The report foresees a period of significant uncertainty ahead in the Indian media and entertainment sector. Implementation of conditional access (CAS), besides having an impact on the media and entertainment industry, will also have significant ramifications for all sectors of Indian society including advertisers, FMCG companies, white goods manufacturers amongst others - adds the report.

The CSB report which attempts to conduct an impact analysis of various implementation scenarios on the Indian media and entertainment sector, states that a lot of work need to be done on the "ground" in terms of implementation and seeding of set-top boxes.

The report says that the maximum number of boxes which will be seeded (total metro C&S at 6.5 million) would be around 1.5 million. It adds that this scenario could have negative political implications.

Set-top boxes:
On the issue of set-top boxes, the report says that there is little evidence of a move towards installation of set-top boxes in consumers' homes. While certain pay channels continue to advertise the necessity of acquiring set-top boxes (to continue receiving them post-July 14), local cable operators (the consumer interface) remain clueless about pricing and availability of the same, it states.

Consumer's point of view:
From the consumer's point of view, the CSB report states that CAS is not a step in the right direction in terms of affordability.

Based on the income demographics of the consumers in the four metros, the report makes the following observations:
* Cable currently enjoys ~80 per cent penetration among the addressable households in the metro cities.

* Approximately 45 per cent+ of households in the metros (in the monthly income bracket of Rs 9,000+) could acquire set-top boxes (priced in the region of Rs 1,500 - Rs 3,000).

* However, the balance of 55 per cent would struggle to afford a Rs 1,500 set-top box coupled with monthly charges in excess of Rs 200 (+5 per cent of income)

*This division between the 'haves and have nots' will be more apparent in the rest of India where only 10 per cent of the population will really be able to afford conditional access through set-top boxes.

* The swing factor for approximately 25 per cent of the metro population (Income - Rs 6,000 - Rs 9,000) will be the price of the set-top box.

Consequently, besides the issues of availability of set-top boxes, affordability will also be an issue, the report adds.

The report adds that this issue will gain in significance as the conditional access rollout moves on to Phase 2 - implementation in the rest of India.

The report makes an assumption that if CAS is rolled out over the next two years across India, this would be possibly the largest incremental cost item for most Indian consumers. At an average STB price of Rs 1,500,500 (low-end analog box produced on a large scale) and assuming a 50 per cent conversion rate of the existing 42 million India C&S household base, there would be a huge outgo from the Indian consumer's wallet.

Over the past few years television viewing in Indian homes has become a necessity with viewers accustomed to receiving premium content (movies/premium sports/entertainment) at the cost of Rs150-300 per month.

Hence the propensity to purchase a set-top box (to continue with the existing viewing experience) will take precedence over all purchases. In the transition period, impact on sales of other consumer durable items could be significant.

More specifically, implementation of CAS will also have an impact on the sales of the second TV set in most urban households given that post-CAS each television set would require its own set-top box.

Cable ops real gainers of pay channels turning FTA: CSB report