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HomeArticlesRoop SharmaDismal Progress in Phase III of Digitisation
Friday, 10 April 2015 10:43

Dismal Progress in Phase III of Digitisation

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MIB issues minutes of the 6th meeting of the TASK Force for Digital Addressable system (DAS) in cable TV Network in Phase – lll

Last month, the Information and Broadcasting Ministry issued Minutes of 6th Task Force Meeting that was held on 13 March, baring open the lies of the government and the broadcasters, about the success of digitization that has been talked about in every forum by the senior government officials. The fact is that the way the process is being implemented, it will never succeed to benefit the consumer even after another ten years. We list out the points given in the minutes and explain the ground level situation. 

In the welcoming speech Mr. Mathur mentioned that MSOs had been asked to give seeding plans for Phase lll areas and and only 37 out of 100 MSOs had given the data in this regard and it indicated that about 31 lakh STBs have been seeded by them with about 5.5 lakh STBs in their stock and about 23.5 lakh STBs under orders of purchase. He remarked that the seeding was very low as compared to target and asked the representative of MSOs to explain the Task Force about their strategies, plans and constraints, if any in executing the same. The representative of MSOs made the following points:-

Points from MSOs

The first issue is related to content costing. Seeding plans can be firmed up by MSOs only if they know about the content cost. Till then MSOs can only give their seeding projections instead of seeding plans. 

Content cost cannot be same in Phase III & IV as it was in Phase I & II and the revenue from Phase lll & Phase lV areas is about 2O-30 per cent of the total revenue from the country. This has to be taken into account by all stakeholders

Content Cost

The fact that revenue from Phase-III and IV areas is just 20-30 percent of total revenue of the country it negates the claim of  broadcasters that LCOs underdeclare the collections and do not give the due share to them.  This is very true, we have always been talking against the blame of undeclaration. If the industry receives only 20-30% of total revenue from a connectivity of 100 million, the rest of 30 million provide the 70-80 % of revenue of the industry. These 30 millions exist in Phase I and II cities. Thus expectation of the broadcasters and the government while framing the digitization policies were completely off the mark. 

In a similar way, expecting the consumers of Phase- III and IV to pay the same  Entertainment Tax and Service Tax as done by elite population of Phase I and II cities cannot be justified. The policies of content pricing need to be reviewed.

This brings out the following facts:-

1.Indian consumers in small cities and rural areas cannot afford digital pay television service. 

2.Entertainment Tax must not be levied where a consumer demands only free to air channels.

3.Pay Broadcasters cannot force bouquets of pay channels on these consumers.

4.A-la-carte rates have to be extremely low, if broadcasters want their channels to be viewed.

It is surprising how without giving a deep thought and analyzing the present state, the government decided a two years deadline for completing the digitization process in the whole country. It is a known fact that none of the large MSO has deep pockets to create a network infrastructure for the whole country. Nor do the MSOs own the last mile to play with the tariffs to have high ARPUs. 

If it was so, these MSOs who are existing  since 1994, would have created large networks consolidating the networks of LCOs and making them a permanent partner in the business. In that case there would have been no need to mandate digitization. It would have been just a normal upgrade of services as has been done by the broadcasters and telcos. 

The last issue is related to input cost, as, if it is unknown, MSOs cannot be able to educate its consumers about their rates. Further, there are issues related to local taxation levied by some State Governments. There are also some examples where local cable operators switch over to analogue when the digital signal to them is cut off by the MSO.

Broadcasters blame MSOs for not demanding content for Phase-III

Representatives of broadcasters replied on issue related to interconnect agreements that MSOs have not approached to broadcasters for entering into interconnect agreements in new areas, MSOs do not have a concrete plan while broadcasters are ready to cooperate as they did in Phase I & Phase ll.

In Phase I & Phase ll however, seeding was done by MSOs without first entering into interconnect agreements with broadcasters for which they were pulled up by TRAI many times. Also, that time, the government was too keen to complete its target and allowed the MSOs to seed STBs without the consent of subscribers, literally forcing them to pay for the STBs and channels, not even required by them. It was the LCO who faced the wrath of the consumers but in the rest of India, people are poor and can not be forced to dish out heavy fee for pay channels. 

Channel prices have gone up due to technical up gradation from SD to HD and the advertisement rates have not increased. So the broadcasters should restrict selling HD channels only in large cities where consumers may afford them.

Mr. Mathur mentioned that there is a lack of mutual connection between broadcasters and MSOs. Everyone wants to maximize his own interest but they should arrive at consensus and think beyond all these petty considerations. He advised them to sit together and sort out their issues. 

TRAI's representative advised the broadcasters to enter into interconnect agreements with MSOs who approach them for content in Phase lll & Phase lV areas. He informed that a meeting was arranged on 18 March 2015 with broadcasters and MSOs to address this issue. Further he added that MSOs must take the consumers choice before installing STBs.

According to representative of Consumer forum, channel pricing is the main issue in Phase III & IV. Consumers should know the price before he switches over to digital.

As per representative of Consumer Electronics and Appliances Manufacturers Association (CEAMA), they had approached the MSOs to clear their doubts about indigenous set top boxes. Nonetheless the response was not encouraging from the MSOs. CEAMA has capacity to meet the requirements of indigenous set-top-boxes for Phase lll & Phase lV. Mr. Mathur asked MSOs about the format of seeding plans and the information related to the number of indigenous set-top-boxes seeded and ordered by them.

 

There was a representative of U.P Government in the meeting and he mentioned that Consumer Acquisition Forms (CAF) should be filled by MSOs before changing to digital mode in Phase lll & Phase lV areas. Further he added that the State Government was not having complete seeding data of Phase ll cities. 

Representative of J&K Government wanted consumers to be informed about the set-top-box price.

Finally, concluding the meeting, Mr. Mathur emphasized that without public awareness campaign by all stakeholders, the progress would be slow. The major role in public campaigning belongs to broadcasters. They have to spread awareness for Phase III& IV as they did in Phase I & Phase ll. He advised that broadcasters should start a dialogue with MSOs immediately. He praised TRAI initiative for holding meeting with broadcasters and MSOs to resolve interconnect agreements issue. He motivated all stakeholders to make sincere efforts to achieve the targets as early as possible.

Even in the last Task Force, results were not very good. Ministry had asked Nodal officers, at State and district level, about the data and the officers told that they had received data from only 15 States/UTs. They had asked from each State and UT about District wise data of Urban Areas which are to be covered in Phase III but received the same only from Chattisgarh and Uttar Pradesh. 

Ministry had earlier asked LCO Sub-Group to nominate one LCO Association from each state and UT but it had received nomination only from Gujarat. One wonders why Ministry not adhered to the constitution of the Task Force having national level LCO organizations as done in the first Task Force. 

Infact, after the Task Force of Phase I, Ministry decided to have no LCO in the Task Force. Some distributors of large MSOs and channel distributors were inducted in the Task Force of Phase II who had no knowledge of the national scenario and remained 'Yes' men of the Ministry officials. 

Again in the Task Force for Phase iii, Ministry did not have any LCO organization. In stead, it asked the State Governments to nominate some LCO. Everyone knows that states were never involved in the process of digitization and this resulted in some influential persons who were MSOs or distributors of 'Pay' channels who made the entry. Overall the whole task force is tilted towards one large media group. 

Under these circumstances, how can the Ministry expect some positive results.   

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