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HomeArticlesCol KK SharmaTime to Rethink the Policies
Wednesday, 04 March 2015 06:14

Time to Rethink the Policies

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There are lots of speculations in the market regarding success of DAS implementation. The ambitious process that started in January 2012 and was to be completed by December 2014, is not even 50% complete. Out of about 130 million households, only 30 million have been digitized till date. That too for the name sake, as only the STBs have been seeded and the digital processes meant to create transparency, choice to the consumers, financial benefits to all stake holders including the government and help increase the broadband penetration in the country, giving a boost to the National economy, are not even visible anywhere. Yet, the government likes to pat itself for its success. 

It is unfortunate that since most of the print media is also into television, no broadcaster even dares to carry any public reaction of the process, fearing a backlash since, except the major broadcasters no one has gained from the process. 

Most of the information made public project a very one sided view, in favour of the Broadcasters who stuff these newspapers and magazines with advertisements. Even research agencies never project the correct picture because their survival depends on sponsorships from these large broadcasters or their distribution agencies. The blame is always put on the smallest entity in the whole system that is the LCO. However, there is one truth, the public knows it all. One cannot befool the masses for a long time.  

Even the Regulator, TRAI knows that except seeding the boxes in a hurry, nothing has been achieved. It has been time and again, admonishing the MSOs and Broadcasters for not adhering to the timelines, regulations, not coming out with itemised, system generated billings and not signing interconnect agreement between stakeholders; yet it always writes in its communications that Phase-I and II have been successfully implemented. 

I feel it is time the government rethinks on the process and find remedies to rectify the faults, including review of some regulations and laws. Earlier time-lines and regulations were framed in a hypothetical way without going into the ground realities. I strongly believe that the process can be much faster if the stakeholders, without the assistance and interference of the government, devise a plan for everyone's benefit. Otherwise, except a few broadcasters, everyone including the small and regional broadcasters, LCOs, independent MSOs and the government will lose and overall, it may be a big loss to the Nation. To bring such a large change, all stakeholders should be prepared to lose something or the other in the beginning, giving all benefits to the consumer. This will create the real market for Digital services that in the long run will benefit all. 

Let me discuss some issues that have been brought up by Broadcasters and MSOs in various forums and interviews. 

According to them there are three reasons for the failure of digitisation. 

1.LCO/ LMOs unwilling to share revenue.

2.MSOs haven't focused enough on building processes and management of bandwidth.

3. Price control.

LCOs/ LMOs unwilling to share revenue.

I feel this is a very narrow minded approach, may be because broadcasters have not thought about the other stakeholders. They have to remember that to reach the million subscribers in the analogue market, they have to depend on thousands of cable operators and independent MSOs.  No National MSO or DTH can cover this huge area even in the next ten years. 

Broadcasters have always thought that they must get all the revenue from the subscribers and keep blaming the LCOs for leakage of 80% of their share in under-declaration. This is a fallacy created by the broadcasters who turned ‘Pay’ from FTA in the late nineties, in order to make LCOs pay more to them. They forget that they are operating in a country that has 70% population living in villages and is poor. I wonder from an ARPU of Rs 150, how much share they expect they should be given.

MSOs haven't focused enough on building processes and management of bandwidth.

As far as MSOs are concerned, the reason of their failure is their false projection to the government that within two to three years, they can undertake this large exercise of consolidating their networks using the LCO networks, that do not belong to them and without spending a single pie on upgrading the last mile network, make broadband signals reach the consumers with an offering of hundreds of TV channels and internet. Their perceived success lies in their thought that once consumers are forced to buy a set-top-box through a government mandate, all the market controls will shift in their favour and investors will come running to them with bags full of money. Infact, some of the National MSOs have managed to collect crores of rupees from the Indian Public through IPOs giving fictitious figures of millions of LCO connections as belonging to them. 

If one goes through the minutes of meetings of the Task Force, one would know that the MSOs are still struggling to lure some investors. Unfortunately, that is not happening as investors know well that MSOs do not own the last mile and it is not possible for them to either rebuild the last mile.

Price Control

Where is the price control?  Pay channels are free to charge whatever they feel like. MSOs can make packages of their choice. Out of the 823 registered channels in India, only 187 are pay channels. Only 90 can be accommodated in an analogue network. Collective cost of all pay channels that a consumer in analogue was getting for just Rs 150, is more than Rs 700.  How much of this ARPU should remain with the LCO and how much to be given to the broadcaster and the MSO? Broadcasters should start their calculations from here before they blame the LCOs.

TRAI has tried to make upper limits for the consumer price in  Non- DAS areas aligning it with the current ARPUs but that did not fare well with the Broadcasters who took the matter to court and managed to get a stay.

So let us not forget that not more than 25 % TV sets existing in the country can reproduce a digital quality picture. Also, majority of the consumers may not like to pay high fee for a digital picture and be satisfied with the analogue system, saving on money. Considering India’s disposable income, just 20 % subscribers, mostly in the urban areas may opt paying for pay channels. We have seen this result in Chennai when CAS was implemented in 2003. 

Also,  there is a requirement of making all cable networks broadband enabled, which requires infrastructural changes. Who  will fund that ? Thus, government  must realign all the policies to focus on the infrastructure rather than the content. When bandwidth is there, content distribution will be no problem.

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