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India's Leading Source for Broadcasting & Broadband Information - CableQuest Magazine
HomeArticlesCol KK SharmaLet Thousand Flowers Bloom
Saturday, 10 January 2015 11:05

Let Thousand Flowers Bloom

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Three years have gone by and we do not see the end to gigantic task the government undertook to digitise the entire cable TV industry connecting 120 million household. Although initially, overambitious bureaucrats in the I&B Ministry as well as TRAI thought they could force an unorganized industry to embrace the new technology within two years, disregarding the massive expenditure it involves and the huge requirement of basic consumer equipment, STB, that were required, the deadline for the final switch-off of analogue signal has now been extended to 31 December 2016. These bureaucrats may go out of service much before the deadline, but I have my doubt if we can meet these new deadlines, particularly considering that the hastily framed regulations are stuck in the Courts, being challenged by various stake holders. On paper we have made digitization a huge success so far but the Industry knows the sufferings it will endure for many years.


A Year of Struggle for All

We have now entered 2015. This is the beginning of the fourth year of migration to digitalization in Cable TV Industry. The first two years of the process were merely trials of adopting to the new technology by the service providers, namely Broadcasters and MSOs and to some extent LCOs. The year 2014 was the year of struggle for the LCOs who all the time tried to adjust to the new system that threw many new challenges at them. It is only the last year that the LCOs knew what was in store for them when they started getting the gross billing from the MSOs including the arrears and were made to offer Packages of channels as per DAS regulations after completion of Phase- I and II cities and complete switch off of the analogue signal. LCOs were also engaged in making the consumers understand the meaning of packages, difference of pay channels and FTA channels and necessity of paying the taxes to the government. 


Computerised Billings have not yet Started

Due to lack of functioning of billing and SMS systems of the MSOs, a-la-Carte channels could not be delivered and fixed/ default packages were offered to them, keeping in mind the subscription charges being paid by them in the analogue regime. These default packages of the MSOs did not have many popular channels as the interconnect deals between Broadcasters and the MSOs were under dispute in the courts. Broadcaster demanded increased rates and MSOs wanted to continue till TRAI tariff orders and billing systems were implemented. All this awhile, consumers had no knowledge about their rights and that they could demand a-la- carte channels and make packages of their own choice, what the regulations stipulate. 


LCOs Protested Everywhere

Also, this was an year of protests by the LCOs because they were forced by the MSOs and the broadcasters to collect payments for complete bouquets of the broadcasters without giving choice to consumers. These subscription amounts were much higher than the analogue tariffs and consumers resisted paying them. The protests were made against MSOs as well as pay broadcasters. A very positive fall out of implementation of mandatory digitisation in Cable TV is that it has brought together LCOs in many states. In the initial stages LCOs thought the government was trying to organise their industry through digitalisation. It is only now, after about two years that they have realised the true nature of DAS regulations that have helped only the large players like the pay broadcasters, some National MSOs and DTH operators. The process has put LCOs business in jeopardy as it is not viable for them to digitalise small networks and joining an MSO means they are becoming subservient to an MSO who would control their subscribers, revenue as well as compete with them in the last mile. 


Year of Litigations

This was also a year of litigations as regulator TRAI and I&B Ministry were taken to courts against various rules and regulations and tariff orders by different stake holders.  So far, all regulations made by TRAI are under litigation and not being implemented. 

Even LCOs have gone to the courts against many regulations and Tariff Orders, but surprising that where the broadcasters managed to get the orders from the courts in their favour or managed a stay of the disturbing regulation, LCOs have hardly been given any relief. One wonders, why it happens like that; is it because of powerful and influential lawyers hired by the broadcasters or the Ministry and the regulator not opposing their petitions enough?

Sometimes it looks as if many things are manipulated. In the case of LCOs, the regulator and the MIB take shelter under the DAS law, enacted by the Parliament but in the case of broadcasters, even a rule of ad cap in Cable TV Rules is allowed to be violated endlessly for years. Similarly, DTH operators are violating the licence condition of STB interoperability and also running unregistered channels as platform services, without any regulations in place. 


A-La-Carte service Commenced

Another big change that happened in the last year was beginning of a-la-carte channels when STAR TV started providing its content only in a-la-carte mode under the RIO system. This is a positive move in the industry even though Star TV did this under pressure from TDSAT, in a case against Hathway MSO. The Tribunal made the broadcaster submit an affidavit that it would give the same offer to all MSOs without discrimination.  While giving this RIO based offer, Star TV has increased the rates of all channels and giving discount as an incentive only if the MSO selected one of their package, thus literally forcing MSOs to select most of its channels. Harassed MSOs are now offering the channels only on a-la-carte. This may ultimately benefit consumers in the long run, as once consumers select only a few channels of their choice to reduce their billing, many broadcasters will lose their viewership and will be forced to reduce the cost.  

Other pay broadcasters are in a fix whether to follow this system or provide bouquets to consumers. They still have a choice as they are not involved in this litigation. However, broadcasters will have to move to the a-la-carte system as once the consumers find it beneficial in the case of Star channels, they will demand for other channels too. This way they will be able to control their billings. DTH


DTH 

Players benefited a lot in the first two years of digitization when Cable TV industry was in a flux, migrating to a new technology.  But since the last year, they have again started losing connectivity. As per the latest TRAI data 44% of their connectivity is inactive. Although their ARPUs have improved a little by providing high priced HD channels, they are unable to hike the rates of their SD packages. Moreover, high cost of HD channels and value-added services like games and VOD are under the scanner of the Delhi High Court in a PIL and recommendations of TRAI on the subject of regulation of Platform services are yet to be accepted and implemented.


HITS

HITS has also not picked up, inspite of initial hype created by Jainhits. Even InCable HITS has not been launched yet as they are still to get their license. They expect to launch in early 2015 but it is doubtful if HITS really became successful in India, considering that Phase-III and IV have been delayed and most of the cable operators are trying to install their own digital headends as cost of equipment has come down drastically. 


Deadlines for Phase III & IV Extended

The last day for registration of DAS MSOs for Phase III and IV may also be extended in view of LCOs having gone to Court against it. The networks in the rest of India are also not a lucrative target for the large companies, being very small and far flung. Consolidation will be difficult task apart from being costly. It will also be very time consuming as fresh fiber will have to be laid. The problem is similar to what the telecom industry is facing to increase the broadband penetration in these areas.


Now time for LCOs to take over Phase III & IV

Considering the wide spread and low density of Phase III & IV areas, it is not possible to meet the deadlines by the large MSOs. Even DTH operators, who are working in these areas for many years, have not succeeded in getting a good market. Lower Demand of pay channels will also discourage large players who thrive only on the support of Pay Channels. Thus, LCOs must come forward to fillup this gap and maintain their livelihood.  Hence the government must encourage more and more LCOs to start their digital networks in these areas, either individually or making co-operatives. Focus should be in bringing maximum number of LCOs for registration, making the procedures simple. This is where we have to follow the great Chinese leader, Mao Zedong who wanted to ‘let thousand flowers bloom’ in China to start the progress in the country.   

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