Finance ministry moots Rs 46 FTA price

NEW DELHI: The industry had been referring to it as the day when the CAS (conditional access system) rollout picture would become clearer. What transpired though was that the government-sponsored task force on CAS today did not arrive at any consensus on the final pricing of the basic tier of free to air channels.

There were differences of opinion on the price arrived at by the finance ministry - Rs 45.90 for 60 channels. This is exclusive of local taxes. If Rs 30 is factored in as the service tax component, then it works out to Rs 75.90. A number that fits with the figures reported earlier (between Rs 70 and Rs 80) on as to what the government's thinking on the FTA pricing was.

The government today gave the task force members the break-up through which the Rs 45.90 FTA costing was arrived at.

According to the government estimates, the cable headend capital cost would be Rs 2.59 million, per channel cost at the headend (in case of upgradation in a post-CAS regime) would come to Rs 43,170, the network cost would come to Rs 36,754,562 for a network with 37,540 subscribers. The per subscriber cost has been worked out by the government to be Rs 1,137.

Then, the government has calculated the whole operational cost of a cable operator, inclusive of manpower and depreciation, as being Rs 1.257 million per month. An operational expense per subscriber per month has been calculated to be Rs 35.78 and the net cost per subscriber per month (for 60 channels) has been calculated to be Rs 45.90.

According to those who attended the meeting, though there was in-principle agreement on the costing (mostly supported by the MSOs and the broadcasters) to be fair on the whole, but certain sections like the cable operators and consumer activists have raised their objection on different grounds.

The cable ops representatives in the task force have dubbed this "too low Which if implemented would drive small cable ops out of business," while consumer activists opined at the meeting that the costing of the basic tier of channels is still on the higher side. According to one such calculation (given by a consumer activist from Kolkata), it should be around Rs 36 per month for a subscriber base of 50,000.

One of the cable ops in the task force said, "We will register our objection on this costing as the realistic costing per subscriber would work out to be far higher."

However, at the next meet, slated to be held on 27 March, another issue may crop up. The costing done by the government has not taken into account the distribution margin for cable ops, MSOs and also the broadcaster.

However, the way matters are progressing seems to suggest that over a few more meetings, the task force would be able to formalise the cost of the basic tier.

At the last meeting of the task force, the finance ministry had also circulated a proforma to be filled in by everybody. The proforma was supposed to help the government in knowing the real costing of channels from all stakeholders of the industry --- cable, broadcasting, MSOs and the consumer.

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