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White Paper on Cable TV
The cable and satellite industry came into existence in 1991 during the Gulf War. Later on with more channels being launched over the Indian space, viewers were provided a set of about five-six channels. For this they paid approximately Rs 25 to their neighbourhood boy who went on to become the cable operator. In 1994 two pay channels were launched at a nominal rate of Rs 5 each - i.e. Star Movies and Zee Cinema.
Today the cable operators show anything between 70-90 channels out of which 40 are pay channels.
Effective this month, the rates of pay channels are as follows:
Bouquet ChannelsEffective rate
aStar8Rs. 90
bSony6 + 2 (NDTV)Rs. 65
cZee Turner14Rs. 75
dESPN Star Sports2Rs. 39.70
eTen Sports1Rs. 32
fHallmark1Rs. 4.20
gNickelodeon1Rs. 3
hB4U Movies1Rs. 9
iVideo channels royalties2Rs. 27
jCable ops chargesRs. 100
TotalRs. 444.90
There are an estimated 52 million cable and satellite homes in the country, and out of this Delhi accounts for approximately 800,000 cable subscribers.
Pay channel broadcasters collect subscription money from MSO's every month. Those broadcasters carry out periodic increase in subscription numbers/connectivity and the bouquet rates every six month.
Every year, in January, they increased the price and in the middle of the year they increase the connectivity. Some broadcasters charge fees on a subscription base of approximately 1.8 million in Delhi out of total 800,000 cable homes.
The Information and Broadcasting (I & B) Ministry had recommended that pay channels be routed through a Conditional Access System (CAS) (implying use of a set-top boxes). Suitable amendments were incorporated in the Cable TV Regulation Act, which was approved by both the Houses of Parliament.
One of the provisions in the amendment to the Act was: if a cable operator does not encrypt the pay channels and delivers through STBs, he shall be liable to punishment under the Act, as a non-cognizable offence.
The basic issues being addressed by implementation of CAS were to streamline the pricing mechanism which was governed by the total number of cable and satellite homes declared to the broadcasters. Opinions showed, CAS would enable total transparency in this aspect and thereby enable the broadcasters to charge on the basis of the actual viewer ship and not arbitrary increase in the price, which ultimately hurts the end user.
With the increase in the number of channels every year, there is an added burden on the MSOs to upgrade the Cable TV Plant, thereby increasing the expenditure on capital.
The Cable and Satellite (C & S) industry in India has grown solely out of the efforts put in by the cable ops and the MSOs and has generated employment for thousands of people. All this has been achieved without any help from the government. Unlike other service sector industries this industry has never asked for any kind of help or protection in the form of subsidies/concessions from the government.
There is an urgent need to regulate this industry especially for the explicit purpose of keeping a check on the broadcasters, who keep hiking the prices.
For this 11-year-old broadcasting and cable distribution industry, there is only one Act - the Cable TV Regulation Act. This has led to a lot of litigations in the courts without any relief to the industry and consumers.
There is no bill pending in the Parliament to regulate this 15,000 Crore industry. This prevailing chaos may help the telecom and broadband industry to take over this business and the livelihood of approximately 500,000 families in the industry.
Under the CAS regime, if we take the case of Chennai - a total of 800,000 subscribers have successfully implemented CAS from September 2003. Today, the total monthly charges paid by the Chennai subscribers have gone down from 200 million to 820 million per month.
Earlier, in a pre-CAS scenario, Chennai cable subscribers were paying an average of Rs 250 per month to the cable operators, but in a post-CAS scenario, majority Chennai cable subscribers are paying only Rs 72 per month. Only 10,000 subscribers are paying Rs 200 per month. That means, the benefit of balance amount of nearly Rs 120 million (approximately) is ultimately getting passed on to the subscribers due to introduction of CAS.
CAS implementation in Mumbai and Kolkata - though legally on - has been deferred due to heavy lobbying by pay channel broadcasters.
In Delhi, the high court upheld the implementation of CAS in Zone-I (the entire South Delhi area). The MSOs, in strict compliance with the directive of the court, invested about Rs 5 billion to deploying best available technologies in the world for CAS implementation.
During the recent Assembly elections in Delhi, BJP party head Madan Lal Khurana though supported CAS as consumer friendly - was in fact instrumental in preventing it from being implemented.
CAS has got an in-built revenue generation model for the state and central governments by way of entertainment and service taxes, which would be beneficial to the exchequer.
Some of the media reports had miscommunicated that the technology deployed is an obsolete one and not up to the required standards. In fact, the equipment being used here is the same as that used elsewhere in the world. It has been approved by the Bureau of Indian Standards (BIS) is said to be amongst the best in the world.
There are talks of broadband technology being deployed. This technology has recently moved from the design boards of the laboratory and is under test. The broadband technology is also being tested by the existing MSOs and their affiliates. However, the perfection of the technology and its economic viability will take some time to become a reality.
Recently a senior BJP leader Vijay Kumar Malhotra told some newspaper that MSOs are exploiting the consumers - which are gross misrepresentation of facts.
The cable industry is deploying the boxes on a bare minimum rental with deposit scheme thus subsidising the cost. MSOs have not even factored the investments made in the master control room in the price of the boxes.
Presently about 4000-5000 STBs are being deployed in the CAS notified zone every day. Subscribers who wish to watch only 60-70 free to air channels will be required to pay only Rs 72 plus taxes although these rates do not meet the basic expenses of the cable operators.
aThose with TV but no cable connection. They simply watch Doordarshan channels by putting up an antenna for Rs 200.
bThose with black and white TV sets: they will be happy to watch only FTA channels.
cCable and satellite homes are only five-six percent. These viewers will take STB and rest of the subscribers will be happy to watch FTA channels. Most religious, music and news channels are FTA, anyway.
Deferring CAS will mean people who want to watch FTA channels for Rs 72 only, will be deprived and hence an anti-consumer move.
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