Hathway in Triple Play

Hathway is taking the acquisition route to widen its footprint. Local cable networks in Chandigarh, Mohali and Kanpur were gobbled up early this year to gain foothold in new territories, all northern prosperous markets where digital cable and broadband have potential to take off. Such buyouts, though, will be selective and limited. But coming after years of inaction, Hathway sees an opportunity in growing along with the digital market.

Competition also means that Hathway will have to protect its own turf as DTH gets aggressive with full content and more service providers. With Tata Sky preparing for launch soon and Subhash Chandra's Dish TV recently sewing a deal with SET-Discovery for a whole host of channels including Sony TV, Max, Discovery and Ten Sports, the writing is on the wall: cable will have to move in fast to migrate its customers from analogue to digital.

Hathway's initial task is to defend its direct points and the creamy customers of the local cable operators. They will have to persuade their direct customers and the top-end subscribers of local cable operators to opt for digital cable as they will form the main target for DTH service providers.

So far, that has been an agonisingly slow process. Hathway has managed to deploy just under 50,000 digital set-top boxes (STBs), mainly in its direct points. The distribution chain has not been supportive (only one-fifth of the last mile operators (LMOs) have been co-operative). For energising the chain, Hathway is giving operators Rs 400 per digital STB. And on niche content, the multi-system operator (MSO) parts with a 50 per cent share on margins. Besides, operators who buy STBs on bulk are given discounts.But how does Hathway woo customers and make them switch from analogue to digital? One way is to offer bundled packages along with the cable internet services. The idea is to lock in customers with ARPUs over a longer period while driving sales of digital STBs.

There are various schemes launched over a month-long period. Internet subscribers who have been sitting with Hathway for two years will be given the digital box free to use for a year. They will also have the option to buy the box for Rs 500 (box costs Rs 3375) but have to remain as Hathway's internet customer for the whole year. Boxes are available at Rs 1,000 for one-year-old customers. And for an existing internet subscriber who has not completed a year, the box is sold at Rs 2750 while Globus (retail store) coupon of Rs 500 is given along with a 20 per cent discount on Onkyo Home Theatres. New internet customers who subscribe to a minimum period of six months will have the option to buy the box for Rs 1000.

Hathway is backing up the price incentives with a dose of marketing, unprecedented in the Indian cable TV industry. Discount coupons, roadshows, FM radio stations, hoardings, interactive contests - all these media vehicles are being used to promote digital cable. And it has a staff of 70 people on sales and customer support for the digital services. Hathway's monthly ad spend is Rs 800000-100000. They are now selling 5,000 boxes a month which is still low, but there has been an improvement in offtake. Tieing up with companies for discounts and co-branding is another exercise Hathway has started. Hathway is going to tie up with Citibank for a co-branded credit card which they will offer to their internet customers. For digital cable, they are in talks with Onida for discount offers.

Lining up premium content is not a focus area. Hathway, though, has launched an ad-free dial-up interactive music channel I-TV through its digital services. The channel, which is currently available in Mumbai and Pune, will also be taken to other cities. Hathway has also introduced gaming on its digital services last month, for which it has selected NDS technology.

Hathway is creating another arsenal for its fight against DTH. Plans are on to launch VoIP (voice over internet protocol) services by the end of the fiscal. Having built a two-way infrastructure for broadband, this is a natural progression for the MSO. Analogue telephony has been tested with Bharti but hathway considers VoIP as a better option. VoIP test is going on in Mumbai. They are planning to launch at least in two cities this fiscal where they can bundle cable TV, broadband and VoIP services to customers which will add to their revenue streams.