CABLE NETWORK IS A BOON

The Indian Readership Survey 2001 reveals urban cable penetration of 84.7
per cent in towns and 32.7 per cent in villages. Cable/satellite broadcasters
have current revenues of Rs 3600 crore mainly from advertisement revenues
with the expected growth by 2006 to Rs 8100 crore largely on the strength of
subscriber revenue.Herein lies the rub.

The average growth in the TV segment sector has been 38 per cent. Naturally
the broadcasters want a greater share of the cable pie and local cable
operators are unwilling to give in easily to demands of full declaration when
no broadcaster is willing to reveal his cost of acquisition of content or
operating costs and when the whole trp audience rating issue has become
tainted with controversy. In the past two years broadcasters and multi-system
cable operators have resorted to bitter litigation on various issues and
inevitably settled out of court.Broadcasters have had to face flak from
advertisers for not providing assured connectivity. Cable operators have had
to face wrath of consumers for blank screens.

The cable industry is 'governed' by the Cable Network Regulation Act 1995
which only provides for post office registration and is otherwise a toothless
and technologically redundant law. Ultimately the Convergence Bill will
become law but in the meanwhile government has been resorting to piecemeal
legislation to take care of burning issues affecting the electronic media. These
include major amendments to the Cable Act in 2000, a local (satellite) up-
linking policy in 2001, and DTH guidelines in 2002. Now the government has
accepted the Rakesh Mohan task force report on introduction of a conditional
access system for pay channels. This mandates that all pay channels would be
available only through a set top box to provide the consumer the choice of
viewing and an option to pay for what he chooses to watch. Free-to-air
channels would continue to be available through present receivers at an
'affordable price' to be determined by the government.

After the initial round of euphoria in the cable industry, various queries are
being raised mainly by broadcasters and consumer organisations: Is the set
top box a feasible solution for ensuring that broadcasters are paid?
Broadcasters have been able to double their subscription revenue in the last
one year forcing cable operators to raise rates to Rs 300 per month in
Mumbai. Any further raise will not be tolerated. Will consumer choice be
reduced by government mandated solutions? All that the government is doing
is restoring the right of choice of watching channels to the consumer who will
only now pay for channels he chooses to watch. Who will bear the costs of
regulation? Obviously, the consumer will bear the cost of the set top box. The
cable operator will bear the cost of the subscriber management system. The
broadcaster will have to fix a maximum retail price to compensate the cable
operator for use of the infrastructure and system upgrade including the
subscriber management system.

The government has to chart the road ahead once conditional access becomes
mandatory. Government has to continue to take a proactive consumer stance
by taking the following additional measures immediately: 1) Ensuring a
three-phase roll out to cover metros in the next six months, mini metros in the
next 12 months and the entire country in 18 months. 2) To ensure easy
acceptability of set top boxes and subscriber management systems for cable
operators all duties including central/state and local levies be waived for a
period of three years. 3) As government has decided to fix a maximum retail
price for free-to-air channels, it should also freeze all current pay channel
rates till deployment of set top boxes is actually in place. Thereafter the
broadcasters would have to persuade customers to subscribe to their channels
both in terms of attractive content and pricing. 4) As the Convergence Bill is
still being scrutinised by a standing committee of Parliament, an interim
arrangement to settle all disputes in the TV segment between broadcasters,
cable operators and consumers may be considered by enlarging the function
of the Telecom Regulatory Authority or appointment of an ombudsman.