IF IT IS CLEAR, IT MUST BE THE CIGNAL!

This doublespeak reminds me of the Memorex Tagline in the ‘70s … “Is it Live?... or is it Memorex?  Many of us still remember the days of the cassette tape where the Memorex company sought to distinguish itself from competitors like Sony, TDK, RCA and others.

Being one of those pioneers in the cassette tape recording industry in the ‘70s and ‘80s, I remember clearly that studio audio quality was referenced on 1/4 inch magnetic tape reels. The cassette tape which had a width of 1/8 inch compromised quality with size and compactness; and thus manufacturers like Memorex broke new ground as they formulated one of the best magnetic tape material that money could buy.

 In no time, the gigantic reel to reel tape industry was superseded by the new compact format. With purist quality cassette playback and recording machines like the Nakamichi and Sony trouncing the Akai reel machines of the ‘60s and ‘70s, the reel to reel business virtually disappeared from homes overnight.

The recent ads being launched by Cignal TV where they made a direct comparison between Cable TV and their DTH product, have not gone unnoticed as celebrity endorsers like Willy Revillame, Ryan Agoncillo and others have continuously (bad)mouthed that only their product is 100% CLEAR and 100% Digital, while Cable is Not Clear and HinDigital.

Even local radio broadcasters have started to pronounce that Cignal is clearer than Cable, based on their recent survey. As they claim, only two out of ten respondents said that their cable TV signals were clear and 80% vouched for Cignal’s signal. Preposterous as we might say of this unverified and obviously loaded survey, this brings to light the start of an industry-wide pay television war of sorts.

In the recent years, ad agencies had been very careful of making direct product comparisons and ethical standards were followed for the most part. With the advent of personalized messaging like Twitter and social networking sites like Facebook, ethical boundaries are no longer in force, as anyone can now make an individual comment or observation and broadcast the message to the whole wide world!

Many of us in the cable business will not dispute that Cable TV is not as clear as satellite-delivered signals because all of us in the business capture most of our programming from the satellites that relay signals from the original source. Indeed, there is an acceptable reduction in quality as satellite signals are reprocessed in our headends for delivery to our last mile customers.

Perhaps this where Cignal is coming from… some of our colleagues in fact source their programs from DTH (Direct to Home) antennas.

It is now obvious, that a battle for the eyeballs is in the offing as DTH companies square off with the well entrenched Cable TV networks; and Telcos are now busy waiting in the wings, preparing to enter the fray at the appropriate time.  Broadcast TV networks are now gearing up for digitization; more content is being produced and acquired as new digital channels will become available soon.

This situation is not exactly a surprise for all of us in the cable TV industry, for some of us had already been preparing for the Pay TV wars early on as we deployed conditional access systems and adopted the DVB-C digital video broadcasting standards for cable TV. More and more cable operators are now joining the digital bandwagon as competition is heating up.

The few who have made the plunge into Digital are actually making more money than before, contrary to the speculations made by the more conservative players in the business. SkyCable, which had been in the red for over a decade, has started to make decent profits in the last few years, after they implemented a network wide digitization of their signals and plugged all the leaks and theft in their system which for a time was the main hindrance to a better bottom line. Parasat Cable, Satellite Cable Network, ACCTN (Angeles City Cable TV Network) which were among the first in the provinces to go digital and today, can now be proud to declare that business is better than before and ARPU (Annual Revenue Per User) has increased by at least 30%-50%.

What do we need to do now in order to stop Cignal and the competition from taking prisoners (business) from us in the cable TV business?

THE CIGNAL IS CLEAR…WE MUST DO SOMETHING WITH OUR SIGNALS!!!

With hundreds of small cable systems spread far and wide still using outmoded analog technology, the threat to their existence is slowly gaining ground as more and more subscribers become enticed by the claims of clearer signals and better pricing schemes and promos.  What is also clear is that analog technology is inferior in quality and wasteful in bandwidth or channel allocation.  Many of our colleagues only deliver between 30-70 channels at prices that are insufficient for any operator to sustain a network wide upgrade.

Analog technology is such that even at low signal levels at the TV set, the subscriber endures snowy pictures and does not complain because this is nothing unusual. It is true that many of us deliver more channels sacrificing quality for quantity to stay in the game.

We do not realize that a good portion of our subscriber base is actually willing to pay the price for quality programming. Those who have gone digital can actually prove this. Even with only 25% of the total, we are collecting as much compared with the rest of the 75% which pays less than half of the premium price.

This is because the higher end of the market pays three times as much as the lower end of the spectrum. In our case at Parasat, our lowest digital package (DigiLite) is priced at P399.00, while our full HD/SD package (PremiumHD) is priced at P1350.00/month.  On the average, we now collect from all our subscribers around P600.00 instead of the usual P400 if we remained at analog. This does not even count the revenue we generate from PPV (Pay Per View) like the Pacquiao fights!

The signal is clear… we have to go DIGITAL in order to face off with upstart CIGNAL TV or else just play second fiddle in the coming years. Just a few years ago, even our fellow officers in the board downplayed the advantages of Digitization. Today, they are speaking and thinking on the same line… If it is not Digital… It is not Clear!

What are the options for the small cable TV operator? How can they afford digital technology? How do they learn the technology?

Digital Cable TV technology just three years back was quite expensive. SkyCable which made the right move, had to invest nearly Php100M for their digital headend for around 100 channels. Today, a decent digital headend which consumes less power and rack space, and delivers over a hundred channels costs less than Php10M! That’s how fast prices drop… digital is now becoming affordable and inevitable for those wanting to survive. Set top boxes which used to cost around US$60 are now half the cost; even HD boxes can now cost below US$50.

The small operator which has between 500-2,000 customers can not afford the technology shift at today’s prices. The more prudent and feasible option is to start talking to the neighboring system and discuss the possibility of an interconnection, maybe even a merger of sorts, in order to reach economies of scale. Four or five operators can be interconnected to a single digital headend using fiber and still maintain different packaging dependent on the subscriber profile in each area. This is made possible by conditional access and an efficient subscriber management system.

Another option that is being made available by a friendly DTH operator is the digital transcoder system, which allows a small cable operator to offer premium HD channels at a reasonable price without letting go of their analog one price offerings. This is how it works: The operator buys a transcoder/transmodulator which in effect downloads the HD programs from the DTH operator, converts the signals into QAM (digital format) and modulates the digital package straight thru the existing analog network without any upgrade needed. The premium customer then buys a regular DTH HD box (supplied by the DTH partner) which allows him to view the HD programs at will. From what I gather, the upfront cost to the operator is less than P150K for the transmod and a number of HD boxes included.  This method is very popular in India today, as thousands of mom and pop cable operators embrace digital technology.

Digital technology is not Rocket Science. The PCTA regional technical seminar series in the last couple of years, has been consistently training hundreds of cable installers and technicians in digital deployment.

In the last few months, the PCTA has gone to Butuan City for the Mindanao leg, and San Fernando in La Union for the Luzon leg, in order to train technicians and talk turkey with fellow cable operators in the area. In January next year, the technical seminar will be held in Metro Manila while the Visayas leg, which will be in Boracay island, will be held after the annual PCTA Convention in Cebu.

All systems go for CEBU!

The 20th PCTA Convention dubbed 20@12: Intensified! will be held at the spanking brand new convention facility of the Radisson Blu Hotel beside SM City Cebu  on March 20-23rd. Please make your booking reservations now for your plane tickets as there are promos which abound for the early birds. Cebu offers a lot of affordable accommodations; just check with our Secretariat for a list of hotels, inns and pension houses.

Some of us in the Board were able to attend the CASBAA convention in Hong Kong and we learned about the current trends in the ASEAN region.  Everyone else was talking about mobility as customers now want to view their favorite programs even on their IPads and Androids!

We were also able to snag a good number of exhibitors and sponsors for the next convention. This will obviously be another banner year for the Convention team!

We have also attended another meeting with the Technical Working Group in the MTRCB which was tasked to map out the relationship of the cable TV industry and the government regulatory body.

Christmas is coming in fast and we all wish everyone…

“A MERRY HD CHRISTMAS TO ALL, MAY YOUR SIGNAL BE CLEAR AND BRIGHT!”

by Engr. Elpidio M. Paras

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