The Hindu : The great Indian television game

Online edition of India's National Newspaper
Sunday, Jun 15, 2003

Opinion

Opinion - News Analysis

The great Indian television game

JUST TWO weeks ago, a cloud of uncertainty hung over the Centre's move to implement the Conditional Access System (CAS) on July 15. A heated political controversy and a high-voltage campaign aimed at deferring, if not scuppering, the Information and Broadcasting Ministry's proposal to roll out CAS in four metros (Delhi, Mumbai, Kolkata and Chennai) had raised doubts about whether the new cable television regime would see the light of day.

The majority of members of a Parliamentary Standing Committee had wanted implementation deferred, and expressed apprehensions over the availability and affordability of set-top-boxes (STBs). With one eye on the Delhi Assembly elections, representatives of both the Congress and the BJP — worried about the possible impact on middle-class voters — had come out strongly against CAS. Other parties such as the Shiv Sena declared their opposition and the Prime Minister, Atal Behari Vajpayee's remark that CAS should protect consumer interests was interpreted in some quarters (mistakenly as it turned out) as a sign that the new system didn't even have approval at the very top.

The Centre's response was the announcement of a slew of measures aimed at neutralising the main causes for consumer resistance. Radical reductions in custom duties on STBs have ensured that the boxes will be available at half the cost and Multi-System Operators (MSOs) have been persuaded to offer them under relatively painless leasing terms. At the same time, the basic price for non-CAS subscribers was pegged at a mere Rs. 72 plus taxes (or under Rs. 100).

The criticism that CAS would lead broadcasters to offer channels in bouquets (forcing consumers to pay for unwanted channels and therefore offering no real choice) has been addressed with a notification that prohibits this. Apart from demanding that broadcasters offer channels singly, they have been prohibited from pricing channels in such a way that makes the choice illusory. (In other words, they cannot charge a very high price for one popular channel and offer the rest at a marginally higher price). The complaint that CAS subscribers would receive only 30 free-to-air (FTA) channels was redressed by the very nature of the technology. Digital STBs are capable of offering considerably more than this and therefore CAS subscribers are unlikely to be denied the 60-odd FTA channels available on air today.

Pressure by the powerful lobby of foreign broadcasters (led by the Star group) to have CAS deferred is unabated. And in a political environment where rollbacks and climbdowns have become tediously familiar, it is impossible to conclusively predict whether CAS will be implemented as scheduled. But with the Information & Broadcasting Minister, Ravi Shankar Prasad, determined to go ahead and with opponents of CAS within the BJP leadership coerced into beating a retreat, the new cable television regime appears set to roll out. Says Jawahar Goel, Head of Zee's expansive distribution (MSO) network, Siticable: "Too much time and money has already been invested in this exercise. There can be no going back now."

In preparation for CAS and in order not to lose out to rivals, MSOs have already begun to import set-top-boxes. For instance, Dayanidhi Maran who heads Sumangali Cable Vision, the major distributory network for Chennai, says that his company has already placed orders for 2.35 lakh STBs (mainly of Taiwanese and Chinese origin) and has geared up to deliver a box within six hours of an order being placed.

It is probable that the offtake of STBs in Chennai will be proportionally lower than in the three other CAS metros.

Unlike Delhi, Mumbai and Kolkata, the primary drivers of the television market in Chennai are FTA channels such as the Sun TV, Jaya TV and DD Podhigai. The Sun network plans to offer three channels on a pay basis (KTV, Sun News and SCV), possibly at a total price of around Rs. 20. Says Dayanidhi Maran: "Offering these channels on a pay basis will be a way of testing the CAS market scenario for the Sun network."

Mr. Goel says he will have about 6 lakh STBs in place by end-July (all of them lower end digital boxes). Unlike other MSOs, who have to receive satellite signals, scramble them and pass them on via last-line cable operators to homes, the Siticable alternative works on a radically different model.

Dubbed `head-end in the sky', the alternative model involves downloading the signals, encrypting them with a single CAS and then beaming them up to one satellite (in this case Insat-3a). These signals are received by cable operators, who trans-modulate them before passing them on to subscribers who received them via digital STBs.

Zee has invested enormous sums of money in the head-end in the sky model, the key advantage of which is that is does away with expensive CAS equipment at each head-end level. Cable operators require nothing more than inexpensive transmodulators to pass signals on — something that smaller operators (those who cover a district town or a small city) may find attractive.

The head-end in the sky concept falls a step short of the DTH model and, in a way, seems like a preparatory towards making the shift. Zee's facility in Noida is already geared to make this change. Government clearance is pending but the network has announced August 15 as the date it kicks off DTH services, mainly it seems to make a public declaration about its technological readiness.

Will the rival Star group make its channels available to Zee's head-end in the sky? What will be the consequence if it refuses to do so? The answer to such questions remain unclear but they point towards the basis of what divides the broadcasting industry over CAS. Some critics of CAS have suggested that the main reason for resistance lies in the fear that it will threaten the revenues of pay TV broadcasters.

The argument goes that such broadcasters fear that CAS will be rejected by many consumers and that as a result there will be a fall in viewership and a corresponding fall in advertising revenue.

Such an argument makes sense only if CAS is going to be much more expensive than what the consumer already bears under the existing cabling regime.

If CAS comes cheaper and a consumer prefers not to opt for a particular pay channel, then isn't the conclusion that he doesn't want to watch it inescapable? If the July 15 deadline creates a huge demand-supply gap for STBs, then of course there will be a short-term shrinkage of revenue. But in the long run, exposing the true extent of viewership to advertisers can hardly be a rational basis for opposition.

But will advertising revenues really take a huge dip as some people make out? As G. Krishnan, Executive Director and CEO of the TV Today network, points out, this is very unlikely. "Consumers are not going to walk away from a truly popular channel merely because of CAS", he says.

The problem that CAS poses for the Star Group — which is leading the high-voltage campaign against the system — is the impact it will have on its ambitious foray into DTH.

Once CAS is in place, the DTH market will become that much harder to penetrate. Only a failure of CAS, or better still its non-implementation, can leave the market open for the kind of monopoly that a DTH player would like. In other words, the real controversy over CAS is about something much bigger — about who controls the airwaves in the vast space occupied by India's television industry. The market is huge and will only get bigger. Mr. Goel estimates that it will be worth Rs. 60,000 crores between five and eight years from now.

Talk about DTH leads inevitably to the following question. If such services are expected to be launched in a few months, then why implement CAS at all? Isn't there a case for switching directly to the DTH platform? But as Mr. Maran points out, both conditional access and DTH can coexist. And the fact is that they do exactly this in many other countries, including the U.S.

Those who find DTH too expensive can choose to remain with CAS.

Exactly how the great television game will play out may not be clear. But one thing is certain. Any regulation of the currently disorganised cable industry will attract a whole host of broadcasters. Already, a number of such players are said to be waiting in the wings for CAS.

And from the point of view of the consumer, that means one thing: more choice.

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