The issue has assumed enlarged dimensions especially in the backdrop of government announcement that all the concessions and incentives available to infrastructure sector companies will be given to those operating in the telecom sector. The issue of assign ability of telecom licenses has also been resolved by a tripartite agreement among Department of Telecommuni-cation, Licensee and the lending institutions who fund the project. The rules also provide for the transfer of license to the third party should there be any default in the payment to financial institution funding the project. However, this would be done only by taking the advise from the DoT. Conforming to the clause of force majeure, private operator would not be liable to pay any penalty to DoT, if they fail to abide by the promises on account of natural calamities.
The new rules also provide for a more flexible borrowing pattern for the telecom projects as the limit for external commercial borrowings (ECB) has been raised from existing level of 35 % to half of the total ‘project cost. Adorning the infrastructure status would also help domestic telecom projects in gaining entitlement for a five-year tax holiday within 12 years of commencement of operations. For the balance number of years within the 12-year period, the projects stand to benefit from a 30 % tax exemption.l Operator go ll Video Library Way? Yes, he would if the Broadcast Bill is approved in its present form. If the bill goes through then the country will be carved up into territories just like the way it has been for the telecom circles. In such a scenario, the small cable operators could well be edged out, as the license fee would leap into crores of rupees. Operators are undergoing a sense of deja vu, as in a not very dissimilar fashion; the Cable TV Regulations Act of 1995 also paved the way for multinationals like Hindujas and Siticable entered the market at the cost of small players. Also proposed in the legislation is draconian fine structure for offences that one could be forgiven for thinking that running a small cable operation is akin to drug trafficking! While import duty .on SKD has been reduced from 35 per cent to 30 per cent, import duty on finished products has been brought down from earlier level of 50 per cent to 40 per cent. This has placed local assemblers, who used to import in SKD stage, in a tight spot. According to new regulations, the differential between import of finished and unfinished has been reduced from 15 per cent in the last year to 10 per cent. This will force the local assemblers to trim their margins for competing with finished imported product.
To discourage the gray market operators, a massive reduction in import duties from 50 per cent to 30 per cent has been envisaged for cellular phones and pager sets. If passed on fully to the customers, it may lower the price of these equipments upto 15 per cent. The provision that unlisted companies can approach fills for funding purposes, would boost the prospects of private cellular operators.
Some of the surest winners from these announcement is public sector companies Videsh Sanchar Nigam Ltd. (VSNL) and Mahanagar Telephone Nigam Ltd. (MTNL). Though, most of the capital expansion projects under-taken by the telecom major MTNL are expected to be old ones, still it may claim tax rebates under five-year tax holiday scheme as is being granted in the case of power companies. Among the private sector players, which are listed on the stock exchange, companies like Bharti Telecom and Max India would gain on account of their large holdings in the subsidiaries operating in the telecom sector.
Ramifications of the Broadcast Bill
On the lines of recommendations made by Rakesh Mohan Committee under The India Infrastructure Report’ the current year budget has sought to make a headway into creation of a transparent regulatory framework. This will subsequently help in stepping up foreign debt and equity financing of the sector as in the past, vague and slippery rules governing the sector have often been decried off by the investing agencies. As for the cable industry, the suspense still continues.
In recent history, no other business visitor to India has attracted more attention than the whistle-stop tour of the world’s richest man -Bill Gates. Our country’s corporate titans hung onto every word of his, drinking it in like gospel truths, with emotion bordering mass hysteria. If one had to express his entire presentations in a single word - then it is CONVERGENCE. The theme for the future is that it there will be just one cable entering every home. And this solitary wire would carry just about everything under the sun, and probably the moon as well, covering satellite television, video teleconferencing, Internet access, teletext, teleshopping, interactive TV etc.
ic case of convergence would be the World Wide Web, which already has 85 million users worldwide. This number is growing in geometric proportions and is expected to cross 200 million by the turn of the century. However, India barely has half a lakh Internet users. Even after three years, this number is expected to he just two or three lakhs, which would hardly allow India, make any dent on the world’s Internet map. Technology has now made it possible for the Internet to be accessed through a cable operator with a simple cable modem. So if India is to have any chance of catching up in the great Internet race, then a super start could be provided by the promise of the entire cable and satellite population of 18 million suddenly having access to the Internet. This move could make India home to the world’s second largest base of Internet users.
Cable networks also provide a great advantage in being able to transmit band with-hungry items like video as Internet has swung (lie demand in favour of real high-speed, high-volume telecom pipelines. Several technologies are jostling with each other, with the cable networks showing that they could prove to be the proverbial dark horse.
Proving un equal to the crippling demands for video transmission, the regular dowdy old telephone that we are familiar with has earned an un enchanting sobriquet, ‘POTS’- short for ‘Plain old telephone service’. But it should be immediately realised that the existing physical infrastructure does have the potential for being modified into a cavernous pipeline, that can be used to transport huge iceberg-sized data that video demands. The original design for a telephone system allocated the lowest 4 KHz of the available spectrum on twisted-pair wiring for voice calls. Higher-bandwidth services that are being launched now using the same wires coexist with traditional services by using higher frequencies. Other options are also being tried. In the much the same way that DSL has uncovered deadly
Against such a backdrop of swiftly changing technologies, the Broadcast Bill could well end up being a Rip Van Winkle if does not adequately provide for the future technologies. Besides, India’s peculiar requirements have time and again shown that one cannot simply transplant a highly capital-intensive technology with the hope that it is the best solution for India just because it has succeeded abroad. What is needed here is a holistic approach that takes into account questions of employment and egalitarianism. Such is the dilemma faced in the context of, for instance, the small cable operators’ operation, which already provides employment to twelve lakh people.
Most of these operators are a very amorphous lot, scattered all across the country with little cohesiveness in their efforts. Although most lack formal training, most of them have a lot of pluck and native entrepreneurial spirit. Because of lack of geographical proximity and being, by definition, largely away from the metros, they have not been able to drum up support from lobbies in the Parliament, as has been possible for the big operators with their money muscle and comfortable perches in the nation’s capital. The less educated cable operators are little match for the polished business savvy of the business operators, lots of whom enjoy overseas backing. Notwithstanding these odds, certain valiant cable operators are banding them together, to put up their demands with a single voice. Prominent in this league are the Cable Operators Action Committee and Cable Networks Association. This time the government has managed to something really difficult - displease virtually everyone who would have anything to do with the Prasar Bharati Bill. Generally, in Bills such as these, there are always those who are benefited and come away looking happy. Not so this time, where virtually all seem to be turning detractors, whether the players are big or small, domestic or foreign, sky-borne operators or ground-borne operators. But on the whole, it is the small and domestic players who seem to be the worst off.
All Unquiet on the Western Front
But opposition is coming from not just the small end of the business but also from biggies from international entertainment and electronics business. Charges of covert attempts to introduce restrictive trade practices in the new broadcast bill are now being flung at the Deve Gowda government. In a recent meeting attended by the heads of General Electric, Sony, Disney and Rupert Murdoch, they felt that their business prospects would be adversely affected. The luminaries are taken aback by what they perceive as a marked shift in the position adopted by the Indian Prime Minister at Davos and have sent him their views also stating their intention of wanting to see him.
Potential in the standard POTS networks, the friendly neighborhood cable TV network is now being harnessed to deliver fast data-access services. After successful testing of cable modems throughout the United States and Europe, the first of the projects have already been commissioned. While video data still goes to all the cable subscribers connected to the loop, the modern filters out the information addressed to a particular subscriber. This establishes a virtual point-to-point connection, albeit in a single direction.< br>
An example of how cable companies can turn their CATV networks into video links for corporate customers is Motorola’s CableComm, a turnkey solution for implementing video CATV services. The package includes modems and subscriber access software. The necessary cable router that installs at the head-end interfaces with a hybrid fiber-coax (HFC) distribution network to local or remote IP networks. One channel takes up 6-MHz of downstream bandwidth, in the range of 65 to 750 MHz. The cable router manages all the modems in the system and prompts them to shift to alternate channels. Each downstream channel provides a 30-Mbps raw data rate, with 768 Kbps upstream. Since all traffic passes all the premises that are connected to the network segment, the system encrypts messages with shared private keys unique to each modem. A force multiplier can come in the form of fibre-optic lines when they combine with CATV’s coaxial networks. It is well known that a single fiber can transmit up to 30 terabits per second that is the equivalent of a mind-boggling 450 million simultaneous phone conversations with digital quality. A highly expensive proposition, HFC is a combination of fiber-optic trunk lines, which bring the data over long distances, and coaxial cable networks, which provide the local-loop links.
As of now, cable companies in the US and Canada have been able to add on Internet-compatibility. It should not be long before some of the more astute cable operators in India follow suit.
It is reported that the Prime Minister’s Office has taken careful stock of the note and circulated it to various Ministries. It is further reported that RAW and IB have defended their earlier stand saying that their suggested uplink system is much on lines found in countries like US, Malaysia and Singapore. They have refused to reconsider their earlier suggestions regarding uplinking in the Broadcast Bill.
It is pertinent to note that the committee of secretaries has suggested that the law must specifically make uplinking from India mandatory for all broadcasters. This committee had been set up to propose changes in the Broadcast bill to the Union Cabinet. Part of suggestions were to require foreign satellite channels targetting India to downlink their programs through a station in India where it will screened. Subsequently, the signal would be again uplinked through a government-owned or rented satellite before once again down linking for the final distribution. This roundabout route is not finding favour with international majors.
The foreigners are also unhappy about the structure and functions of the Broadcast Authority of India. It is therefore only for the better that the committee of secretaries has sought to redress the present imbalance by recommending the inclusion of a journalist as a full-time member as well as include more part-time members as well as a full-time chairman, vice-chairman, secretary general and three or four ex-officio members. The idea is to have experts and industry figures in the board. Surprisingly, the foreigners are not so upset probably this pragmatism in approach has come because this limit is often far stricter in foreign countries. For instance, the US has a twenty five percent cap on foreign holdings. While the global giants are very keen to get into India in a big way, there is a strong possibility that this keenness will not translate into investment if the Broadcast Bill is passed without any changes.
Rumblings from among the Ministries
Not content with enough problems that it already has with telecom privatisation in the country, the latest of which being the usurious landline to cellular tariff, the Department of Telecom is feeling greatly left out of the action on the Broadcasting Bill. The Department has questioned the very lack of a basic definition of the word broadcasting in the cabinet note, adding that the Information & Broadcasting Ministry should check with DoT on various points before moving to finalise the bill. Defining in accordance with the International Radio Regulations, DoT has defined broadcasting as a radio communication service, in which the transmissions are intended for direct reception by the public.
DoT has also pointed out the technical difficulties in implementing the ‘unauthorising’ of a foreign satellite channel that does not acquire a license from the Broadcast Authority. The I&B Ministry plans to go ahead regardless saying that they do not envisage any technical difficulties in implementing this provision, adding that in any case, the provision has to be there and should not be deleted just because there may be some difficulties in its actual operation.
The Department of Telecom has also added that the Broadcast Authority should take the consent of the wireless adviser to government of India, before authorising the reception of the signals of any foreign channel under certain terms and conditions including annual payment of authorisation fee as may be determined by the Broadcast Authority. This observation has found concurrence from the I&B Ministry as these are subject to provisos of international agreements and such an authorisation shall not mean relaxation of technical parameters of the satellite networks.
Media observers feel that that a far better option would be to control dowlinking, as practiced in Singapore and other foreign countries. This would be quite enough to enable meeting the real objective of regulating foreign television channels, which is to have a check on programming content.