NCTA gives memo on CAS to president, PM and deputy PM

NEW DELHI: Even as the task force was discussing various aspects of conditional access system (CAS) and its implementation amidst media reports that the implementation may be deferred on political pressure from BJP, a cable association, National Cable and Telecom Association (NCTA), today, has sent a memo to the president, the prime minister and the deputy prime minister of the country decrying lobbying against CAS implementation.

NCTA president Vikki Choudhry in the memorandum said that a section of the industry is "attempting to obfuscate and divert to peripheral issues" when talking about CAS implementation.

We reproduce here the full text of the NCTA memo sent to the top three political figures of the country.

The NCTA note in full:

On 31 December 2002, presidential assent was given to a key amendment to the Cable Network (Regulation) Act 1995 mandating provision of pay TV channels only through a set top box (STB). Popularly known as Conditional Access System (CAS), the amendment was brought in essentially to empower the viewer to select and pay for only channels that he really wished to view at a price acceptable to him.

The amendment was brought in to end an era of forced bundling of channels by foreign TV broadcasters who had indulged in frequent price rises, forced bundling of channels and frequent switching off of its channels to cable service providers and MSOs to extort more and more money from an unwilling viewer base.

The CAS regulations had been brought in on the basis of exhaustive deliberations of a multi dimensional task force consisting of consumer groups, broadcasters, cable service providers and multi system operators which unanimously recommended the bifurcation of TV channels into free to air channels (FTA) and pay TV channels.

While government would decide the price of FTA channels, the price of pay TV channels would be left to market forces of supply and demand with a key condition that these premium channels would from a notified date be available only through a set top box and further only if the viewer desired to actually watch a particular pay TV channel. For this purpose, all that the viewer would need to buy was a set top box. In turn, the cable service providers and MSOs would invest in creating a CAS system and be ready to supply it by the notified date.

Government took a proactive stance and notified the date of 14 July for the four major metros by its order dated 14 January 2003. Subsequently, government appointed an implementation task force to ensure smooth implementation of CAS. After various meetings, on 9 May 2003, the government has, after detailed discussion in the task force, notified a maximum price of Rs 72 for all FTA channels with a direction that no customer shall be provided less than 30 FTA channels.

A high-voltage media campaign by a strong lobby of foreign broadcasters against the Conditional Access System (CAS), designed to regulate the TV business in India, is attempting to obfuscate and divert to peripheral issues. This attempt is to raise public anger against the CAS mandated by the Indian Parliament.

The CAS regime is threatening the pay TV broadcaster's advertising revenues in the short run, as it will expose the true extent of their viewer-ship to the advertisers. It is also threatening the lucrative Pay-TV subscriber revenues, which these broadcasters are virtually 'extorting' from the cable service providers on most unreasonable terms.

For example, channels have been 'bundled' into bouquets of channels and the cable service providers and the consumers have to buy all or nothing. The Star bouquet consisting of eight channels is priced at Rs 60 per customer. The Sony bouquet consisting of eight channels is priced at Rs 55 and the Zee bouquet consisting of 16 channels is priced at Rs 60 per customer. ESPN-Star Sports bouquet of two channels is priced at Rs 48 per customer. Other bouquet of Pay channels run by Modi Entertainment Network is priced at Rs 28. The total of all these comes to Rs 251 (per subscriber per month)

To this, one needs to add the entertainment tax and service tax being charged by different state and central governments on an average comes to Rs 45. After accounting for the operating expenditure of the cable service provider, the total cost of service amount to around Rs 400. The average price of cable TV in the four metros is in the region of Rs 175 to Rs 275. This results in a totally losing proposition for the cable service provider, which is being subsidised mainly by the larger Multi-System Operators (MSOs) who depends on the smaller last mile operators to collect the revenue from the public. The broadcasters argue that the operators under-declare their subscriber numbers.

In order to redress this problem and to bring some control on the 'Pay Channels', the I & B ministry has been conducting an exercise over the last 18 months in which broadcasters, cable service providers, equipment manufacturers and consumer interest groups have fully participated. A task force was constituted, as stated earlier, consisting of members from the above interested groups to find a solution and to suggest a way forward for the regulation of Pay TV in India. As a result of this exercise, the Parliament amended the existing Cable TV Regulation Act and Government, thereafter, mandated that the CAS would be implemented in the four Metros with effect from 14 July 2003.

This mounting attack on the CAS proposal is well orchestrated by a powerful lobby of foreign networks like Star, Sony, ESPN-Star Sports and others. These foreign-owned broadcasters have immense clout in the media because of cross-ownership between the entertainment channels and the news channels.They command immediate attention in the print media because of vast amounts of money the broadcasters spend on advertising in newspapers and magazines.

As it happens in politics, the broadcasters' lobby claims to be championing the interests of the common man while, in fact, suggesting action of deferring the CAS implementation, which would actually serve their own specific designs and interests. The attempt of the foreign broadcasters to parade as protectors of public interest is extremely brazen.

The foreign broadcasters can hardly be expected to protect the interest of the common Indian consumers. In whatever devious manner these foreign broadcasters try to camouflage it, the CAS dispute is not about public interest. It is about control, private control of airwaves in India's entertainment space and over the cable TV distribution system.

Public memory is short and the broadcasters are taking advantage of this. They need to be publicly reminded of the 1995 judgment of the Supreme Court of India, where the Court has held that "the airwaves are public property. The use has to be controlled and regulated by an independent autonomous public authority in the interest of the public and prevent the invasion of their (people's) rights".

The foreign broadcasters have also gradually spread their tentacles into the cable TV distribution business in India by buying out substantial chunks of cable distribution networks in major cities like Mumbai, Delhi, Bangalore, Hyderabad and Chennai amongst others. The foreign broadcasters are trying to gain domination, both of TV content as well as the distribution activity of cable TV. Their clear intention is to create a vertical monopoly.

The independent Indian MSOs and medium and small cable service providers in different towns and cities of India are being squeezed by broadcasters like Star, who want to control and dominate the cable distribution business as well. The foreign pay TV broadcasters have formed a cartel and are denying access/ switching off cable service providers on the pretext of non-payment of their ever-increasing pay channel charges, knowing fully well that the cable service providers are losing money heavily in order to meet the demands of the pay channels.

For example, the pay channels have increased their rates in the last three years by over 500 per cent. Increases are being made at intervals of six and 12 months. The increase is not proportionate to the actual viewer-ship of individual channels.

The attack on the government of India's (GOI) proposal for introduction of CAS is being done under the guise of helping the consumer. The common man is being frightened by saying that they would have to pay much higher subscriptions if CAS was to be introduced. The reality is quite different. After CAS, the consumer will have a choice of deciding which of the 35 plus pay channels he wishes to watch and pay for accordingly.

A bogey is being raised with that the digital Set-Top-Box (a device to regulate pay TV at the consumer's premises) would cost Rs 7, 000 which is false as the cost would not exceed Rs 5,000. This totally ignores the fact that analogue boxes would cost less than Rs 3,000. In reality, the consumer would have a choice such as renting the same, buying it on hire-purchase, buying it outright; depending on each one's financial capacity. "That too only if he wishes to subscribe to niche pay TV channels"

Nobody debates or talks about the price of TVs as being a factor in watching cable TV. Depending on the customer's choice and capacity to pay, the markets make available the TVs on various payment terms. The Set-Top-Box is only an attachment to enable him to choose and pay for premium channels that he chooses to watch on the TV.

The orchestrated criticism of CAS, using the services of pliable editors, members of Parliament, consumer action group, a media research agency from Hong Kong (Home of Star), a rating agency in India which feel threatened by the CAS regime amongst others, are being used in a spate of disinformation in the Indian print media in order to save the foreign broadcasters from losing advertisement and pay revenues.

These broadcasters know fully well that CAS is the only acceptable method of running pay TV services in other countries, particularly in the West. They submit to the discipline in those jurisdictions without murmur. In India, they are behaving like colonialists by telling the 'natives' what to do and to pay up without asking any questions for their services. If the GOI succumbs to this pressure, it will ensure the demise of the independent cable TV operation in India and the control of the same will pass into the hands of foreign broadcasters who have shown their clout in manipulating news to suit the agenda of their western masters.

The coverage of the recent Iraq war by Fox News of Rupert Murdoch and CNN is but an example. What is being attempted in India is also control of Indian minds and eyeballs. The state must step in and stop this from happening. Frightening the ruling coalition of losing votes at elections by a media campaign and showing a bogey of losing popular support is an old and tested ploy of vested interests. Are we so weak?

Also read:

Pay channels to remain 'pay'

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