[icernet] India adds to cable television confusion

[Arul Selvan]

In mid-December last year, when the Indian government approved the Cable 
Networks (Regulation) Amendment Bill 2002, it was touted as a harbinger 
of harmony to the chaos that prevails in the television distribution and 
broadcasting sector in India.

The bill paved the way for the introduction of a "conditional access 
system" (CAS) for the distribution and broadcast of TV content, which in 
simple terms means that instead of paying for blanket channels, the 
viewer can choose, through a "set-top" box, which channels are wanted, 
and pay only for those. This will be in addition to a fixed amount of 
US$1.5 that viewers would have to pay each month for a clutch (a minimum 
of 30) free-to-air channels. This system will be introduced initially in 
Mumbai, Delhi, Chennai and Kolkata.

When the policy was announced, the first reactions were positive, from 
the multi-system cable operators who distribute TV channels to cable 
operators, who in turn distribute to millions of homes across the 
country, to TV broadcasters who would know exactly how many people were 
watching their channels and would be able to charge them accordingly, to 
TV viewers.

But now, with the four cities just over month away from switching over 
to CAS, chaos and uncertainty rule supreme.

To understand how CAS is meant to bring order to the sector, it is 
important to understand the peculiar functioning of the TV, particularly 
cable and satellite, market in India. Industry estimates put the total 
number of TV households in India at about 85 million. About 60 percent 
of these depend on (un)friendly neighborhood cable operators to bring 
channels to their homes - the rest are catered for directly by 
multi-system operators.

During the Gulf War of the early 1990s Indians were first exposed to 
satellite TV when a few enterprising cable operators started 
distributing CNN to affluent neighborhoods in Mumbai and Delhi. A couple 
of years later, when the satellite Asiasat, launched by Hong Kong-based 
Asia Satellite Telecommunications, Asia's first privately-owned regional 
satellite operator, became available for broadcasting TV channels to 
India, a few consumer-savvy channels, mostly foreign-owned, like Rupert 
Murdoch-owned Star TV, Zee TV - in which Murdoch also has a stake - the 
BBC and MTV emerged to beam TV content to Indian homes. A few more local 
language channels soon followed. Suddenly, most homes in larger Indian 
cities had a cable operator in their neighborhood stringing coaxial 
cables across their rooftops.

In the absence of any regulatory laws, local goons, petty politicians 
and smart entrepreneurs joined in the free-for-all cable operating 
business. For about $2 a month, an Indian home could receive a dozen or 
so channels, including a movie channel running pirated videos of the 
latest Indian films. This unfettered growth created one of the largest 
cable markets in the world. Low-tech, homegrown cable operators became 
as ubiquitous as the local grocer.

The mid-1990s saw the first consolidation. The Cable TV Act was 
promulgated in 1995, which saw the emergence of six multi-service 
operators, all owned by large and influential businessmen. These 
operators took the "last mile" operator as a franchisee and upgraded 
networks to offer up to 100 channels, which were distributed through a 
network of over 50,000 cable operators. On the ground, however, nothing 
much changed. While many channels became pay channels and cables passed 
millions of homes, piracy continued. There were constant turf battles 
between cable operators in which some people were even killed. And 
worst, despite the array of channels, the consumer hardly had a choice. 
Whatever the cable operators offered and charged was what a TV viewer 
had to gulp. And since there were no laws or system to control the cable 
operators, there was a rampant under-declaration of the TV viewership. 
This was because TV broadcasters charged multi-service operators, who in 
turn charged the cable operators on the basis of connected homes. No pay 
channel, therefore, has a declared subscriber base of more than 10 
million as of date.

Amid all this chaos, the government thought that the time had come for a 
regulatory framework, not only to curb piracy but to protect consumers 
from paying for what they did not watch and to ensure that broadcasters, 
too, get their due share.

But the simple-law CAS is proving to be no match for the highly 
unorganized cable and satellite market where the rule of the jungle 
prevails.

Critics say that the government wanted to put an end to the 
broadcaster-cable operator dispute over subscriber numbers. And therein 
lies the problem: Although broadcasters should be happy, most of them 
that have now to serve as pay channels are scared. STAR TV's head 
honcho, James Murdoch, says that "CAS is not a magic bullet that will 
solve the problem of under-declaration".

Channels like STAR and Sony, which have been consistent toppers in the 
TV (viewership) ratings for years, fear that forcing their viewers to 
pay for viewing channels and for set-top boxes that could cost between 
$80 to $150 a piece, would cause an unnecessary burden on viewers, 
resulting in a drastic fall in subscription. And lower subscription 
means even lower advertising revenues. That's not all. Broadcasters like 
STAR, which want to be players in the yet-to-be introduced 
direct-to-home (DTH) broadcasting - where broadcasters can beam channels 
directly to homes through satellite and another types of set-top-boxes - 
fear that if CAS is implemented now, DTH will find very few subscribers 
willing to spend again in additional set-top boxes.

As with the broadcasters, CAS should ease the woes of the cable 
operators. But they, too, say that they have to handle the toughest part 
of the CAS rollout. "First, we will have to sell the idea, make the 
initial investments in the set top boxes that will be sold to viewers as 
well as spend on software at our end," say officials of the Mumbai-based 
Cable Operators and Distribution Association. "Moreover, CAS will help 
pay channels to increase their rates at the cost of cable operators. CAS 
could destroy over 20,000 families in Mumbai alone that depend on the 
cable industry."

Multi-service operators and set-top-box sellers are the only ones not 
complaining. Critics say that's because they get, at the TV viewers' 
expense, control over India's 42 million cable homes - in four cities. 
It is a control that will make them very profitable, increase valuations 
for their businesses and help them expand and stabilize revenues. As an 
added bonus, there will be transparency: one of the reasons why many 
international cable companies have not yet touched India. "Even if we 
get 30 percent penetration, we make more money," said Sunil Khanna of 
multi-service operator Zee-Turner.

And ironically, the biggest losers would be the TV viewers themselves. 
"The debate over the conditional access system is meaningless," say 
officials of the Consumers Guidance Society of India. "There should be 
no debate at all. It's pretty clear that CAS, in its current avatar, 
benefits nobody - not the broadcaster, not the cable operator and 
definitely not the viewer. If the government sticks to its July 14 
deadline of CAS compliance, it will go against all conventional 
principles of governance where legislation is meant to benefit the 
greatest number of people."

Indeed, under the present CAS formula, although a TV viewer pays more 
for every extra channel, some basic benefits, like movies on demand, 
don't come with it because the technology currently used by cable 
operators and multi-service operators doesn't allow much of tweaking. 
Again, one gets to exercise some choice over viewing of channels, but 
that is already present today to some extent by paying a little extra to 
cable operators. Does the quality of broadcasting improve? No, it 
doesn't. So, for the extra money that one has to shell out, one gets 
virtually nothing in return.

However, in spite of what many called a "half-baked" cable networks 
bill, some feel that CAS is a welcome step. "After a choppy six months 
of confusion and uncertainty, the cable and satellite industry should 
see reasonable growth," predicts Amit Khanna.

Most others, though, can only keep their fingers crossed.

Source:
http://www.atimes.com/atimes/South_Asia/EF12Df02.html