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Saturday November 26, 2011

The aspirations of digital cable TV startup ABN

THE million-dollar question is who is really behind the new digital cable TV startup Asian Broadcasting Network (M) Sdn Bhd (ABN).

A company search of the new startup, which launched its ABN brand on Nov 15, reveals a list of directors that includes Sreedhar Subramaniam (CEO), Tan Sri Mohd Anwar Mohd Nor (chairman) and directors Tan Sri Mohamad Noor Abdul Rahim, Datuk Nik Mohd Amin. and Datuk Kamaruddin Mohd Jamal.

They are the drivers of the new entrant that is about to shake things up in the pay-TV business by making it affordable to the larger population.

Sreedhar: ‘So it is really the under-served market that we are after.’

ABN may be a new aspirant in the pay-TV arena but it is up against satellite pay-TV giant Astro, and the several IPTV (Internet Protocol TV) players such as Telekom Malaysia Bhd (TM), REDtone International and Maxis Bhd.

In the business of TV and content, cash is king and the unanswered question is... does this group have the financial muscle to push through its vision where others have failed?

It needs RM2bil over five years of which RM500mil is needed over the next six months in order to roll out its services in the second quarter of 2012.

“We have a list of banks that we are talking to (both local and international),” Sreedhar says.

To him, funding is not an issue at all.

Money is needed to purchase content and the deeper one’s pockets are, the better chance one has to survive.

“With money, you can buy whatever content is available. But when you bid for content means you need enough customers to defray the cost. For the content creators there are five windows to monetise content. Where would they get their content from?” asks a source.

At its recent launch of its branding, ABN invited all the players, including its future competitors, technology and content players to a modest ceremony for a sneak peak of its service.

“We are open to all as we can carry anyone’s content. We are in discussions even with the free-to-air players to carry their content,” says Sreedhar.

Sreedhar will not talk about what content ABN has signed on thus far, but did say that “we are talking to over 40 content providers. We have signed deals with some and are in the final stages of negotiation with others,” he says.

ABN wants to bring to market information, entertainment and education over fibre to homes and at affordable rates.

“Our strategy is about access to all and prices that are lower than that offered by the incumbent,” Sreedhar says.

The market is curious about its next move, though, some people are excited that there will be a new entrant.

“It is time we have a competitor in the pay-TV market place. We need some competition to force existing players to wake up. They cannot be pushing us the same content over and over,’’ says an industry observer.

The backhaul

ABN hopes its services will be passed through 1.2 million premises by end-2012 and wants to have a subscriber base of 500,000 by then. It is aiming for a 15% market share by then and 40% by end of five years.

Those are very ambitious targets and some do not think it can roll out as fast as it claims.

For starters, it is in talks with all the fibre operators and hoping to use Telekom’s back haul. However, it would need to wire up the last mile as predominately most of the homes apart from those on the high speed broadband are on copper. For digital cable TV, fibre is needed.

There is a lot of fibre in the ground that can be put to greater use and Sreedhar says “we plan to use the under-utilised capacity.”

An artist’s impression of Asian Broadcasting Network’s new broadcast facility.

“Ten years ago I would agree that last mile connectivity was a huge challenge but not now,” Sreedhar says, adding that they are willing to work with multiple contractors to get the fibre to homes.

An expert asks: “Do you know it takes a day to dig and lay 100m of fibre. Can they lay the number of homes to get the number of subscribers they want?”

At its launch ABN wants to bring to market 100 channels of different genres and it wants to deploy as many contractors needed to wire up homes to hit its target of half a million subscribers.

The naysayers think that is too “ambitious a target.” “Why duplicate the infrastructure? What’s the difference in coaxial and IPTV. It’s all over a wire,” says a sceptic.

But Sreedhar is quick to point out that there is a difference between cable TV and IPTV.

“For cable, we use RF signals over fibre but IPTV is delivered in data packets and the customer experience differs. For digital cable TV, there is no lag time when changing channels as opposed to IPTV,” he says.

Cable TV is not a new thing as it has been in existences for nearly three decades in markets such as India, the United States, Australia and Britain and with compression technology, more channels can be carried. The infrastructure ABN is building allows it to offer up to 1,000 channels but it will be happy if it can get close to 500.

It is preparing about 100 channels at launch date but in two years, ABN will have a capacity to deliver 200 channels to homes.

It will operate from its new office in Puchong soon and is planing its own broadcasting centre which will be completed in two years’ time. Along with programming, it claims it will also partner internationally renowned film, TV production and digital content creation educational institutions to set up the ABN Academy to create an adequate pool of local talent who will fit into ABN’s broadcast ecosystem. It also aims to become Asean’s most advanced digital cable TV provider.

ABN has been on a hiring spree and is looking to add 200 personnel. It aims to hire 800 people in total.

Though this new group is gusto about bringing to a wider market a new viewing experience at reasonable prices, the proof in the pudding will be its timely delivery not just in terms of the channels, but compelling content and quality of programming that may entice people to subscribe to their services.

But Sreedhar is adamant and says “when two pay-TV operators can survive in Singapore, we do not see how this market cannot.”

He adds that the company will break even in five to seven years.

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