Writing on the screen

Telecom companies in India will soon start buying over media companies

Writing on the screenConvergence is a reality and I have been saying so at every forum I have been speaking at for the last five years. Two things that are important in the media business to get the audience that ‘matters’ are brand and content. I had said more than three years ago that the line between telecom and media companies will blur and the former, with their soaring valuations, will try and buy into and buy over media and content companies.

In this context, the latest recommendation of the Telecom Regulatory Authority of India (TRAI) for more FDI in TV and the radio business is indeed welcome. Let me explain why. I have recently been in the forefront of an initiative to discuss the future of the newspaper business in the era of the digital consumer and have again been part of the debate over the future of newspapers in India — which at the moment looks bright.

As you would all agree, we live in a digital convergence age and India is fast catching up with the world in digital social availability.  Let me also outline for the benefit of context the key recommendations of the Telecom Regulatory Authority of India (TRAI) which has proposed a hike in the foreign investment limit for cable networks from 49 per cent to 74 per cent. The Trai estimates that Rs15,000 crore will be needed to upgrade cable networks to a basic digital format and an investment up to Rs64,000 crore would be needed to shift to the high-tech platform prevalent in developed countries. It makes a lot of sense that global capital does a lot of the modernisation work in the country.

I believe that the country is poised for a big explosion of value-added services in the telecom sector. The stage is set for major players to roll out triple play carpet.
 
As increasing bandwidth allows richer technology outlays, more and more content will find its way over the ubiquitous copper line into the smart phone, handheld or portable internet device. But with wires horribly crossed, the auction of the 3G spectrum and the future of mobile telephony hang in the balance. It is high time that the clear policy guidelines are issued on both mobile telephony and IPTV (Internet Protocol television, whereby a digital TV service is delivered using internet protocol).

The issue of whether new or foreign players should enter the process of bidding for new licences needs to be settled once and for all. Keeping the foreign players out of building cellular infrastructure or other platforms will retard the sector’s growth. Issues such as review of spectrum allocation and reserve price need an urgent review with comments from all the stakeholders.

All this is fine but here are some implications for our media, entertainment and telecom industry in India:
- English and Indian language news papers in the next 10 years will grow tremendously. The Indian language ones will grow faster. The twin reasons are  increase in literacy and rise in affluence levels. The newspaper organisations in India will successfully morph into news organisations. India is low in terms of newspaper penetration and the readership universe will expand. Larger players will consolidate.
-  Free newspapers will be launched next year and become a dominant player in the next five years.
-  Media rates or advertisement yields will go up as they are almost one-third of what they are in the world. Yes, the larger players will benefit.
-  Indian media organisations will
become multi-media and survive.
-  There will be mergers and consolidation, and players who embrace and infuse capital and international best practices will survive.
-  The professionals in this sector will cross from content platforms to digital
distribution platforms.
-  The industry will move away from
dependence on advertising revenues to subscription fee-based revenues.
-  Newer entrants such as Moser Baer, which is neither a media nor a telecom company, will emerge as large players in the domain of content and entertainment.

Telecom companies in India are likely to become bigger than media companies and then the following maxim for media companies would be true: “I started at the top and worked my way down”. I hope and pray for my media baron friends.

Anurag Batra is the co-founder and editor- in-chief of the exchange4media group.