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Such lofty valuations are based in part on the assumption that the MSOs can whip local cable operators into line. They have had some success. Thus, in Mumbai, the Hindujas have an alliance of some 900 local operators who have become little more than agents, collecting the basic subscription fees and handling customers’ problems. Such practices as cable-cutting and amplifier stealing have “stopped completely”, says Dileep Gupte, who runs the company’s broadband services. To build such alliances, MSOs are carrying the cost of upgrading the networks, sometimes including the last mile, which the cable operators usually control.
But plenty of operators retain their wild ways. Earlier this month Bhopal, capital of the state of Madhya Pradesh, lost cable service for a week because of a dispute between an operator affiliated with Siticable and a local MSO. The police brokered a truce. Roop Sharma, president of the Cable Operators Federation, scoffs that an MSO is “just a signal provider”. She sees little reason for her constituents to upgrade their networks: “Why should cable operators spend when consumers only give 100 rupees a month?”
Sceptical operators are not the only risk that the MSOs face. They are pioneers in a market with low incomes, poor technology and excessive regulation. Interactive digital television has yet to arrive in India, so the first customers for the Internet over cable will be users of its 3m-4m computers. Although MSOs expect the cost of the service—1,500 rupees a month, or ten times what most subscribers pay for cable TV—to fall quickly, along with that of cable modems, for the moment it is out of reach of all but the rich.
The quality of the service that MSOs can offer depends in part on bits of the wires that they do not control. Most Internet traffic comes from outside India, and thus hits the bottleneck of India’s publicly owned telecoms companies, which have a monopoly of long-distance telephony and international data exchange. The data monopoly is about to end, and private operators will soon carry Internet traffic via satellite. But the state monopoly is keeping its grip over access to ultra-high capacity submarine cables.
Yet MSOs have one great advantage, which telcos cannot rival. They already have broadband connections with millions of homes, which they can now upgrade and use to promote their new services. If they succeed, India could yet be the country that proves the Internet can benefit the poor world, and not just the rich.
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Ashwin Gopinath
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