Sky, Home Cable to spend P200M for ‘tiering’ scheme

Beyond Cable, the holding company of SkyCable and Home Cable, may have to spend at least P200 million for a move to go into "tiering" of its offerings and offer different packages to its subscribers depending on their needs.

There is now a growing trend among local cable television (CATV) operators to invest in equipment that will allow them to encode signals so that subscribers can get only the cable channels that they want.

According to the Philippine Cable Television Association (PCTA), there are already at least six provincial CATV operators that have gone into encryption and that are offering four types of packages (starter, basic, premium, and international) to their customers.

Encryption will cost a CATV operator around $1,000 per channel. "Addressable set-up boxes" will also have to be installed per television per subscriber and one box will cost the operator around $25.

Earlier, SkyCable president Eugenio Lopez III said they plan to start offering these packages to their subscribers by June of this year, although certain industry members doubt whether the company can raise the money to finance the move, or if they do, whether their creditors will allow it. Lopez emphasized that going digital is the only way to curb cable TV piracy.

And the provincial CATV operators that have already invested in the move (in Cagayan de Oro, Iligan, and certain areas in Pampanga) said piracy has completely been eliminated in their areas.

According to a Beyond Cable official, SkyCable and Home Cable combined have around 200,000 subscribers. Assuming that 30 channels will be encrypted and each subscriber has only one television, encryption alone will cost $30,000. The set-up box for 200,000 televisions will cost a total of P200 million.

But the official expressed confidence that the creditors of Sky and Home will recognize the fact that this is the only way for the cable TV industry to make money and reduce costs. Both Sky and Home are engaged in debt restructuring negotiations with their respective creditors.

Right now, some CATV operators are forced to underdeclare their subscriber numbers because foreign program/content providers charge them per subscriber.

But with encryption, the operators can have a starter package (say for P300 a month) that offers only the free-to-air channels (such as Channels 2, 4, 5, 7, 9, 13, 23); a basic package (say for P500 a month) that will have the free channels plus one channel per genre (one cartoon channel, one sports, one foreign movie); a premium package (that will have more than one per genre); and an international package (including the embassy channels). Some of the six provincial operators that have joined the bandwagon have adopted this four-tier package system.

In the case of Metro Manila, the Beyond Cable official said Sky and Home can probably start with the basic package, although he said they have not decided at this time how many packages and how much each package will cost.

Through encryption, the foreign program providers can easily determine how many subscribers actually subscribed to a package that carried their channel.

A PCTA official told The STAR that there is a move to make it standard among all CATV operators to at least have the same number of programs in the starter and basic packages, although some operators feel this will be difficult, especially in towns where there is more than one operator.