Argentina’s TV Problems As a Guide For TV of the Future

Television in Argentina should be examined as a case study. Here are the key issues facing the market:

  1. How can television grow in a market (such as Buenos Aires) which has five terrestrial TV networks and 117 TV channels, of which, on average, 45 are on cable and 72 are on satellite?
  2. How can terrestrial television go digital if, for financial reasons, cable TV remains analog (especially since cable serves 55 percent of the national population and 70 percent of the Buenos Aires population)?
  3. How can one compete in a market where multiple TV operators work in the same area? In Buenos Aires, for example, consumers can choose from three cable TV systems and a satellite system.
  4. How can one face the future in the middle of an economic crisis and with a declining "Growth Competitiveness Index," which has slipped, according to the World Economic Forum, from 49th to 63rd place?

VideoAge asked these questions to Walter Burzaco, president of ATVC (Argentina's Cable TV Association), during the annual Jornadas de Television, held last November in Buenos Aires.

"At this point," Burzaco stated, "the problem is not growth. The goal of all cable TV companies is to hold onto their subscribers. It's not just a matter of revenues, but of costs. If it were to cost one dollar to hold onto a subscriber, it would cost seven dollars to gain one."

The growth of cable TV in Argentina happened during the ten-year period 1988-1998, when subscribers reached 5.5 million households. Then the recession at the end of 1998 and the economic crisis which started last year caused subscriber numbers to plunge to 4.5 million.

In an effort to keep their revenues steady, companies have increased subscription costs 25-40 percent, mostly on the basic service, which can offer up to 65 channels. At the same time, they tried to improve premium services, whose cost is added on to the basic rate. "The cable TV service hasn't changed and, in some instances, it has improved," continued Burzaco, "but some subscribers, somehow, have the perception that the service has deteriorated. This is a problem we have to face."

As for future growth, according to Burzaco, this will happen by offering an analog, interactive (bi-directional) service. "Every company has plans for digital television," said Burzaco "but there's no way they can be carried out in the near future."

Obviously, if the cable-TV system remains analog and it carries the terrestrial TV signals to the wealthier households, it's not worthwhile for stations to invest in digital television, since there wouldn't be a sufficient return.

Plans, commented Burzaco, now consist of adapting the cable network to interactivity so that more services can be offered, including Internet access. Cable TV systems in Argentina have fiber-optic trunks with the last mile made of coaxial cable.

Currently, the cable TV system CableVision - where Burzaco is manager of public affairs - installed cable modems for 60,000 of its subscribers. With these modems, viewers can request two types of Internet service: one at 256 kbps and the other at 520 kbps. To keep these speeds as stable as possible, the nodes, which usually serve 2,000 households, got subdivided into four sub-nodes, each carrying a 10 Mbps channel. This way, up to 50 subscribers can use the same line simultaneously without any slowdown.

The problem now is that all these sub-nodes and modems generate noise, which gets channeled and amplified into the return network causing problems at the headend. This is what is limiting the two-way service at the moment, representing - according to Burzaco - one of the key problems the industry needs to tackle in order to grow under the present conditions.