Reliance Jio readies plan to woo DTH customers, to take on rivals

To offer a combination of broadcasting and broadband services with two-way communications, which DTH cannot

Reliance Jio’s target of bringing in two-thirds of its 50 million fibre-to-the-home (FTTH) subscribers by weaning them away from existing direct-to-home (DTH) players signals the firm is all set for another dose of battle, this time with Dish TV, Tata Sky and Airtel, among others. 

There are around 69 million DTH homes and the number has been increasing because the players have weaned away subscribers from cable services. There are over 86 million digital cable households. 

A Reliance Jio spokesperson, however, declined to comment on the issue. 

According to sources close to the company, Jio will use various planks to woo DTH households. One, it will offer a combination of broadcasting and broadband services with two-way communications, which DTH cannot. Two, unlike DTH, where spectrum limits the use of channels as well as high technology like 4K services, there is no such limit on a fibre network. Three, FTTH will provide customers with a range of value-added services under the internet of things like security and safety services for homes, and healthcare services. Fourth, it will go in for aggressive tariff plans where the payout for a customer using broadcasting services will be lower than that for DTH. Fifth, Jio will target DTH customers who are using broadband mobile services (like dongles) at home for high-speed internet by offering them FFTH as an alternative. 

The acquisition of Hathway and Den has provided Jio over 15 million active customers (the customer base is 24 million). It also gives them a broadband network that passes over 8 million homes, of which only a little over 1 million have taken broadband. Jio will offer cable subscribers set-top boxes, which would be able to work both on cable and fibre, and it will be followed by upgrading the back haul with fibre and with fibre last-mile connectivity, replacing cable.

DTH operators, however, say Jio will be able to get at most 3 per cent of TV households under its belt to FTTH, and the plan to reach 50 million could take many years.

“DTH through satellite has a coverage footprint across the country, so our cost of acquisition of a new customer is very low. In FTTH you need to have a large fibre footprint because the conversion of households into FTTH is not more than 25 per cent. So you require large investments to lay the last mile and that means a high cost of customer acquisition. That is why it is sustainable only when customers pay an average revenue per user per month of over Rs 1,000 and above. DTH average revenue per user, on the other hand, ranges from Rs 250 to Rs 500 a month so it caters to a different market,” said Jawahar Goel, managing director of Dish TV, one of the leading players in the DTH space.

Based on Goel’s assessment numbers, Jio will require a fibre footprint that will cover 200 million households if it wants to reach 50 million FTTH households. That’s is more than the 197 million households who have TV currently. 

Analysts have raised a point that while its recent acquisition of Den and Hathway would help in a quicker roll-out of FTTH, it raises other challenges. Kotak Institutional Equities Research says the FTTH offer could become a bone of contention as the current TV subscription revenue streams of multi-service operators and the LCOs might get hit and Jio might have to make up for their losses, which would lower the profitability of the FTTH business.