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HomeArticlesRoop SharmaDigitisation Phase III & IV - Moving Forward
Wednesday, 04 March 2015 06:28

Digitisation Phase III & IV - Moving Forward

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Whatever may be said by the Ministry or TRAI in their statements to the media about the success of digitisation, it has been a failure so far, as even after three years, no benefits to consumers are visible. No broadcaster has dared to make a programme, public debate or discussion on the subject involving consumers. Fearing backlash from consumers, even the last UPA government had strictly prohibited the print media to report any unfavourable reactions to the mandatory implementation. Two years time is not at all adequate to bring such a large scale change, affecting 120 million households where 70% are from poor or lower income groups. Also, STBs are not manufactured in India and we cannot depend on international suppliers in a given time frame. Also, there is no check on quality of imported STBs or even quality of service. 

What we have achieved is a further increase in monopoly of one or two players who already enjoyed vertical monopoly even before the implementation started. TRAI has already given recommendation against these monopolies but the Ministry is yet to accept them. Now ball is in the new government’s court. 

Phase I and II are over according to government and deadlines for Phase III and IV have been extended to 2016 because the new government thinks that STB must be indigenously manufactured. Neither TRAI nor MIB is thinking of the poor consumers and are not even talking of introspecting what has gone wrong till now and how can that be rectified. 

Consumers are not even aware what is FTA, Pay channel, a-la-carte, bouquets, basic package etc. They still get channels full of disturbing advertisements, poor signals, poor quality STBs with no repair or replacement facility, no interoperability, non-availability of STBs in open market. They are being charged activation fee, inspite of TRAI declaring it illegal. 

To add to the woes of millions of consumers, TRAI has issued a new Tariff Order for the Non-DAS areas that cover more than 70% of the market. Majority of the population is in villages and semi-urban areas where cable operators are operating very small networks, providing only a few channels (20-50). Only in towns, there may be some MSOs extending their services with 80-100 channels. There is also not much demand of so called ‘Pay’ channels as cultural values and languages are very different in these regions.  

Thus, it is very important to keep in mind that apart from aspect of affordability of the cable TV services to these subscribers, TRAI must make them aware of the ‘Pay’ Channels and the new digital system including the concept of a-la-carte system, so that they are ready for the digital cable in an year or two. We should not forget that mere 

Advertising in a few ‘Pay’ channels in a threatening language by broadcasters does not change the whole system. Considering the vastness of the country, lack of communication infrastructure and access to internet, it will take years before all people adopt the new change.

Here are some suggestions:-

Extention of DAS must be utilized to better organize the industry 

It is good that the government has extended the deadline for Phase III and IV. Extended time will enable the markets to get matured in an organised way, so that consumers get used to pay channels before they are forced with pay channel bouquets through DAS, like it happened in the Phase I and II where even after three years consumers are not getting their choice nor are they getting computerized bills with details.

Pay broadcasters must not be permitted to encroach upon the domain of Local Video Channels

Pay channels are trying to encroach upon the viewership of cable operators run video channels that have been their means to earn livelihood for the last 25 years or more, making their subscribers stick to them. Pay channels came much later through the backdoor route of FTA channels. After making their FTA channels pay, they started forcing cable operators to pay knowing well that there was no addressability for distributing pay channels like it existed in other parts of the world.  

Quality of Service standards should be mandated for Broadcasters too. 

TRAI has not drafted any QoS regulations for the broadcasters. They are compressing their channels to fit more in the same bandwidth to make more money compromising the quality to consumers. Same is the case of advertisement duration which broadcasters have challenged in the court, refusing to accept that, knowing well that it is against consumer interest. Sound level of Advts, frequent repeats of the same programme, dubbing in different languages and breaking up the same channel into two or more with different names just to increase their market domination. Unless the quality of reception is extraordinary consumers will not shift to the digital cable will enjoy.

Wholesale Tariff

a) Broadcasters should specify retail for the next five years rates for channels and bouquets within specified ceilings Rates given in the three slabs in Tariff Order lead to an average price of a ‘Pay’ channel as about Rs. 5/-, same as was worked out for CAS. Whereas this is reasonable and consistent with CAS regime price, that has been accepted by all without much problem, how will TRAI ensure this price. Pay channel costs in DAS areas average at about Rs 15, three times more than the rates in slabs made by TRAI? Sports channels costing between Rs 30-50 are out of reach of these 100 million households in that case. For the first five years of Digitisation TRAI should fix the a-la-carte price limit to Rs 5 that migration to digital is not painful. Since government is not subsidizing the process this should be resorted to.

b) Create a market force Since there is no market force working in cable TV industry and Regulations have given all powers to the ‘Pay’ Broadcasters, they tend to dominate the market in every way. Because of them even HITS is struggling. There is no IPTV in the country. There is no competition, only survivors in the present scenario are ‘Pay’ Broadcasters, their DTH and MSO networks. Subscribers are not left with any choice for an affordable entertainment. Either subscriber takes the cable connection or DTH. Both these markets are dominated by the ‘Pay’ Broadcasters. To created a market force FTA and pay channels must be will differentiated like in CAS regime choice being left to the consumers.

c) A-la-carte offering of channels at the wholesale level. TRAI so far, did everything to help the ‘Pay’ broadcasters by equating FTA channels to ‘Pay’ channels forcing their encryption in DAS areas and denying millions of subscribers easy access to these free to air channels that include even Doordarshan Channels.  Pay broadcasters, by forcing their bouquets on consumers have denied easy access to stand alone FTA channels. Doordarshan is analogue and has lost all its reach. Free Dish DTH of Prasar Bharti has somehow, not grown in the last five years to be competitive enough in the market, dominated by Pay Broadcasters.

TRAI should direct Pay broadcasters to give their channels in a-la-carte mode at extremely low rates to consumers so that consumers get used to the new system of pay channels and their content. Low pay channel rates will also encourage all FTA cable TV networks to show a few pay channels in the network. 

d) Formula for viewership of  pay channels must be worked out for non-DAS areas. Many Broadcasters and MSOs are forcing LCOs to pay for all pay channels available in the network, irrespective of whether all subscribers in LCO network watch them or not. The toughest task in the industry is of collecting subscriptions from consumers who do not watch all pay channels delivered to them. Also every pay channel does not have the same viewership. TRAI must find a way for reasonable negotiations without using coercive methods by MSOs or broadcasters to avoid disputes.

Billing to Consumers

Cannot be sorted out till the issue of Revenue share, availability of Pay channels in bouquet or a-la-carte, sudden withdrawl of channels by MSO etc. is not resolved. This can be done only when both MSO and LCO have a mutually exclusive playing field. Only in such a situation, MSO and LCO will become business partners and not competitors as provided in the existing regulations where MSO can also be a last mile operator in his own area.

Phase III & IV ARPUs are lower 

ARPU in these areas is only about Rs 150/- and broadcasters don't want to reveal the costing of channels on which their a-la-carte and bouquet prices are based. They haven't even reported their Ad revenues and revenue from the same content dubbed in different languages and its exploitation in international market. They also do not want TRAI to impose any cap on Ad duration. So, only data left withTRAI to work out the Tariff is-

a) Cost of distribution in a cable network and

b) Existing ARPU 

a) Cost of distribution can be worked out taking average 60 channels in a network of 500 connections. TRAI can work out the minimum share of the LCO from this data to ensure survival of his business. Deducting this from the ARPU will give the share of an MSO and Broadcasters. This can be applied till the country is fully digitised at least for the first five years of implementation.

b) Retail Tariff (ARPU) Broadcasters were not even registered in India at the time pay channels were introduced and neither did they approach the government to bring addressability. They didn’t even accept addressability for their pay channels when it was introduced in 2003 because, they knew consumers in India will not pay high cost they demanded and will outright reject them, the way Chennai consumers did after CAS was implemented. 

Since analogue networks do not have the addressability, LCOs should be allowed to take only a few selected pay channels that meet the demand and afford ability of  their subscribers. 

c) Cut leakage through non-paying  subscribers. TRAI needs to come out with a fresh regulation for the handling of non-paying subscribers, penalties for defaulting subscribers, business protection policy of cable operators suffering out of public grievances risen because of malfunctioning of MSO’s system etc.

Revenue Share Between MSO and Cable Operator

TRAI cannot delink revenue share from the minimum operational cost borne by the cable operators from subscription rates. It should workout the subscription rates accordingly and ensure that revenue share of the LCO can enable him to survive his business. 

TRAI has not tried to evolve a Business Model for a stable operation between MSO & LCO in the process of restructuring the cable TV industry in a manner that no one feels threatened and there is a hope for future growth for both. They have left it to mutual negotiations that have failed since 1994 when the MSOs entered the market first. At present the LCO feels that his investment and hardwork is not secured and his registration in post office and in MIB could be revoked on petty reasons. Providing a secured business environment is essential, atleast for the next five years, to let peaceful business consolidation takes place rather than hostile take-overs. 

Any cable operator installing a digital headend in Non-DAS areas voluntarily, must be given full help and protection by TRAI and MIB in getting the registration and the content without any hassle. Operators have faced many problems in Phase-I and II, causing disappointments, resulting in a very few registrations compared to the number of cable operators and independent MSOs present in DAS cities. 

Reporting Requirement 

Although many reporting requirements are mandated but stake holders seldom do that. TRAI must have a strong monitoring system to ensure correct reports are made and strict action should be taken against any violations. Also frequent changes of converting FTA channels to ‘Pay’ and vice-versa should not be permitted.  

TRAI should avoid long drawn litigations, challenging its Regulations

Every regulation has been challenged in the courts; Our past experience has shown that TRAI does not have any mechanism to ensure implementation of its regulations at the grass-root level, particularly where violating company is a large corporate, who can take the regulator to court. They employ many senior experienced lawyers including ex-Law Ministers and ex- I&B Ministers to defend themselves and take a stay on TRAI’s action, delay the proceedings of the case to no length while continuing to violate the regulations.

This period of lawlessness in the Industry has given boost to large media groups to monopolise the markets with their money power and political clout, creating a chaotic situation on the ground like in Phase I and II areas.

State Level Monitoring Committees

Every state must have a monitoring committee or a task force comprising of representatives of all stake holders and state departments to see the regulations are followed by all and facilitate MSOs and operators in getting Right of Way (RoW) and resolve other local issues.

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