Sky, Home Cable to provide subscribers with digital boxes

SkyCable and Home Cable, the country’s two biggest cable television brands, will be introducing digital set-up boxes among its subscribers in phases, beginning late this year with those in high-end residential and commercial areas, instead of full blast due to the huge funding involved, company officials told The STAR.

The full implementation of the move to install digital set-up boxes will be done in five years starting this year, officials revealed. Sky and Home have a combined subscriber base of 200,000 which means that just to put one box per home will already cost the company P600 million.

The plan is to distribute the first box for existing subscribers for free while the other boxes will have to be purchased or leased from Central CATV. Each television will require one box. New subscribers will have to acquire even the first box. "We do not know yet how much we will sell the boxes to the subscriber but at most, it will be sold at cost, which means between P2,500 to P3,000 per box," the official said.

The installation of digital addressable set-up boxes is a move being resorted to by the local cable TV industry in order to minimize if not altogether put a stop to signal piracy. While there are between one to 1.5 million paying cable TV subscribers nationwide, it is estimated that another one million are illegally connected.

"Easily, we can double the subscriber base of the cable tv industry if we just put a stop to signal piracy," an official of the Philippine Cable TV Association earlier said. Other provincial cable tv companies have already installed either analog or digital set-up boxes.

Company sources revealed that this year, around 10,000 boxes will be acquired and installed among subscribers in affluent subdivisions and high-rise condominiums. At $52 to $55 per box, this year’s cost for acquiring the boxes will amount to roughly P30 million.

Of the $30 million loan which ABS-CBN extended to Central CATV last year, around P1 billion is left and P500 million has been used mostly to update on interest payments to creditors and for operations. Sky and Home have a combined debt of P2.5 billion which was earlier the subject of a restructuring agreement with the creditors.

The remaining P1 billion, meanwhile, will be for interest payments to the banks, to finance operations, and partly to purchase the addressable set-up boxes.

"We do not know yet how much of the P1 billion will be spent for the set-up boxes, but this year only around 10,000 boxes will be acquired. We are now looking for distributors," an official disclosed.

The first 10,000 boxes will be installed in affluent subdivisions and high-rise condos, "or areas where we can expect to generate additional revenues even if we give the first box for free," the official explained. The additional revenues will come from pay per view.

During the five-year phased implementation of the introduction of set-up boxes, subscribers have no choice but to have the boxes installed since the channels will be encrypted in the boxes. "No box, no signal," the official said.

The risk of installing digital boxes however is that subscribers may cut down on the number of televisions they have that have cable. Right now, a Sky Cable subscriber pays P800 a month as basic subscriber fee and pays a fixed minimal amount for each additional television.

With the installation of the digital boxes, an existing subscriber will get one box for free, but he will have to acquire additional boxes if he has more than one television.

Company officials. however, expect that whatever they will lose in such a case will be more than compensated by revenues from pay per view as well as those with illegal connections who will migrate to being paying subscribers.