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CAS to benefit consumers,MSOs, operators and Govt alike

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MUMBAI: Hinduja TMT executive vice-president (corporate affairs) Ashok Mansukhani , in his presentation at ficci FRAMES 2003 on 'Conditional Access System : a mid term review', addressed various issues related to CAS such as the features of the set top boxes, the advantages of CAS and how it would benefit not only the consumers but also the MSOs, the operators and the government.

 

He began his session by giving a brief outline of the prevailing scenario of the Indian cable industry, substantiated with facts and figures of studies conducted over the years. He stated that--

* In the past 12 years, the Indian cable TV industry has grown from zero base to approximately 45 million homes.

*The Indian Readership Survey had revealed urban cable penetration to be approximately 84.7per cent and rural cable penetration to be about 32.7 per cent.

* For the past 3 years, the Indian Cable TV industry was plagued with blackouts by broadcasters, protests by customers and a worsening financial situation due to frequent rises in pay channel fees by broadcasters.

*The broadcasters, on the other hand, accused cable operators of under declaration to justify both blackouts and frequent rises.

Explaining how all these problems will come to an end with the passage of the Conditional Access System regulations in the Cable Act, he went on to say that -

  • In a revolutionary step, Parliament has passed a crucial amendment to the Cable Act 1995 in December 2002 mandating compulsory use of set top boxes by pay channels and restoring choice of viewing television to 45 million cable homes.
  • By this regulation, the viewer will now pay for only those channels actually watched by him as per norms accepted world over.
  • The present scenario of forced bundling of weak and unwanted channels with popular channels and arbitrary rate increases by broadcasters will soon end to the relief of customers.
  • The government has opened the way for orderly growth for the 45 million home cable industry which employs lakhs of people in this service sector. This industry provides information/education and entertainment to lakhs of viewers in the convenience of their homes.

Giving a brief outline of what the CAS Revolution would be all about is and the technology it would entail , he spoke about the digital and analog set top box ( STB) and its features . He stressed on the following special features of Digital STBs

* Interactive content and data services reach the television sets

*Advantages of the versatility offered by the digital format

* More Channels

* Better sound quality

* Operators need to protect their revenue stream

Commenting on the quality of transmission he said it would be --

* Similar to comparison between DVD and VHS

* The viewing experience will be the difference one experiences between colour TV and digital TV.

*Sharper pictures.

* Clearer sounds

He also added that with the present pay channels number being 32 (many more expected in India), the cable operators will be left with 29 channels for free to air whereas MSOs like IMC can give at least 70 free to air channels.

In addition , extra channels capacity will be available for value added services viz. Internet, Video on demand, email/ SMS, telephone, games on demand, electronic program guide, pay per view and mobile messaging Internet advertising. Bringing to light how CAS would benefit the consumers stand to benefit because --

  • He chooses what he wants to watch
  • He pays only for what he watches
  • Higher quality of Services at International Standards · Clearer pictures and stereophonic sounds to give a Richer Experience
  • Over 500 potential channels
  • He is not faceless anymore
  • Needs are heard and attended to

On how Broadcasters would benefit with CAS --

  • Full declaration
  • Added features like Pay Per View - now consumers can view sporting events, movies and other hit programs at their convenience. All they need to do is pay a fee and avail of the content
  • Video on Demand - Now Archived footage of events that consumer missed / replays will be available for viewing
  • Better communication with the consumers
  • The needs of the consumers will be easier to map.
  • Their needs will be addressed more effectively .

MSOs benefit because:

  • Transparent system leading to Full declaration
  • Commission for distribution creates a viable business model
  • Build a platform to launch value added services like Pay per view, Video on demand, Internet telephony, Gaming, Home-shopping etc
  • Data-mining / Harvesting
  • Focused Marketing efforts Operators enjoy
  • Longevity and security assurance
  • Stay in Business
  • Cemented relationship with the consumers
  • Beneficiary to launch of new services
  • Additional revenue streams with new services

The Government Benefits:

1. Under the Cable Act, cable operators are enjoined to carry out Government directives on sensitive content issues. Under CAS, this mandate will be easier to implement.

2. Benefits of full declaration will result in higher Income Tax, Service Tax and Entertainment Tax collection by a huge margin.

Speaking on contentious issues like consumer concerns he said that the government and the information and broadcasting minister have clearly declared their concern to keep customer concerns paramount in mandating the implementation of CAS. The Indian cable TV industry is in full agreement with this intention of the government and promises to take all steps necessary to ensure that customer interests are kept as the primary focus.

Regarding the issue of whether the problem of undeclaration will be resolved by CAS, he said that it is quite clear that the opponents have not appreciated the stringent provisions of the new section of the amended Cable Act. The amended provision mandates the operator to maintain full records and the government is entitled to verify the records at any time. Any act of omission will be a cognizable offence. Service tax on cable industry has been notified with effect from August 16 2002 and the service tax authorities are also entitled to inspect all records. They have already started surveys in Mumbai and Delhi.

Talking about the issue of government fixing the rate of free to air channels he explained that it was actually a consumer friendly measure to help the consumer get free to air tv channels at the cheapest possible price. "We expect the average price to be about Rs. 100 and after deduction of Rs. 30 as entertainment tax; the balance left will be Rs. 70 for 35 channels which is the lowest in the world," he added.

Regarding who will bear the cost of the set top box, he stated that the cable is a service industry like electricity or cellular mobile. The customer bears the cost of the electricity meter or the mobile instrument. Obviously the customer will bear the cost though the MSOs/cable operators can help source them cheaply through STB suppliers and banks. The cost of the subscriber management system and conditional access will naturally be borne by the cable operators/MSOs.

Highlighting the pending action that need to be taken he stressed on the Indian cable TV industry requests' of an early action of the Ministry of Information and Broadcasting on the following issues:

  • After the notification by Government for mandating conditional access in the 4 Metros in January 2003, a couple of meetings of the implementation task force have been held. Unfortunately they have not yet resulted in finalization of various contentious issues specially relating to free to air pricing, genre based programming. The task force must announce the FTA price and decide on other related issues latest by March 31.
  • Unfortunately the cable industry's logical and reasonable plea for duty reductions has been ignored despite assurances from the Ministry of Finance that a sympathetic view would be taken as the benefit of duty reductions would have resulted in more acceptable cost of supply of STBs making cost of delivery of pay channels cheaper to the customers.
  • As government has decided to fix a maximum retail price for free-to-air channels, it should, in fairness have frozen all current pay channel rates as on 1/1/2002 till CAS comes into effect in the various cities.This was not done leading to threats by a major broadcaster to switch off World Cup transmissions recently.
  • In the last two months there has been agitation by consumer organizations in Mumbai wanting reduction in the total package from Rs 350 to Rs 150. This matter is subjudice in the Mumbai high court and hence no direct comments are offered. However it should be known to the audience that Pay Channel costs amount to Rs 220 per subscriber and with Rs 45 of taxes including Entertainment and service tax, it is not possible for MSO's to provide Pay channel service at Rs 150.
  • In a reply to a starred Parliament question, the honourable minister for Information and Broadcasting on 20/02/2003 stated that subscription disputes were to be decided by the market place and there was no provision for regulatory intervention. One cannot disagree with this contention but at the same time pay channels should exercise restraint in raising pay channel prices at this stage when customers have become increasingly resentful of paying higher costs.
  • Once CAS comes into force, the broadcasters will have to persuade the customers to subscribe to pay TV channels on the strength of attractive content and value for money pricing.
  • Issue of entertainment tax levied by state governments is another area of concern for the Cable TV industry. Currently it varies between zero in Himachal Pradesh to Rs 30 per subscriber in Maharashtra. The CAS regulations give a choice to a customer to opt for only FTA or some pay channels or the entire bouquet of pay channels. In near future video on demand and pay per view will be technically possible. In such a varied scenario, it would be necessary to link levy of entertainment duty to the category of service provided to the customer.
  • The CAS regulations have already led to the issue of guidelines for both analogue and digital set top boxes by the Bureau of Indian Standards. The Cable TV industry has already started surveying customer demand and is in readiness to provide set top boxes as per the need of the customer. The mantra has to be affordability to the customer. It is not necessary to mandate either of the two technologies.

He concluded his presentation saying that, " the challenges of CAS have to be met not only by the cable industry, but all the stake holders including broadcasters, government and even the consumer".

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