Interview with Sashi Kumar.
Millions of television viewers in the four metropolitan cities await the implementation of the Conditional Access System (CAS) with fear of the unknown. CAS, which is being touted by the government as a mechanism to liberate viewers from the caprices of turf-grabbing cable TV operators, has instead, caused fears that viewers are being thrown to the wolves. The deadline for the first phase of implementing CAS is July 14. The issue of charges for channels, particularly the pay channels, is only one of the many concerns that consumers face. The price and the terms on which viewers will be able to install set top boxes (STBs) in order to view the pay channels, remains an imponderable. Many viewers wonder whether they will be able to view their favourite channels at all.
While these issues rankle viewers, other issues of greater significance have remained largely obscured in the rush to the deadline. Cable TV, which made its appearance in India in the early 1990s and quickly spread across the country, thanks to the enterprise of the local cable TV operator, is now a different kind of business. Its scale, and the presence of almost 100 channels, means that the small cable TV operator no longer calls the shots. Instead, Multi System Operators (MSOs), who act as distribution hubs, have acquired a clout which oftentimes extends to the political realm as well. Several of the bigger broadcasters have acquired a stake in MSOs, spelling vertical integration. Given this, the fear of the rise of oligopolies is very real.
Sashi Kumar, chairman of the Media Development Foundation, which runs the Chennai-based Asian College of Journalism, has been a familiar face on TV for over two decades, initially familiar to TV audiences as a news presenter on Doordarshan, well before cable TV arrived in India. During the mid-1980s, as chief producer he played a key role in the Press Trust of India's foray into the television medium. Prior to this, he had a stint in the print medium, being The Hindu's West Asia correspondent, based in Bahrain. In 1993, still the early days of the cable revolution in India, he promoted Asianet, one of the first regional language channels in the country. A film and media critic of repute, he has been a keen observer of the way the medium of television has unfolded in India.
Although Sashi Kumar believes that CAS is broadly a step in the right direction, he is critical of the Bharatiya Janata Party-led government pushing CAS in haste. He points out that the government is rushing CAS through with a view to draw dividends in the coming round of elections. CAS, as it is being implemented, is also likely to push the industry along oligopolistic lines. Sashi Kumar believes that the small cable TV operator who played an important role in the cable revolution in India is fading away, increasingly replaced by cartels of MSOs often acting hand in glove with broadcasting companies. He contests the notion that CAS will result in greater choice for viewers and save them from the tyranny of the cable TV operator. Instead, he points out that the viewers' choice of channels will be within a narrow range of options that will be decided in an arbitrary manner, which may well have adverse implications for Indian democracy. Excerpts from an hour-long interview he gave V. Sridhar:
How do you view the CAS in the context of the way TV, particularly cable TV, has grown as a medium in India in the past decade? How do you think CAS will unfold?
The evolution of cable TV has been a series of faits accomplis. The cable revolution in India was heralded by the small cable TV operators after the first Gulf war brought CNN into Indian homes. That small cable operator is now nowhere in the picture. By a slow process, through a series of aggrandisements, the small operator is now a part of a larger cable operator's business. He is lost somewhere in this whole scheme run by MSOs and cable TV operators. It is a pity of the way the cable revolution has happened in this country that during the last decade the small operator has been marginalised in the metropolises and big cities, which is where the bulk of the cabling is. So we are left with only the big players - some of them indigenous and some of them with links to multinationals. Some MSOs have channels of their own, implying an axis of sorts. We do not have any law against cross-media holdings in this country; in any case, even in the West, cross-media dispensations seem to be collapsing, as indicated by the recent dismantling of rules governing cross holding by the Federal Communications Commission (FCC) in the United States. So we have the big players, the sharks, who are trying to control cable operations in the country.
So, you see the MSO segment coalescing into the broadcasting end of the business by companies extending their reach across the two important segments of the industry?
Yes. There will be cross-media holdings, for example, Siticable (the cable network) and Star (the broadcaster). Zee is another example of a broadcaster extending operations into the MSO segment. These tie-ups indicate vertical integration in the industry.
But, while we are told that this is the way technology evolved in the West, and while it is true that this is a technological imperative in some sense, the point is that in all the developed countries the basic infrastructure was enabled or facilitated by the state. Maybe this was done in the private arena, but there were rules and legislation that put in place the enabling provisions, which facilitated the creation of the infrastructure, particularly the highways.
In India we do not have the highways for cables. Much of the optic fibre network laid by Bharat Sanchar Nigam Ltd. (BSNL) or private parties is being wasted. So, what do we see in the name of cabling? We see cables strung across trees or poles, and we do not know whether taxes are paid for using these. Cable operators use our terraces to station their equipment. It is a ramshackle operation, except that the operation is on a much larger scale than earlier. The situation is similar to placing tollgates without building a highway. The cart has been put before the horse. CAS and other sophisticated concepts are being talked about without the government having created or facilitated the building of a cable network. The channel for the `super highway' should have been created first. This would have enabled combining several utilities on a single cable system - for TV, electricity and other applications which require cabling. We had 15 to 20 years to do this, but we have not done it.
In Kerala, when I was with Asianet, we ran cables on electricity poles, running one metre below the wires carrying power. We thus created the super highway. If the State government thinks that the cable operation is becoming a Frankenstein's creature, it has the option to nullify the contract or, imposing conditionalities to protect consumers. In the case of CAS, I do not see the government being equipped to do this.
The CAS issue shows that the government has got a warped view of its priorities. I think CAS is actually a bit of a joke. To insist that we have to implement it here and now because, otherwise, we will miss the boat or lose out on bringing in new technology, is sheer nonsense. We do not have the STBs readily available. It is clear that we do not have enough STBs to cater to the needs of the four metropolises from July 15. What is this hurry about?
What is the government trying to achieve through CAS?
It is clear that the hurry to implement CAS is political. The cable TV operator is being wooed in a pre-election situation. This is because he will carry the must-carry Doordarshan channels or the other channels that carry the propaganda of the party in power. Moreover, he is being wooed because he carries election propaganda and video material for political parties in many States. Today, because people are so obsessed with TV, spending most of their time indoors, their participation in political rallies (particularly among the middle classes) is dwindling. In this situation, the cable TV operator's role becomes a crucial component of campaigning.
What impact will CAS have on the industry? Is CAS pushing the industry along oligopolistic lines?
The industry is really moving along oligopolistic lines - towards cartels and lobbies that operate on behalf of these cartels; lobbies have always been political appendages to cartels. TV is getting less and less diversified, and more and more homogenised, consolidated, and cartelised. That obviously means that the small cable TV operator is nowhere on the scene.
The small operators who are subscribing to the MSOs will find themselves acting as slaves to this technology. The CAS is technology-driven and technology-determined and, therefore, the person who is switching this system on and off in a room somewhere, literally calls the shots. An important implication of this is that the democratisation effect that the cable TV dispensation promised at one time (in terms of liberating us from the monopoly of Doordarshan) has actually swung the other way. On the one hand, we appear to have moved away, instead, to a kind of far more commercialised and commoditised situation in which oligopolies are dominant. That is far more dangerous than the mindless and senseless monopoly of Doordarshan.
However, on the other hand, CAS does seem to rationalise (at least on paper) the situation in which many viewers are asking: "Why should I be seeing 70 channels in 15 languages, 14 of which I do not understand anyway? Why cannot I just watch what I want? Why cannot I insulate me and my children from channels that I think are showing obscenity, and sex and violence?" So, CAS is supposed to enable us to pick and choose channels, apart from the bouquet of free channels. That makes sense to an extent, in terms of the "consumer is king" concept. But the problem is we do not know whether all of the channels will be available to viewers from all the cable operators. For instance, if I want to watch Kairali in Chennai, I will get it only on Hathway, not Sumangali. Will this change when the CAS dispensation comes into force? Will MSOs who are also associated with channels be even-handed in distributing rival channels? Will those pictures continue to be hazy and less clear than their own channels? Moreover, the subscriber cannot switch between MSOs, at least not without incurring an additional cost for the STB. These are moot points.
There are several other unanswered questions. Is it mandatory for the MSO to carry all channels? If so, what is the definition of `all'? Every channel which can be received on a dish in Indian territory - is that the definition? We do not even know the number of channels that we can get. What will happen to the regional channels in the four metros? Can someone in Chennai get an Oriya channel? Will that be free or will it be a pay channel? The government says that cable TV operators will have to provide 30 free-to-air (FTA) channels. Who is going to determine which of the channels will be aired free? Is it on the basis of the population mix in the cities? Or, is it to be determined on the basis of the population mix in the target group that the MSO or the cable TV operator is serving? I think there is far too much arbitrary power left in the hands of the MSO or the cable TV operator at this point in time.
Is it mandatory for MSOs to create a dish farm which will enable them, necessarily, to capture all satellite signals that are carried into the country? This means that the MSO must have a huge dish farm. Logically, only the big cartels and oligopolies can do this. The field is weighted towards the big players. Unfortunately, many of the finer details about these matters have not come into the public realm.
Many of the issues have not even been discussed. Why this hurry? Why July 14? I do not understand the logic. They (the government) should have gone through a learning process to begin with, discussed and debated the issues and then arrived at a decision on how to implement CAS. I am not saying that CAS should not be implemented. In fact, I think it is necessary in order to rationalise this market. But, first the highway should have been in place and the state should have had a direct or indirect role in creating the wherewithal for reaching the signals. Instead, the ongoing frenetic discussion and excitement is only on the issues related to the last mile, that is, from the cable TV operator to the TV viewer. How does the signal reach the `super highway'? That issue is not in the picture at all.
The government, you mentioned, is pushing CAS for political reasons. And, CAS, it appears from what you say, is pushing the industry along oligopolistic lines...
I think a cable operator-driven cartel (or a pressure group) seems to be prevailing at this point in time. Although there are the political reasons that I mentioned earlier, I think there is also the element of enlightened self-interest of the government. Doordarshan has been suffering for the last several years of cable operations because its signals are just about the worst in a cable bouquet. The government probably thinks CAS will rectify the situation and that the must-carry channels of Doordarshan will be clearer now. Doordarshan was always shunted to the S-band and did not get a decent distribution by channel operators.
The government, because of the greater transparency and accountability that is a feature of CAS, probably believes that it will be able to monitor so that this actually happens.
But the government also appears to have taken on some of the big broadcasters who have been critical of the government. For instance, some channels said strong things about the Government's role in Gujarat. If the government is not democratic-minded or liberal in terms of its information regime (in real terms, not as rhetoric), then it would try and restrict the scope for such channels. Once you have a gateway principle, which is what CAS is based on, you can put your guards, and you can monitor who is delivering what.
What does CAS have in store for broadcasters?Broadcasters are no saints. They have been remiss in the way they have gone about informing the public or advertisers about their reach. They have been bluffing, lying through their teeth. Their claims on the number of connections have always been exaggerated; they multiply the number of connections by five to arrive at viewership figures for their channels. They think advertisers are taken in by these figures. I do not think advertisers take the broadcasters' claims seriously. But in the absence of any other figures they hedge their bets and put their advertisements on each of the channels.
The segmentation of the market started happening even before CAS was on the agenda. Among advertisers, the logic that larger reach automatically means large revenues is no longer valid. Advertisers understand that there is no point in advertising a consumer durable or an item of conspicuous consumption on a medium with a long reach like Doordarshan; probably 90 per cent of the viewers cannot afford the item. It probably makes better sense to put the advertisement money into a niche channel (even a narrowcasting channel), which has a better reach among those with the purchasing power. This kind of segmentation has been taking place for some time; there has also been segmentation along linguistic lines; and, it has also happened in terms of rural and urban markets.
Broadcasters have tended to gloss over this when they sold themselves to advertisers, taking advantage of the confused scenario. This is the beginning of the end of that bluff regime and it will show up who is what. Therefore, broadcasters are a little wary about CAS, but one must see this as part of process if the government does go ahead with CAS.
The next step, we understand, is going to be DTH (Direct to Home), which is a swing in the other direction. That is meant to cater to the needs of a segmented market. DTH does in the air what CAS does on terra firma. It is a more sophisticated system but one which still has free-to-air and pay channels operating on a ku band transponder, which has been forbidden so far. Once DTH comes, the rich could afford it. There could even be pay-per-view and other sophisticated concepts which will come into play in a DTH regime.
I do not see why the government is in a hurry to introduce CAS. Perhaps the cable operators told the government, `Give us at least one or two years time, because DTH, which is likely to come soon, is sounding our death knell.' But that is not the way it has happened in the West; both cable and DTH coexist. Despite these fears the market in India is huge and constantly expanding. I do not think the cable and TV markets have been saturated and that there is no need for this paranoia.
How does CAS compare with the DTH option? It is reported that Star TV is aiming to go the DTH way while Zee has developed its reach through its MSO operations on the ground...
Zee is also planning to go the DTH way. It also has a licence and it has been given a letter of intent, and so have Star and Doordarshan. It is good that Doordarshan is getting into DTH. It is high time it started earning more revenues instead of doing charity for everyone. DTH will also be competitive, but operating in a rarefied atmosphere.
I think cable will continue to be relevant to the mass of viewers in the townships, the semi-urban and rural areas, apart from a good proportion of the lower end of urban viewers. Cable has deeply penetrated urban slums. For these people these changes will be very important.
Is this the end of the road for the small cable operator?
I think the small operator is gone. But I do not find myself weeping for them because the cable business has become a question of taking territory. There are big sharks in the picture now and they are moving in with huge investments. In the run-up to the process of acquiring territory, there is a lot of goondaism and mafia-like activity because these operators want to capture turf. This hectic activity of capturing turf has been fuelled by the out-of-the-blue July 14 deadline.
I also think the cable operation is increasingly operating in a sellers' market. Initially it was clearly a buyers' market because there was a demand for this service. Over time, there was increasing tension between buyers and sellers. Now it is becoming a sellers' market, in the sense that choices for consumers are only notional. I do not think it is practical for cable operators to be mandated to carry the signals of all the channels. Is the government going to say these are the 100 channels (30 FTA and 70 pay) that are mandatory? I do not see any such list forthcoming.
I was shocked by the large advertisement issued recently by the government (DAVP), which uses your and my money. It looks like an advertisement for which the cable operator should be paying. It even mentions cable operators by name, claiming that they have promised this and that, and that it is likely that the consumer will pay less. It is like a public interest ad issued by an MNC edible oil company which claims its product will prevent cardiac arrest... This ad is a bit like that, on behalf of the cable TV operators. It indicates a kind of complicit attitude in this whole issue.
It is said that CAS will result in lowering broadcasters' reliance on advertising revenue. Broadcasters claim that subscription rates in India are among the lowest in the world and that this is no more viable.
To be fair, it must be said that we in India pay far less for a cable regime with these numerical (I would not say in terms of variety) choices. But it is also true that India is an exception. I do not think there is a free sky regime anywhere in the neighbourhood - not in Singapore or Malaysia, which are highly regulated regimes. Except in Europe and America, nowhere do viewers get to see 60 to 70 channels. We cannot suggest mindlessly that we should go the way the West went in terms of determining whether the system should be ad-driven or subscription-driven. Our social conditions are different, our purchasing capacities are different, the cable penetration is uneven, there is multi-linguism, and the whole cultural situation is so different.
I think there is still tremendous scope for advertisements supporting the television dispensation because traditionally, the proportion of ad spend in the electronic media has been 60 per cent, the remaining going to print and other media. In India, it has been the other way around. Sixty per cent of ad spend is still on print, only 40 per cent (maybe going to 45 per cent now) is being spent on the electronic media. This difference of 10 to 15 percentage points still remains to be acquired by the electronic media. Obviously, there is far greater scope for advertising in TV. We are not talking about taking a piece of the existing cake alone; the cake itself is expanding. Therefore, there is no need to worry about subscription as a great source of revenue. This is why the big broadcasters have been careless about the numbers of connections that cable operators provide them. Now, I think, because of the number of channels, broadcasters see more competition within the segments.
One of the new developments in India is the arrival of the news channel as a viable economic entity. Conventional wisdom was that news is required to drive a channel, but that it cannot be sustained independently through ad revenues. But that is changing because of the law of diminishing returns operating on movies and teleserials. News, particularly live 24-hour news portrayed as drama, has itself become entertainment. News channels are thus viable profit centres. There have been many entrants in this field. Tomorrow there may be women's channels or even health or children or fashion, with many competing channels offering similarly focussed fare. When this kind of segmentation happens, it is necessary to bring in the subscription angle.
I do not agree that the primacy of the subscription channels - which is what you see in the cables in the West - is ipso facto relevant to us because the DTH regime already exists there. When DTH comes here the whole system will be in flux again because DTH can handle the segmentation. There is also the other aspect relating to value-driven services on cable, which we have not really examined. That could be the greatest subscription source. You could have telephony, Internet, voice mail, home security alarm systems, all of which are value-added services that cable operations at a technologically sophisticated level offer to consumers. What this means is that with the same installed capacity in terms of the cable network, the operator can get more by way of subscriptions. Therefore, the cabling network means establishing the infrastructure for all this to happen.
So, the issue is not just advertisement revenues as against small levels of subscription revenues as is being claimed by some. The operator is basically being given the turf on which he or she is going to become a bigger and bigger player. These players are also going to control much of the information and communication that is purveyed and exchanged in homes. The MSO is going to become the immediate information and communication technology (ICT) supervisor in some sense. This has serious implications in the next 5 to 10 years.
This also has implications for a functioning democracy...
Absolutely. I think some wise people in the government have noted this and have worked to bring in this regime. It is necessary, at some level, for the state to intervene or to facilitate, but for the right reasons. If it is done wrongly, it can hit the ruling party just as hard as it can hit those in the opposition today.
The single biggest worry about CAS is the rush. There is a shortage of set top boxes (STB). At least, they can be imported. Some time could have been given so that the STBs would have been in operation for a while in a free regime, by which time prices would have come down. People who are going to buy an STB today are going to look foolish five years later. We are also not clear as to how the cable operator is going to charge for the STB. There are many unresolved questions. These could have been resolved if there was time.
We are told that consumers have to articulate their grievances with an SDM (Sub-Divisional Magistrate) or a Commissioner of Police. Consumers are being asked to ask for more trouble. Imagine the police having to see whether you or the cable TV operator is right. TV watching is supposed to be a leisure time activity; instead, the system is going to be more intrusive and problematic.
How do you look at CAS in terms of the government's stated rationale that this is a consumer friendly measure? Subscription rates are expected to go up significantly. Do you think there could be a backlash from consumers?
Unfortunately, it is not a one-point agenda on which viewers can join together to fight. If I want to enlist support because I am not able to watch a particular channel, my neighbours may not be interested in seeing that channel. So, it is a very difficult organisational concept.
But could there be a backlash in terms of price? Consumers may say: "We do not want this at this price".
That is likely, but it depends on the way prices go. The government's thinking on this appears to be that the consumer may not end up paying more than Rs.200 a month for the FTA and a decent bouquet of pay channels. But I doubt this, although I do not think that prices will go up tremendously, unless the price of the pay channels is pitched high. However, it is not as if any of the channels are indispensable.
The CAS will put the onus of creating better brands - brands which the consumer cannot do without - on the channels. They can no longer get away by doing what the others are doing. Apart from small and cosmetic differences, all of them are doing the same thing. In reality, what happens is that if a viewer has missed a channel for a week, he or she stops missing it. It is a case of out of sight, out of mind. I would like to see how many of these channels want to become pay channels, and at what price. Some of them, surprisingly, may prefer to be in the FTA mode. They may not want to get exposed as channels with a narrow viewer base if they offer their fare as a pay channel; in the FTA mode they may still be able to get away with their claims of viewership. A pay channel can always shift back into the FTA mode, but that would be like getting its nose rubbed in the mud twice over. It may be better for a channel to remain FTA, then assess its prospects in the context of how the other pay channels are faring, and then launch it in pay mode. Each channel, I suppose, knows what its real viewership is, at least it has a very good approximation. CAS will give them an opportunity to do some real hard-nosed stock taking to decide whether they want to continue as FTA and derive the advantage of maximum advertising revenue, or try and introduce the pay concept and wait it out.
I would think that the MNCs, those like Murdoch's Star TV, will be willing to take the latter route because they always work on such long credit lines that they are willing to fund and fund and wait it out. They could also be the ones who would do the test ballooning in this case and create a culture of pay channels as well in India. Some of this carries social stigma, especially among the middle class, which is prone to this kind of behaviour. If I do not have a particular channel at home, it is interpreted as my unwillingness or inability to pay for it.
You talked about the move to an oligopolistic situation. What would be the elements of such an oligopoly?
Pricing is an obvious issue. It is likely that pay channels will join together and seek to protect their profits by agreeing on some kind of unified pricing. They could get together and decide that there should be no distress sale. At some level the business functions like a club. In terms of technology too we could expect oligopolistic behaviour. The MSOs could get together and decide as a cartel to get only a particular kind of STB, not necessarily the best. They could decide on an optimal level of technology which they consider good enough for the Indian market. This has always happened in India. In the name of appropriate technology consumers are short changed and inferior goods are passed on at a higher price.
Another important aspect of CAS relates to the quality of signals that is supplied by MSOs to viewers. Is there a way of testing signal quality? I would like the government and the state apparatus, which is now implementing CAS, to ensure that minimum levels of quality of signals are provided by the MSOs. There are parameters for colour, sound and quality of signals which can easily be monitored. Are these yardsticks going to be applied? The government has not put any deterrents to ensure that MSOs deliver quality service.
I think the script is being written by the oligopolies in the cable business; the government is merely mouthing that script. I do not think the government has even understood the issues independent of these players. We saw on TV a leading MSO repeatedly bailing out the Union Minister for Information and Broadcasting. In short, on CAS, the tail is wagging the dog.
