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India adds to cable television
confusion
By Indrajit Basu
KOLKATA - In mid-December last year, when the
Indian government approved the Cable Networks
(Regulation) Amendment Bill 2002, it was touted as a
harbinger of harmony to the chaos that prevails in the
television distribution and broadcasting sector in
India.
The bill paved the way for the
introduction of a "conditional access system" (CAS) for
the distribution and broadcast of TV content, which in
simple terms means that instead of paying for blanket
channels, the viewer can choose, through a "set-top"
box, which channels are wanted, and pay only for those.
This will be in addition to a fixed amount of US$1.5
that viewers would have to pay each month for a clutch
(a minimum of 30) free-to-air channels. This system will
be introduced initially in Mumbai, Delhi, Chennai and
Kolkata.
When the policy was announced, the
first reactions were positive, from the multi-system
cable operators who distribute TV channels to cable
operators, who in turn distribute to millions of homes
across the country, to TV broadcasters who would know
exactly how many people were watching their channels and
would be able to charge them accordingly, to TV viewers.
"It will bring in orderliness and legalize cable
operations," said K Jayaraman, chief executive officer,
Hathway Cable and Datacom, one of the largest
distributors of TV channels who distributes through a
network of cable operators. "TV viewers now get a
choice, they give money to the extent of what they want
to see, and it is the last chance for the TV industry to
clean its house."
But now, with the four cities
just over month away from switching over to CAS, chaos
and uncertainty rule supreme.
"The TV industry
is on tenterhooks about the introduction of the
conditional access system from July 14," says Amit
Khanna, an industry stalwart and chairman of Reliance
Entertainment, a prominent entertainment company. "The
government is adding to the chaos by arriving at some
rather arbitrary conclusions. What is surprising is that
almost anyone associated with the business, and even
some consumer activists, are taking a myopic view of the
fast changing panorama of broadcasting."
To
understand how CAS is meant to bring order to the
sector, it is important to understand the peculiar
functioning of the TV, particularly cable and satellite,
market in India. Industry estimates put the total number
of TV households in India at about 85 million. About 60
percent of these depend on (un)friendly neighborhood
cable operators to bring channels to their homes - the
rest are catered for directly by multi-system operators.
During the Gulf War of the early 1990s Indians
were first exposed to satellite TV when a few
enterprising cable operators started distributing CNN to
affluent neighborhoods in Mumbai and Delhi. A couple of
years later, when the satellite Asiasat, launched by
Hong Kong-based Asia Satellite Telecommunications,
Asia's first privately-owned regional satellite
operator, became available for broadcasting TV channels
to India, a few consumer-savvy channels, mostly
foreign-owned, like Rupert Murdoch-owned Star TV, Zee TV
- in which Murdoch also has a stake - the BBC and MTV
emerged to beam TV content to Indian homes. A few more
local language channels soon followed. Suddenly, most
homes in larger Indian cities had a cable operator in
their neighborhood stringing coaxial cables across their
rooftops.
In the absence of any regulatory laws,
local goons, petty politicians and smart entrepreneurs
joined in the free-for-all cable operating business. For
about $2 a month, an Indian home could receive a dozen
or so channels, including a movie channel running
pirated videos of the latest Indian films. This
unfettered growth created one of the largest cable
markets in the world. Low-tech, homegrown cable
operators became as ubiquitous as the local grocer.
The mid-1990s saw the first consolidation. The
Cable TV Act was promulgated in 1995, which saw the
emergence of six multi-service operators, all owned by
large and influential businessmen. These operators took
the "last mile" operator as a franchisee and upgraded
networks to offer up to 100 channels, which were
distributed through a network of over 50,000 cable
operators. On the ground, however, nothing much changed.
While many channels became pay channels and cables
passed millions of homes, piracy continued. There were
constant turf battles between cable operators in which
some people were even killed. And worst, despite the
array of channels, the consumer hardly had a choice.
Whatever the cable operators offered and charged was
what a TV viewer had to gulp. And since there were no
laws or system to control the cable operators, there was
a rampant under-declaration of the TV viewership. This
was because TV broadcasters charged multi-service
operators, who in turn charged the cable operators on
the basis of connected homes. No pay channel, therefore,
has a declared subscriber base of more than 10 million
as of date.
Amid all this chaos, the government
thought that the time had come for a regulatory
framework, not only to curb piracy but to protect
consumers from paying for what they did not watch and to
ensure that broadcasters, too, get their due share.
But the simple-law CAS is proving to be no match
for the highly unorganized cable and satellite market
where the rule of the jungle prevails.
Critics
say that the government wanted to put an end to the
broadcaster-cable operator dispute over subscriber
numbers. And therein lies the problem: Although
broadcasters should be happy, most of them that have now
to serve as pay channels are scared. STAR TV's head
honcho, James Murdoch, says that "CAS is not a magic
bullet that will solve the problem of
under-declaration".
Channels like STAR and Sony,
which have been consistent toppers in the TV
(viewership) ratings for years, fear that forcing their
viewers to pay for viewing channels and for set-top
boxes that could cost between $80 to $150 a piece, would
cause an unnecessary burden on viewers, resulting in a
drastic fall in subscription. And lower subscription
means even lower advertising revenues. That's not all.
Broadcasters like STAR, which want to be players in the
yet-to-be introduced direct-to-home (DTH) broadcasting -
where broadcasters can beam channels directly to homes
through satellite and another types of set-top-boxes -
fear that if CAS is implemented now, DTH will find very
few subscribers willing to spend again in additional
set-top boxes.
As with the broadcasters, CAS
should ease the woes of the cable operators. But they,
too, say that they have to handle the toughest part of
the CAS rollout. "First, we will have to sell the idea,
make the initial investments in the set top boxes that
will be sold to viewers as well as spend on software at
our end," say officials of the Mumbai-based Cable
Operators and Distribution Association. "Moreover, CAS
will help pay channels to increase their rates at the
cost of cable operators. CAS could destroy over 20,000
families in Mumbai alone that depend on the cable
industry."
Multi-service operators and
set-top-box sellers are the only ones not complaining.
Critics say that's because they get, at the TV viewers'
expense, control over India's 42 million cable homes -
in four cities. It is a control that will make them very
profitable, increase valuations for their businesses and
help them expand and stabilize revenues. As an added
bonus, there will be transparency: one of the reasons
why many international cable companies have not yet
touched India. "Even if we get 30 percent penetration,
we make more money," said Sunil Khanna of multi-service
operator Zee-Turner.
And ironically, the biggest
losers would be the TV viewers themselves. "The debate
over the conditional access system is meaningless," say
officials of the Consumers Guidance Society of India.
"There should be no debate at all. It's pretty clear
that CAS, in its current avatar, benefits nobody - not
the broadcaster, not the cable operator and definitely
not the viewer. If the government sticks to its July 14
deadline of CAS compliance, it will go against all
conventional principles of governance where legislation
is meant to benefit the greatest number of people."
Indeed, under the present CAS formula, although
a TV viewer pays more for every extra channel, some
basic benefits, like movies on demand, don't come with
it because the technology currently used by cable
operators and multi-service operators doesn't allow much
of tweaking. Again, one gets to exercise some choice
over viewing of channels, but that is already present
today to some extent by paying a little extra to cable
operators. Does the quality of broadcasting improve? No,
it doesn't. So, for the extra money that one has to
shell out, one gets virtually nothing in return.
However, in spite of what many called a
"half-baked" cable networks bill, some feel that CAS is
a welcome step. "After a choppy six months of confusion
and uncertainty, the cable and satellite industry should
see reasonable growth," predicts Amit Khanna.
Most others, though, can only keep their fingers
crossed.
(Copyright 2003 Asia Times Online Co,
Ltd. All rights reserved. Please contact content@atimes.com for
information on our sales and syndication policies.)
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