DAS Phase II: Indiacast-Hathway- GTPL slugfest on DAS deals

MUMBAI: A war of sorts has broken out between India‘s second largest content aggregator IndiaCast Media Distribution and Hathway Cable and Datacom, the country‘s biggest Multi System Operator (MSO) and its affiliate GTPL, Gujarat‘s largest MSO with footprints in other states too.

This is happening at a time when the entire broadcast and cable TV industry and government have been grappling with how to deal with the Phase II digitisation (DAS) of India‘s cable TV. And it clearly reveals how much more needs to be done to make the government‘s agenda to professionalise and spruce up India‘s cable TV sector a reality. (MIB wants MSOs-b‘casters to sign DAS agreements within 15 days )

Now on to the problem between IndiaCasat and GTPL and Hathway. Both Hathway and GTPL have switched off IndiaCast channels in multiple markets across India including Gujarat, Maharashtra, West Bengal, and Madhya Pradesh as the latter is demanding a reduction in carriage fee and growth in subscription fee.

IndiaCast distributes 35 channels from the TV18, Viacom18, Disney UTV and A+E Networks spanning across Hindi general entertainment, news, kids, youth and regional genre.

Hathway, on the other hand, has cable operations that straddle across key Indian geographies and offers cable television services across 140 cities and towns.

However, Hathway and GTPL feel IndiaCast‘s demand is unjustified. Their contention is that the time is not ripe for a carriage fee reduction or an increase in subscription fee payouts as they have hardly started collecting money from the ground.

IndiaCast though feels that its demand is justified as the analog cable TV networks around the country are being digitised in a phased manner which will lead to broadcasters getting their fair share of subscription revenue due to transparency in subscriber base of LCOs.

The content aggregator alleges that both Hathway and GTPL want to maintain status quo by doing deals similar to that in the analogue era. According to IndiaCast, the two MSOs also want to revisit phase I deals which were done on cost-per-subscriber basis.

Hathway Cable and Datacom MD and CEO Jagdish Kumar feels the broadcasters‘s maw is increasing and they are unwilling to support the MSOs in this transition phase.

"Broadcasters have become too greedy. They are behaving like ostriches. They want a reduction in carriage fee and a growth in subscription revenue. Reduction of carriage fee is not going to happen overnight. As far as growth in subscription revenue goes, the MSOs themselves have not started collecting money from the ground," thunders Kumar.

Kumar‘s suggestion to broadcasters is to do "equitable" deals till the situation on the ground stabilises particularly since the MSOs have made large investments in making digitisation a reality.

"We also have to look at returns on the investments that we have made so far," adds Kumar.

The dispute that began end of December has reached the sector regulator‘s door. The Telecom Regulatory Authority of India (Trai) has asked GTPL to respond by 10 April to a complaint filed by IndiaCast alleging abuse of its dominant position in Gujarat.

Says IndiaCast COO Gaurav Gandhi, "GTPL‘s intention is to use these coercive methods on broadcasters and aggregators to pressurise them to keep DAS deals in line with what was there in the analogue regime - at any cost they don‘t want a reduction in their carriage income. Almost all our deals in DAS Phase I were done on a cost-per-subscriber model. We have written to Trai on the violations done by GTPL & Hathway and the regulator has now asked GTPL to respond by 10 April."

In its complaint, IndiaCast has alleged that Hathway and its affiliate GTPL illegally collided to coerce IndiaCast into acceding to their demands including increasing the placement fees, reducing subscription fees and also to re-open DAS Phase I deals already executed.

Giving his perspective on the dispute, GTPL president Sumit Bose says that the MSO has followed Trai regulations in letter and spirit while dealing with IndiaCast. GTPL, he says, had an agreement with IndiaCast till 31 March 2013.

He claims that IndiaCast itself did not respond to GTPL‘s offer of working on a new deal for phase II for almost two and a half months. IndiaCast officials did get in touch with GTPL by that time the company‘s management had decided against entering into a new deal with IndiaCast.

"IndiaCast was never inclined to sit across the table to discuss the deal with us despite our keenness. We waited for more than two and a half months but there was no response from them (IndiaCast). Since we did not get any response, the GTPL management decided to switch off the channels as we had to look at our own business objectives as well," affirms Bose.

The MSO then switched off IndiaCast channels in Gujarat citing financial unviability.

However, IndiaCast‘s Gaurav Gandhi is amused with the idea. On the contrary, he feels that the deal is unviable for IndiaCast as its analogue deal had it paying out more in carriage fees than the subscription fees that accrued to it courtesy GTPL.

"Both GTPL and Hathway have cited financial unviability and financial constraints as reasons for discontinuation of deals for IndiaCast channels. This is the basis of the notice they sent for their existing deals - and these existing deals are where we were paying them more carriage, then they are paying us for subscription. So how can a deal be financially unviable for the MSO if they are receiving more than they are paying? This clearly demonstrates the strong-arm tactics and the intentions of GTPL and Hathway," avers Gandhi.

Bose strongly denies charges of strong arm tactics by IndiaCast. To buttress his point, he says that Gujarat is as competitive a market as any other market in India is, with the presence of several leading MSOs and DTH operators.

According to Bose, it is quite optimistic on the part of anyone to think that carriage fees will come down so soon despite digitisation. He also asserts that GTPL has managed to retain its carriage fee level in the deals they have done so far to what they were earlier.

"I don‘t see the carriage fee coming down in the near term. Particularly the market that we are operating in, we expect to cross our own expectations on the carriage front. The deals we have done so far are in line with our expectations," declares Bose.

The last word on the dispute has not yet been said.

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