What remains unaddressed in the row over digitisation of cable TV is who will benefit from the government-led imposition of technology.
The move to introduce compulsory digitisation of cable television across the four metros has pitted a powerful lobby of broadcasters and multi-system operators (MSOs) against local cable operators who have called for the process of digitisation to be put off. With the differences between stakeholders remaining unresolved and with the major infrastructure requirements needed for digitisation not yet in place, the deadline for compulsory digitisation has now been extended to November by the Union Ministry of Information and Broadcasting. As the differences between the warring groups engaged in the business play out, the larger question that remains unaddressed is who ultimately benefits from a government-mandated imposition of technology for which there is no great market demand from consumers.
The existing conditional access system (CAS), which was introduced in Chennai in 2003 and in parts of the other metros from 2006 onwards, already provides viewers with the alternative of switching over to digital TV. Even after the introduction of the CAS, the outreach of digital cable TV in the four metros has remained limited on account of the high initial costs of installation (a set-top box costs Rs.1,000-Rs.1,500) and the limited availability of set-top boxes, which are required for the transmission of channels in an encrypted form in digital TV. According to data released by the Ministry of Information and Broadcasting, the percentage of households with set-top boxes in Delhi, Mumbai, Kolkata and Chennai are 19.94 per cent, 38.46 per cent, 20.67 per cent and 12.5 per cent respectively. Thus, a large section of the viewers of cable TV across the metros is still dependent on local cable operators and analogue cable TV. A complete switchover to digital TV without adequate supply of the required infrastructure will essentially imply a cable blackout in households that cannot or are not willing to move to digital TV. Also, local cable operators who are not able to provide the required infrastructure for transmission of digital TV will essentially have to shut shop. This move is being seen by local cable operators as the culmination of a series of measures adopted by the government to promote the interests of corporate giants entering the domain of cable TV as MSOs.
As part of the first phase of the cable TV digitisation exercise, over 12 million homes with TVs in New Delhi, Mumbai, Kolkata and Chennai were to have moved to digital signals by June 30. About 90 million homes with analogue cable TV were to be converted to digital by the end of the fourth phase in December 2014. Now that the deadline has been pushed to November, both the broadcasters and the MSOs have voiced their protest against the delay.Gradual push
The introduction of the Cable Television Networks (Regulation) Amendment Bill, 2011, was a step towards pushing for compulsory digitisation of cable TV. The Bill, an amendment to the Cable Television Networks (Regulation) Act, 1995, empowered the Central government to make it mandatory for cable operators to transmit pay channels through addressable systems, or set-top boxes. The Bill also stated that cable operators would be given a minimum of six months time to install the equipment required for digital transmission. This Bill, after being passed in Parliament, paved the way for compulsory digitisation, even when a large number of households across the country were enjoying the benefits of analogue TV at the inexpensive rates of Rs.200-250 a month.
Speaking to Frontline, Roop Sharma, president of the Cable Operators Federation of India, said, The demand for digitisation has to come from the consumers. At present, there are seven DTH [direct to home] players in the market, and the consumer already has a choice of opting for digital TV. Analogue cable is relatively cheaper as no set-top box is required for installation. Also, there is the cost of additional electricity consumption for using a set-top box and the burden of entertainment tax and sales tax. The average costs of analogue cable TV provided in Delhi now ranges from Rs.250 to Rs.300 per month. Why should low-income groups be forced to migrate to digital TV if they are happy with analogue?New TRAI guidelines
Local cable operators resent the notification issued by the Telecom Regulatory Authority of India (TRAI) on April 30 specifying a set of guidelines for digitisation as it is said to be heavily in favour of the larger players. According to the notification, the charges collected from the subscription of a basic service tier or free-to-air channels are to be shared between the MSO and local cable operators in the ratio of 55:45. The charges collected from the subscription of paid channels are to be shared between the MSO and local cable operators in the ratio of 65:35. This revenue-sharing model has become the bone of contention between MSOs and local cable operators.
Speaking to Frontline, Chanderdeep Bhatia, a spokesperson for the West Delhi Cable Operators Association, said, On the ground, we still provide cable connectivity to the majority of subscribers in Delhi. Of the 40 lakh subscribers in Delhi, the majority are still in non-CAS areas. Only south Delhi is a CAS area; most of west Delhi and other parts of Delhi continue to be non-CAS areas. Given this situation, the revenue-sharing model is unfair to us.
The notification also provides for a basic service tier of a minimum of 100 free-to-air channels to be provided to the subscriber at the rate of Rs.100 a month. However, the free-to-air channels to be aired are to be decided by the MSO and not by local cable operators. The pay channels will be available to the subscriber on a stand-alone basis on fixed rates.
We would design packages on the basis of the local demand in a particular area. A uniform package of channels across areas does not make sense. In Delhi, less than 10 per cent of the total subscriber base consists of DTH subscribers. Local cable operators have a better understanding of the market on the ground. Earlier, we would download free-to-air channels based on demand by the consumers. The new TRAI guidelines have made it illegal for us to download any free-to-air channels by ourselves, giving the MSO a larger hold on the business, Bhatia explained.
The basic service tier includes the 18 channels of Prasar Bharati, including regional channels such as DD Malayalam, DD Odiya and DD Punjabi. There is no uniform demand for all the regional channels in a particular area, he said.Problems in other metros
In Kolkata, there is a total demand of 30.6 lakh set-top boxes for a complete digital switchover, of which only 6.32 lakh have been made available until June 1. Despite the introduction of the CAS in 2006, only some pockets of south Kolkata, including New Alipore, Kidderpore, Behala, Mominpur and Maheshtala, switched over to digital TV.
Swapan Chowdhury, secretary of the Cable and Broadband Operators Welfare Association, an organisation of 700 associations of local cable operators in West Bengal, said, Given the low levels of penetration in Kolkata, a huge investment will be needed for a complete switchover to digital television. Only 30 per cent of the subscribers in Kolkata use set-top boxes at present. Does the government have a plan to subsidise the sale of set-top boxes for those who cannot afford it?
Roop Sharma also wonders whether it is necessary to import the equipment required for rapid digitisation. About one crore set-top boxes are needed for complete digitisation in the four metros. The equipment is being imported from China and Taiwan. Is this a national priority? Chowdhury said that he had raised the issue with the Principal Secretary of the West Bengal government in May.
In Chennai, the dominant players in the realm of cable TV include the state-owned Arasu Cable TV, revived by Chief Minister J. Jayalalithaa, and Sun Networks Sumanagali Cable Vision (SCV). Local cable operators allege that the political patronage enjoyed by these two has ensured that local cable operators are largely at their mercy in revenue sharing.
Speaking to Frontline, S.P.K. Goguldass, president of the Tamil Nadu Cable TV Service Providers Association, which comprises about 1,000 cable operators in Chennai, explained, Local cable operators are already dominated by the multi-system operator Arasu, which exercises a monopoly over the market. With the new TRAI guidelines and the move towards digitisation, its hold will only be strengthened. This monopoly needs to be broken and more local operators need to be given the licence from the Central government to become multi-system operators.
Of the 20 lakh set-top boxes required in Chennai, only 2.5 lakh were available until June.
Among the four metros, Mumbai has the highest percentage (38.46 per cent) of set-top box coverage. However, apart from pockets in south Mumbai, the majority of the areas continue to be non-CAS. Atul Saraf, general secretary of the Cable Operators Federation of India, said, The CAS system was introduced in Mumbai in 2007. The existing CAS system was good enough for the consumers. If someone is happy watching analogue TV, why would you want to push him to pay extra to install a set-top box, in addition to paying extra money for electricity consumption every month?Pushing for digitisation
Both DTH service providers and broadcasters are unhappy with the government for extending the deadline for digitisation. The DTH service providers had stepped forward aggressively with the announcement for a complete digital switchover.
In an official e-mail response to Frontline, Shashi Arora, the CEO of Bharti Media Airtel, said, India has over 126 million cable and DTH homes, of which paid DTH comprises 42 million homes. This means 84 million homes have cable or free-to-air connections. All these will have to get converted within the time frame. DTH operators like Airtel Digital TV are well organised in terms of carrying set-top-box inventory, distribution infrastructure and reach in urban/rural areas and are quick in installation at the time of new connection. The digitisation of cable network will hugely benefit the entire ecosystem and consumers will be the principal beneficiaries.
On being asked about his views on the delay, Arora said, Digitisation is an important and critical policy intervention to provide high-quality video content to customers. The delay in implementation is disappointing and expensive. As an organisation, we were fully geared up for the earlier deadline of June 30, 2012, with significant investments made already to facilitate seamless adoption of this technology. Having said that, we will continue to support the governments digitisation as it is in the best interests of our customers and we look forward to its successful implementation at the earliest.
Earlier, in May, Tata Sky had launched a major marketing campaign titled Drop cable, upgrade to Tata Sky. Following the postponement, Narayan Rao, the president of the News Broadcasters Association, expressed his disappointment to mediapersons: We are very disappointed with the change in the date. It was a law enacted and approved by Parliament, which was supposed to benefit citizens.
The delay in the deadline for digitisation is more of a knee-jerk reaction by the Ministry of Information and Broadcasting to its inability to resolve crucial differences between stakeholders. While broadcasters and DTH operators want the government to fast-track the process, local cable operators have asked for a further extension of the deadline so that they can gear up to meet the requirements of digitisation. It remains to be seen whether the introduction of the technology is done in a manner that creates a level playing field for all the stakeholders. A government-mandated imposition of technology, in this instance, will benefit only a privileged few and deprive a large section of the population of the benefits of inexpensive cable TV.