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Deadlock on CAS

WEDNESDAY'S MEETING BETWEEN television broadcasters and multi-system operators (MSOs), with the Government standing in as a kind of referee, was supposed to sort out the critical issue of pricing in the proposed Conditional Access System (CAS) regime. As it turned out, the heated discussions resulted in absolutely nothing and provided no clue about how the pricing issue is going to be resolved. The Centre had asked pay channels to fix their prices but all that it resulted in was the distribution of a rate card (by some foreign broadcasters) that seemed to create more confusion than clarity. First, the rate card was structured in a manner that could sharply escalate the cost of a monthly cable bill to Rs. 500 or more. Second, the very legitimacy of this price list was undermined after one broadcaster declared it was not even consulted about it. And finally, by quoting prices that were wholesale (that is, exclusive of the margin for MSOs and cable operators), the rate card threw no light on the retail price to be borne by the consumer.

At one level, the breakdown in the talks reflects the huge gap in the positions staked out by broadcasters and MSOs. The latter want something between 40 and 60 per cent for distributing pay channel signals, figures that correspond roughly with what is charged for such services elsewhere in the world. Some broadcasters want to pay much less (15 per cent or thereabouts). How such disparate expectations can be reconciled is anyone's guess, but from the consumer's point of view, any price list must clearly and transparently declare the ultimate price paid by the consumer. A rate card of the kind distributed during Wednesday's stormy meeting (in other words, one that leaves the distribution margins open) is unacceptable and it is not surprising at all that the Centre has dismissed it as a non-serious exercise.

The other issue that has been thrown up squarely is price. Although the Centre's formal position is that broadcasters are free to fix the prices of pay channels, the Ministry of Information and Broadcasting (which has even talked of a monthly cable bill of around Rs. 200) has an undeclared interest in ensuring that the CAS regime is consumer friendly and voter friendly. It was perhaps inevitable that the contradiction between professing laissez faire and practising regulation would emerge sooner or later. And in the face of some broadcasters electing to charge high rates for their pay channels, the Government is in a spot over an issue that it has no adjudicatory role in. It is obvious that the Centre suspects that some broadcasters have ganged up to have CAS deferred, if not scuttled, and views the high prices fixed for pay channels and the failure to reach an agreement with MSOs as calculated steps towards such an aim. Those broadcasters who fear CAS are concerned about the loss of revenue that could incur in the event of consumers failing to subscribe to the new regime; more important, the establishment of CAS would make it more difficult for them to penetrate their market with Direct-To-Home (DTH) services as planned.

The question now is what the Centre can do about resolving the CAS deadlock. An irked I&B Ministry has threatened to take coercive measures against the broadcasters if they fail to sort out the problem. One threat is those pay channels that fail to come up with a package that the Government considers reasonable would have to turn free-to-air (FTA) or risk being forced off the air. While recalcitrant broadcasters cannot be allowed to impede the roll out of CAS because of their own narrow interests, the Centre should do whatever it can to avoid resorting to extreme regulatory measures in order to implement the new cable television regime. To negotiate a successful outcome will mean balancing the interests of broadcasters, MSOs, cable operators and consumers. Given the opposing nature of some of these interests, this is going to be far from easy.

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