Television

Broadcasters back low FTA package price to push pay channel bundles: cable ops

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NEW DELHI: The cable operators are again taking a shot at forging a unity in a bid to neutralise the broadcasters and have the conditional access system implemented as soon as possible.

In a submission given to the information and broadcasting ministry yesterday on CAS, the National Cable & Telecommunications Association, Cable Networks' Association and the semi-active Cable Operators' Federation of India have said that broadcasters, some of them who have an interest in ground distribution, are deliberately trying to have the basic tier of free to air channels in a CAS regime very low so that cable subscribers would not feel the pinch going in for additional pay channels. 

In the letter addressed to I&B minister Sushma Swaraj, the cable operators associations have submitted: "We wish to bring to your kind knowledge that the pay channel broadcasters who have considerable interest in the ground distribution business through their respective MSO companies in order to safeguard their own interests, want the pricing for the basic tier to be minimum, as this is in their own interest."

The letter, drafted mostly with inputs from NCTA, on the financial aspects further adds; "The stated rate of interest may be adequate at present rate of bank lending. But banks/ financial institutions do not lend to cable networks (venture risks are considered too high). Hence the rate of private borrowing, including defaults in payment schedules, should be considered, which work out to 18.5 per cent. It needs to be borne in mind that in addition to normal profit margin, there should also be scope for future upgradation in the convergence era and CAS, if this industry has to grow. Lack of adequate financial support will suffocate this industry to death." 

The I&B ministry had been conducting a series of meeting to decide on the pricing of the basic tier of cable service to be offered post CAS. The prices suggested in the last meeting, held sometime back, ranged from as low as Rs 35/month/household to Rs 100/month/household.

The cable industry representatives had also pointed out that certain figures arrived at by the finance ministry representative at the meeting did not adequately take into consideration all the aspects of, especially financial ones, related to cable service.

The letter states that during the meeting held by the I&B ministry on 22 August, the analysis of the collected data was disclosed, which is as follows: 

1. Total Free to Air Channels - 40

2. Total Pay TV channels - 40 

3. Total Number of Channels - 80 

4. Maximum Radius of area per headend - 7 Kms 

5. Maximum Length of cable per Km - 1.5 Kms 

6. Trunk Cable used - 42 Kms 

7. Feeder [Sub Trunk] Cable used - 231 Kms 

8. Total Area Covered - 154 Sq Kms 

9. Cost per Channel - Rs.30, 000 - 40,000 

10. No. of homes per Km - 200 

11. % of TV Homes - 90 

12. % of Cable TV Homes-70 

13. In 154 Sq Km of Area - Homes passed - 41,500 

14. Max. Number of Subs per Headend - 29,100 Subs 

15. Cost Incurred per Subscriber - Rs. 800 - 1000 

16. Total investment on cabled Distribution plant - Rs. 31 million 

17. Net Operating expenditure per Subscriber - Rs 35 - 45 per month 18. Estimated life of Headend - 7 years 

19. Estimated life of Distribution plant- 5 years 

20. Rate of interest - 15% 

"It is evident that the above results reached are simply based on mathematical calculations and an average mean has been taken out of the cost details as submitted by the MSOs, broadcasters, broadcaster-owned MSOs, Prasar Bharati, independent networks and industry associations," the letter to Swaraj says, hinting that many more hidden costs are involved too, which must be taken into consideration before deciding on the basic tier of cable service.

Clarifying the cable operators' point of view the letter lists out the concerns and the views which are as follows: 

1. Network is to be designed for 90 channels. On an average, across the country, average number of Free to Air satellite channels is 60.

2. Total number of Pay TV channels is 32 and that too when the few popular channels are bundled along with non-popular pay TV channels in a bouquet. 

3. The radius of operation of 7 km over coaxial cable, as stated, is technically inappropriate. It is not possible to deliver 68 channels with equal clarity and free of impairments within this radius. It cannot exceed 4.6 km. With trunk output of 4.5 km each (generally 4 trunk feeders are leaving headends, utilization of 500 series trunk cable will be 18 km. Whereas every trunk feeder can have 15 branches (in a cascade of 16 amplifiers in every trunk line feeder) of RG-11 employing 3 amplifiers, spaced 180 metres i.e. 3 km on every feeder and 12 km on every network. Based on this, the calculated cost of cable, support wire and connectors would be Rs 1.32 million for 500 series coaxial cable, Rs 375,000 for RG-11 feeder Cables. To add to this is Rs 250,000 for the support wire, accessories and cabling labour. The requirement of RG-6 drop cable @ 20 meters per subscriber will be 100 km for 5000 subscriber homes. 

4. The cost of 64 Trunk amplifiers would be Rs 1.92 million @ Rs 30,000 each and of 192 Line Extender Amplifiers would be Rs 1.54 million @ Rs 8,000 each. 

5. Therefore, the Trunk cable 500 series will be 18 km, RG-11 feeder cable will be 12 km and RG-6 drop cable will work out to approximately 110 km in a network.

6. The total area covered on coaxial cable network will be 72 sq km and on HFC 3,632 sq km. 

7. The cost per channel, with low-grade modulators and receivers, shall be Rs 30,000-40,000 for RF network. Another Rs 30,000 per channel can be added for optical fibre interface. Using consumer grade modulators (recommended) would cost up to Rs80,000 per channel.

8. The average number of homes passed per sq. km is 250 i.e. a maximum of 18,000 homes per coax distribution network and 908,000 homes in HFC distribution. With a penetration rate of 60 per cent on an average, it comes to 10,800 Cable TV homes per coaxial RF network and 544,800 Cable homes on HFC network. 

9. Based on calculations, the cost of distribution network per subscriber comes to not less than Rs 1,350 per subscriber on coax distribution and Rs 3,500 per subscriber on HFC distribution. The stated cost of Rs 800-1,000 is unreasonable. The total investment on distribution plant would be much less than the stated Rs. 30 million. 

10. Also the stated figure of 29,100 as maximum number of subscribers per headend is inaccurate because with7,500 existing headends in India this figure works out to 218 million whereas total national CATV connectivity is only 37 million. 

11. The estimated life of distribution plant cannot exceed 4 years, if the norm of amplifier-to-amplifier cable replacement when number of joints between amplifiers exceeds 4 is to be followed. That will be the fate of coaxial cable and associated accessories laid externally exposed to whether and corrosion.

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