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HomeArticlesRoop SharmaEconomic Survey is not the Right Picture
Tuesday, 12 August 2014 05:16

Economic Survey is not the Right Picture

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While tablin the Economic Survey 2013-14 in the Lok Sabha on 9 July 2014, the Finance Minister Sh Arun Jaitley stated that both the centre and the state governments will benefit fr0m digitisation of the cable TV industry in India because of increase in tax collections. The Survey reports that preliminary data fr0m the state governments show that there is already two to three fold increase in entertainment tax collections. 

To our surprise, the Economic Survey on impact of Digitisation has taken the input fr0m FICCI KPMG report presented in FICCI Frames, an annual event of FICCI held in March this year. Since it was a sponsored event, the report was not an Independent survey that should have been conducted by the government for the true picture of Mandatory Digitisation.

This report fr0m FICCI generally is based upon the inputs fr0m a few large media groups and does not take into account the ground realities. These large media groups who can afford to be the members of industry organizations like FICCI, CII, ASSOCHAM etc. use such reports to get investments and create large monopolies in the market. 

It is unfortunate that even the Ministry does not have an independent statistics of its own to assess the success of mandatory digitization of cable TV, although on paper the Ministry has already declared its grand success in the first two phases of the process. Ministry also depends on the inputs fr0m FICCI and such like organizations who lobby for the rich broadcasters. 

In any case increase in Tax collection was not the main aim of digitisation. The Ministry is very much aware that the industry is highly fragmented with the last mile of hundred million homes controlled by thousands of Cable Operators who may not come under the ambit of service tax, being very small entities. A forced consolidation is not the answer. It was better if this would have been left to the market forces and digitisation and encouraged giving incentives like TRAI had recommended in its recommendations dated 05 Aug 2010. Also, to usher in broadband services, incentives could have been given to all those networks who are providing the broadband services. 

At present, Ministry has opened up many battle fields in the industry; between MSO and LCOs, between Broadcasters and MSO between consumers and the LCOs. This is a long drawn battle of fundamental rights and livelihood for the people employed in the industry and likely to go on for a long time, giving benefit to none. If left to market forces consolidation would have occurred in a more natural way and consumers would have adopted the new technologies painlessly like they have done in the mobile industry where people are increasingly adopting the new technologies for 3G and 4G as per their growing needs and affordability, and the older technology of 2G still dominates.

In reply to many questions that we have posed to the Ministry in an RTI application, Ministry has taken the shelter of the statement that the matter belongs to the TRAI. For the industry Ministry and TRAI are the government and cannot isolate them just to avoid their responsibility, blaming the other. All regulations made by TRAI are based on references fr0m the Ministry and even the recommendations are implemented after they are approved by the Ministry and notified. In any case, everything is being done, based on Cable TV amendment Act drafted and introduced by the Ministry in 2011. 

As far as tariff fixing for DAS areas is concerned, TRAI’s primary responsibility was to fix the tariff for different platform services to carry the content. This could have been ensured for the service operators to make their operations economically viable in the current scenario and left the content costs to market forces. Only caring for the content costs will be doing the same mistake that the I&B Ministry is doing; ensuring all TV channels reach the consumers whether the content carrying networks are capable or not, keeping in mind the laid down standards.    

We also wish to submit that Law based on faulty presumptions will never succeed in its aim and should be modified/ amended for the good of the masses. Even CAS was deferred with the excuse that public perception is against it,  when the public had never even experienced its implementation. On the other hand, in the case of DAS even after two and a half year of implementation no one has tried to assess the public perception. It is evident fr0m the fact that both TRAI and Ministry rely on manipulated statistics of Pay Broadcasters, MSOs and their associations or industry associations patronised by them. Also, news of numerous protests by the LCOs and reactions of the consumers never became the subject of any news or discussion on the television channels and in the print media, majority of which is controlled by the same media groups who would benefit the most fr0m mandatory digitisation. 

Some of the points worth considering are:-

1. Data of DTH (already digital since 2003 and is a competitor to cable TV) connections was also taken into consideration while calculating the STBs seeding when the law was meant only for cable TV.

2. DTH figures were included to hide the teething problems during the initial stages of mandatory digitization and to show successful implementation within the impractical deadlines.

3. Many small cable operators suffered heavy losses due to hurriedly implemented mandatory digitization, losing their subscribers to DTH operators, which is contrary to the spirit of government mandate.

4.To our knowledge Tax figures reflected in the FICCI report and as presented in CASBAA Summit by the Jt. Secy. were the outstanding amount on paper and not as actually collected by the states. Even the Ministry does not have this data fr0m the states. 

5. Many court cases are going on between the MSOs and state governments and between MSOs and LCOs regarding tax collection. The projected collection is based on number of STBs whereas earlier, tax was collected per household. Thus now a multi-TV household pays much more Tax than before. 

6. Most of the small cable networks did not come under the ambit of Service TAX where as now their business has been handed over to the large MSOs who have to pay the service tax and demand the same fr0m the LCOs. 

7. It is still difficult for the LCOs to collect the inflated subscriptions and multiple taxes fr0m the subscribers as subscribers have not come to terms for paying two to three times more subscription every month.

8. No VAT has been paid by the MSOs to the state governments in the seeding of STBs worth 3 Crores, violating the TRAI regulations; all MSOs have given the STBs on activation fee and not sold/ rented them to subscribers. 

The reality is that Digitisation was done in Public Interest but the Ministry has failed to achieve the goal as promised in the Parliament. Collecting Tax was never the aim of digitization. You may carry out a survey with employees in the Ministry office itself to ascertain the following fact to assess what has the government given to the people who have been forced to give heavy tax to fill government coffers:-

(a)Consumers are not aware that they can create their own Basic FTA package of 100 channels in Rs 100/- out of more than 600 FTA channels.

(b)Consumers have not been made aware that they can opt for basic package and a few a-la-carte channels in Rs 150/-.

(c)Consumers do not know that Rs 800/ to Rs 1200/- paid by them to MSOs for STB is not the subsidised price of the STB as promulgated by the Ministry officials, but activation fee which is illegal as per TRAI regulation on the subject. 

(d)MSO packages are forced on consumers in one way or the other without giving them the benefit of controlling their subscription based payment for only what they watch. 

(e)Only 25% flat TVs are existing in India that may display the good quality picture and sound of Digital Cable signal. All others are old CRT type TV sets and even B&W sets. Some of these sets do not even have A/ V input and thus incapable of receiving digital signal fr0m the poor quality STBs that do not have the RF output. Thus Poor consumers are forced to spend additional amount to receive digital A/V signal of STB. Government in its budget has given duty exemption to CRT TV sets manufactured in India but as stated above, they are unable to offer advantage of digital signal where as these poor consumers will pay the same amount of Subscription and tax as a rich household enjoying Digital quality on an LCD flat screen. 

In conclusion we wish to submit that  the poor and low income group subscribers  will suffer the most fr0m mandatory digitization which contradicts the very purpose of making available affordable information, education and entertainment to the masses.

It is also snatching away the business of thousands of small cable operators who earned their livelihood fr0m providing FTA channels including Doordarshan and a few selected pay channels at extremely low rates making their whole families work in the network. 

We therefore, request to relook the implementation process before the whole media industry is grabbed by a few large media groups making even the government their slave. Influence of these channels on public mind was very clearly visible during the loksabha elections recently. A very marked example is that not even a single news and current affairs channel has broadcast any programme or discussion on the impact of mandatory digitization and its acceptance by the masses till date. Even all news of any adverse reaction fr0m public or concerning problems of LCOs/ LMOs is being blocked since last three years.

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