Customer Satisfaction with DTH Services in India

Ref.No.: QM0006

Customer Satisfaction with DTH Services in India

Since Cable TV entered India in 1992, entertainment on television has grown rapidly. Out of the
71 million TV households in 1999, 32 million had access to Cable TV. However, along with the
soaring viewership, complaints on quality also increased. Digitalisation of Cable TV took a new
form when Direct-To-Home (DTH) was launched in India in 2003.
The DTH service is an encrypted transmission. It is a digital satellite service that provides television
services direct to subscribers anywhere within the country. Unlike the regular cable connection, the Set-
Top-Box (STB) decodes the encrypted transmission. Since it makes use of wireless technology,
programmes are sent to the subscriber’s television direct from the satellite. This eliminates the need for
cables and cable infrastructure. DTH service is particularly effective in remote areas, where cables and
even normal television services are poor or nonexistent. These services provide the finest picture and
sound quality. Like the quality of any modern movie theatre, DTH also provides the best quality
surround sound.
Although DTH services were proposed in India way back in 1996, it was not permitted until
2003. The government rejected approval to DTH due to concerns over national security and cultural
invasion. To prevent the implementation of DTH service, even the cable operators had heavily
lobbied the government. Finally, the Government laid out certain regulations for DTH providers to
operate in India. To name a few, no foreign player can invest more than 49% in an Indian DTH
venture, no broadcaster or cable network can earn more than 20% share in DTH venture and the
DTH provider has to be an Indian company. Apart from that, players are required to pay an initial
amount of INR 100 million while entering the business along with a bank guarantee of INR 400
million for a license period of 10 years. They are also required to pay the government 10% of their
gross revenues, 12.36% of subscription fees, entertainment tax ranging between 10%–20% (varies
from city to city) and VAT of 12.5%.

This case study was written by Sravanthi Vemulawada under the direction of R Muthukumar, IBSCDC. It is intended to be used as the
basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was
written from generalised experiences.

© 2009, IBSCDC.
No part of this publication may be copied, stored, transmitted, reproduced or distributed in any for m or medium
whatsoever without the permission of the copyright owner.

Background Reading: Chapter 6, “Sampling and Sampling Distributions”,

Statistics for Management 7th Edition (Richard I. Levin and David S. Rubin)

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License to use for IBS Mumbai. Sem I (Class of 2020).
 Customer Satisfaction with DTH Services in India

The Indian Government issued the first private DTH license to Dish TV1 in 2003 and Dish TV
started its operations in 2004. Dish TV installed a pizza size dish antenna and STB for INR 3,190
at subscribers’ end and charged a monthly subscription fees depending upon the package opted by
them. To suit the needs and pockets of different customers, Dish TV offered four different packages
made available through 25,000 dealers across the country. In 2 years, Dish TV garnered a
subscriber base of 1.5 million2 .
• Dish TV has around 500 channels. Now it is planning to add one more channel to its
basic services because it wants to increase its sales. This channel is expected to be one
amongst few entertainment channels. One of your friends is appointed as a consultant
with Dish TV. Since Mumbai is the hub of the entertainment industry in India, your friend
is of the opinion that a survey of the channel’s Mumbai viewers would be sufficient to
know if a new channel has to be included or not. Is his approach proper?
In 2006, Dish TV faced a new contender as Tata Sky3 had entered the DTH market. Tata Sky
invested INR 25 billion4 and launched its service simultaneously in 300 cities across India,
concentrating mainly in Tier 1 cities. Tata Sky offered an initial package of 55 channels. Its
packages were priced similar to that of Dish TV. By 2007, Tata Sky had 1.5 million subscribers5 .
• Tata Sky has introduced a new service called Tata Sky+. It wanted to know its existing
customers’ feedback about this service. It divided its customer base into five age groups
i.e., 10–19, 20–29, 30–39, 40–49, 50–59 and surveyed these groups accordingly. Is this
approach proper?
Apart from Dish TV and Tata Sky, customers got another option in December 2007. South
India’s first DTH provider, Sun Direct TV6 launched its services at a price of INR 1,999 and
monthly subscriptions ranging between INR 75–250. Apart from the usual offerings, it even
provided add-on packages and customer care service to its subscribers. In just 200 days of its
inception, Sun Direct was successful in reaching 1 million subscribers. In South India, Sun Direct
holds 65% market share7.

1
Dish TV is a DTH entertainment service, which brings 500 channels and services straight from the satellite to the home. It
provides uninterrupted viewing without any transmission cuts along with crystal-clear digital quality picture and stereophonic
sound.
2
Chatterjee Purvita, “ DTH makes merry”, http:/ / www.thehindubusinessline.com/ catalyst/ 2007/ 01/ 18/ stori es/
2007011800120300.htm, January 18 th 2007
3
Tata Sky is a DTH entertainment service, which has redefined the television viewing experience for t housands of
families across India. They offer over 170 television channels in DVD quality picture and CD quality sound along with a
host of new-age interactive services.
4
“ Tata and Sky finally launches Tata Sky DTH Service in India”, http:/ / sifybroadband.techwhack.com/ 53 2-tata- sky-
dth-service, August 12 th 2006
5
Raj Gopal, “ Can DTH compete with cable?”, http:/ / www.hindu.com/ 2005/ 12/ 24/ stories/ 2005122404921100.h tm,
December 24 th 2005
6
Sun Direct is a DTH entertainment service wherein the viewers can watch all their favourite programm es in true DVD
quality, it treats the viewers’ ears to a true theatre experience by providing awesome CD quality so und.
7
Iyer Byravee, “ Sun Direct: Go national, think regional”, http:/ / www.business-standard.com/ india/ news/ go-national-
think-regional/ 21/ 57/ 344653/ , December 30 th 2008

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License to use for IBS Mumbai. Sem I (Class of 2020).
 Customer Satisfaction with DTH Services in India

• The number of subscribers of Sun Direct service is 3.1 million. The company wanted
some inputs about its service from its existing subscribers. They proposed to select a
sample of 100,000 subscribers. What should be the approach?
On August 19th 2008, Reliance Group (a Fortune 500 company worth INR 1,564 billion)
entered the DTH sector with Big TV8, investing INR 20.5 billion. Arun Kapoor, CEO, Big TV,
says that they are planning to capture 40% market share within a year. At the outset, Big TV plans
to spend INR 2 billion9 on marketing and promotions. The company is using the Internet, hoardings,
radio, and print media to make people aware. A live demo of the product was also made available
at the demo closets of different TV outlets. Reliance plans to offer 200 channels packaged and
priced differently between INR 1,490 and INR 4,999. In future, it also plans to add 130 channels.
• Big TV has a million customers. Since the management received complaints of its poor
customer service, they worked on it and resolved the problem. Later on, the management
wanted to know whether proper customer service was being provided. So, they wanted to
survey 10,000 customers of Big TV. How should the sample be selected?
Indian Telecom conglomerate Bharti Airtel launched its DTH service called Airtel Digital 10 on
October 9th, 2008 in 5,000 cities across the country. Currently it has about 175 channels 11 . The
company holds nearly 24.2% market share of wireless subscribers and has 300,000 12 subscribers.
The company plans to leverage on this subscriber base. By 2009, DTH customers are expected to
reach around 10 million–12 million13 .
• Airtel service is planning to add one more channel to its basic service. There are five
channels to choose from, and the company would like some input from its subscribers.
There are about 1 million subscribers, and the company knows that 35% of these are
college students, 45% are white-collar workers, 15% are blue-collar workers and 5% are
others. What type of sampling should be used here and why?

8
Reliance’s DTH entertainment service Big TV is powered by MPEG- 4 technology, which is being used for the first time in
India. It has fantastic features like pure digital viewing experience, more channel choice, many exclusive movie channels,
easy programming guide, interactive services, parental control and 24x7 customer service.
9
Sinha Ashish, “ ADAG to launch DTH service on Tuesday” , http:/ / w w w.business-standard.com/ india/
storypage.php?autono=331705, August 18 th 2008
10
Bharti Airtel launched its DTH Satellite TV called Airtel Digital TV which is available to customers through 21,000 retail
points including Airtel Relationship Centres in 62 cities. It uses the latest MPEG-4 standard with DVB S2 technology.
This latest technology enables delivery of more complex interactive content and is High Definition ready.
11
“ Airtel DTH offers 175 channels”, http:/ / discuss.itacumens.com/ index.php?topic=31581, October 7 th 2008
12
“ DTH Networks India Forums”, http:/ / www.saveondish.com/ forum/ archive/ index.php/ thread-12244.html, Ap ril 18th
2009
13
Iyer Byravee, “ Triple,trick or treat?”, http:/ / www.business-standard.com/ india/ storypage.php?autono= 339736,
November 11 th 2008

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License to use for IBS Mumbai. Sem I (Class of 2020).
License to use for IBS Mumbai. Sem I (Class of 2020).