The Hindu Business Line : Receiving a strong signal

Satellite radio subscribers can receive more than 100 radio channels featuring high quality music, news, weather, sports, and talk radio, but currently, there is only one provider of satellite radio service in India, providing about 45 channels.

V.V. Krishnan

Looking up to the sky.

D. Murali

Up above the world so high, though not like diamonds, orbit many satellites, both active and decayed. Early this month, we made an addition to the population of eyes-in-the-sky by launching the INSAT-4CR satellite.

As you may be aware, Indian National Satellite (INSAT) already provides “a total of about 200 transponders in Ku-band, C-band, and Extended C-band besides instruments for meteorological imaging and data relay functions,” and is the largest domestic communication satellite system in the Asia-Pacific region, as www.isro.org explains.

The data-hungry may like to know that the 4CR, which had a lift-off mass of 2,130 kg, carries a dozen high-power Ku-band transponders designed to provide a variety of communication services – such as DTH (direct-to-home) television, VPT (video picture transmission), and DSNG (digital satellite news gathering) – over its mission life of ten years.

Not surprisingly, therefore, you’d find the word ‘satellite’ mentioned 36 times in ‘Draft Recommendations On Growth of Broadband’ dated September 17, 2007, from TRAI (the Telecom Regulatory Authority of India).

The highly-informative document, running to 77 pages, talks about: how satellite is a good option for providing broadband ‘in hilly areas such as the North-East, Jammu and Kashmir, Himachal Pradesh, and Uttarakhand’; why satellite can offer ‘some cost- effective options such as point-to multipoint (broadcast or multicast) applications that do not require huge bandwidth’; and more.

A section on ‘international experience’ includes Brazil as a case study; it has connected ‘distant schools, advanced military posts, rural and border settlements and hospitals located in the most remote regions’ using satellite-based broadband access to the Internet.

Part of management discussion

Closer home, too, there is a lot of activity, as evident in the reference to ‘satellite’ in many a management discussion of companies. Top in the A to Z list, though, is Apollo Tyres Ltd, which in its MDA (management discussion and analysis), included in the 2006-07 annual report, speaks of the Sterkfontein Vulture Feeding Project, ‘a popular international tourist destination, and two satellite feeding sites’.

Dena Bank includes ‘98 Satellite Offices’ in the tally of its rural branches. India Cements hopes that demand for its product will continue to grow, owing to no signs of let-up in ‘the drivers of cement demand, including retail housing, infrastructure (roads, ports, airports, power plants, special economic zones and satellite townships) and irrigation’.

These apart, you can stumble upon serious ‘satellite’ statements in many other MDAs. For instance, Astra Microwave Products Ltd is “in the process of setting-up facilities for satellite payload fabrication, which is expected to cost Rs 30 crore over a three- year period,” a facility to come-up under its wholly-owned subsidiary in Ahmedabad.

Blue Star Ltd is bullish about its satellite-related biz. The company represents manufacturers of a wide range of ‘test and measuring instruments, recorders, protocol analysers, noise generators and satellite link emulators’. A ‘breakthrough order’ for Blue Star was ‘from Tata Sky for supply of 1,400 Satellite Hunters, a dish alignment tool for DTH Operations’.

KEC International informs that it has continued its value chain expansion “by entering into distribution and rural electrification, optical-fibre cable installations, concrete spun pole manufacturing, supply of telecom towers, hotline stringing and providing services such as satellite/ GPRS surveys.”

EID Parry is into satellite mapping, “involved in conducting oil survey and map the same with the help of satellite imageries by developing farm land database.”

The MDA of Sterlite Optical Technologies Ltd begins with a paragraph on how the telecom sector is aiming at world-class infrastructure. “TRAI has suggested a range of measures for an open-sky policy for DTH, VSAT and up-linking using satellites that should boost broadband,” notes the company.

‘Satellite link charges’ are a major expense head for software exporters, such as Aztec, which spent 1.29 per cent of its revenue towards this line item, last year. “Satellite link charges represent the costs incurred on the communication infrastructure, including leased lines,” explains Aztec in its management discussion. Satellite link costs have increased in absolute terms in line with the increased offshore projects under execution, it notes. “The Company has positioned itself as an offshore centric service provider. The Company’s communication infrastructure forms vital backbone enabling the Company to deliver its superior value added services from its development centres in India,” reads a snatch that shows how critical the link is for service delivery.

Another example of ‘satellite’ in the financials is NDTV. When explaining the rise in production expenses, it lists two points that should be of relevance. One, transponder fees paid for transmission of channels for full year in the US, the UK and Canada, as against three months last year. And two, “commitment charges incurred to book satellite space for metro channels.”

Criticality

Criticality, as in Aztec, is evident, again, in Mphasis Ltd’s MDA: It speaks of satellite in the ‘risk’ section.

A paragraph titled ‘telecommunication infrastructure risk’ informs that the use of ‘strategically located software development centres provides the Group with cost advantages, ability to attract and retain highly skilled personnel and consequently the ability to provide the clients with services 24 hours a day and seven days a week.’ This delivery model involves the maintenance of active voice and data communication links between the Group’s call centres, its software development centres and clients, explains the MDA.

“Although the Group maintains redundancy facilities and satellite communication links, any loss in its ability to transmit voice and data through satellite and telephone communication links could adversely affect the Group’s ability to complete client projects on a timely basis, thereby affecting its revenues and operational performance.”

So, what is the counter-measure? “The delivery centres of the Group have moved on to a state-of-the-art, global secured network put in place by EDS with built-in redundancies and fall back options. This network is widely recognised as the only one of its kind in the world and is a source of significant competitive advantage.”

Growing consumer culture

‘Satellite’ finds place in a para on ‘growing consumer culture’ included in the MDA of Tata Motors Ltd, thus: “The rapid growth in cellular phone and cable and satellite television penetration in India in recent years is fuelling the desire of a better lifestyle. The Company, with its wide portfolio of passenger cars, has an opportunity to benefit from improving life styles and higher aspiration levels.”

In the entertainment space, Zee TV, the flagship television channel of Zee Telefilms Ltd, launched in 1992, was ‘the first Hindi general entertainment satellite channel in India,’ one learns. The company’s ‘content business’, as you may know, is about ‘developing, producing and procuring television programming and film content and delivering via satellites, thereby earning advertisement and subscription revenues.’

Competition is intensifying among satellite TV platforms such as DTH, HITS, IPTV, CAS, and traditional cables, observes Balaji Telefilms Ltd in a section titled ‘evolving paradigms in the television industry’. Its ‘major satellite channels (Hindi)’ contributed nearly Rs 300 crore out of the total revenue of Rs 317 crore that the company earned in 2006-07.

Satellite radio

To those interested in reading elaborately about ‘satellite radio’, the MDA of Entertainment Network (India) Ltd is a must-read. Satellite radio is a radio service that provides radio signals directly from satellites, explains the company.

“It is better than terrestrial digits technologies (DAB/DAB+/DRM) when large areas with homogeneous listening needs are to be covered. This is why satellite radio is popular in the US.”

Satellite radio subscribers can receive more than 100 radio channels featuring high-quality music, news, weather, sports, and talk radio, but currently, there is only one provider of satellite radio service in India, providing about 45 channels. “Satellite radio is primarily subscription-driven and the cost of access equipment remains high at present. At present satellite radio in India is small; however in future, it could be a threat to FM radio…”

These are but a few examples to show that profits are no pie in the sky for companies that factor the eye-in-the-sky into their revenue calculations.

dmurali@thehindu.co.in

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