Regulators

'All our pay channels will continue to be encrypted post-CAS' :Sunil Khanna Zee Turner chief executive

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Conditional access may have been okayed by Parliament, but questions still haunt the industry. I&B minister Sushma Swaraj feels that post-CAS quite a few pay channels may turn free to air, but broadcasters feel otherwise. The pricing of the basic tier has still not been decided and various cable companies have not firmed their investment plans up. The easy availability of set top boxes certainly is an issue, leave aside the fact that a debate is raging whether India should go in for analog STBs or digital ones.

Amidst all these, Siticable, Zee Telefilms‘ cable arm, has introduced another aspect to CAS --- headend in the sky or HITS. The company also maintains that CAS through HITS will be a better proposition for cable ops and others.

Looking at these issues is Zee Turner, a joint venture distribution company, chief executive Sunil Khanna who spoke to indiantelevision.com in Delhi.

Excerpts:

How do you see CAS transforming the industry?



We believe that it is a step in right direction. The introduction of addressable environment in the industry would bring in the much required transparency and would help organizing the same. However, having taken this step, the key would be how efficiently the industry implements the same.

Why is so much emphasis being given on ‘smooth implementation‘ ? What are the critical factors that could affect the implementation of addressability to household level?



Well, there are a couple of them and it is critical that due importance is given to those and a well thought of ‘roll out plan‘ is prepared .

While preparing an implementation plan, one needs to ensure that it takes care of the concerns of the stakeholders such as broadcasters and cable operators and that is also reasonable for customers.

The duty on STBs is as high as 58 per cent at the moment. Though, the I&B minister has assured us that she will take the issue up with the finance minister. The price of digital STBs will be around US $ 40. In digital mode, the quality of viewing will make lot of difference and more number of channels will also be available to consumer in the basic tier and pay mode.

The scene of prime band & non-prime band will also be eliminated. Those who cannot afford the pay channels will be able to get free to air (FTA) channels at Rs 40-50 per month, plus entertainment tax and service charges that totals up to between Rs 90 to Rs 100 per month.

Another issue is the selection of appropriate CAS. One could debate about whether to go for digital or analog CAS. However, it has to be kept in mind that investment in a system which could be hacked easily could be a very expensive proposition as one would have no option but to replace all the cards circulated in the market. In some cases even the boxes would need to be withdrawn and , may be, tuned manually with the new cards.

Similarly , one would have to make informed decision on SMS (subscriber management system) and the type of STBs to be sold.

Who is going to be main beneficiary from this model?



I think all the entities in the value chain --- broadcasters, MSOs, cable operators and customers --- would eventually gain from the model in the long term.

Broadcasters would get what they actually deserve for their channel(s). Customers could decide what they wish to see on their TV sets and could plan their spend on cable in line with their budget. There will be a harmony amongst all the value chain partners, even the consumers.

"The most significant contribution of an addressable environment would be the change in mindset and hence, relationship between operators and broadcasters!"

Will the earnings of a cable operator get affected after addressability is implemented?



No, we don‘t think so. Operators would have two clear streams of revenue.

One, by way of distributing FTA channels. The other and the much larger stream of revenue would be by distributing pay channels. Operators would end up getting approximately 50 per cent of the pay channel revenue as distribution fees. This would be a fairly large revenue stream for the operator.

The most significant contribution of an addressable environment would be the change in mindset and, hence, relationship of operators and broadcasters.

With the implementation of CAS, the role of a muscleman will also be eliminated as the cable ‘war‘ will come to rest. The copyright infringements will also be reduced as the consumer will taste the difference between quality picture and pirated video. The film industry will also get to benefit.

The whole process will take two to three years in whole country to be fully implemented. As of today, the reality is that on the one hand operators feel that broadcasters are taking away revenue from the subscription being realized by them, whereas broadcasters feel that cable operators are not sharing revenues in a ‘fair ‘ ratio.

The addressable environment would establish a proper mechanism of business between two entities and operators would only benefit more with increasing penetration of ‘ pay channels‘ .

Do you think it would take some time before the relationships between operators and broadcasters change?



Not really. This may happen as soon as addressability is introduced. Customers are already used to paying for ‘pay channels‘ . Hence, the penetration of pay channels in all the metros would be fairly high.

From beginning itself, operators would get significantly higher streams of revenue by selling /distributing pay channels. In fact, any simple calculation could show that this would be much higher than their earnings by distributing FTA channels.

Will any of the Zee -Turner channels go FTA after the implementation of CAS?



No. There is no instance of any pay channel becoming free to air in whole world. Moreover, customers are already paying for the pay bouquet and, hence, all the channels would remain encrypted. All that viewers need to do additionally is to buy STBs which may cost between Rs 1,500 for analog and Rs 2,500 for digital.

But the FTA channels, which had plans to become pay, have held up their plans for some time. The advertising pie is not growing at the pace the programming options are increasing. The viewers pay for what they watch and this is the global scenario.

What is the time frame during which the first phase of implementation could start?



The key operators in four metros are already in the process of selecting technology and most of them are in a position to start the same within three to months. In fact, if we go by HITs (headend in the sky) model of CAS, the first phase of implementation itself could include more cities.

Wherever operators would require any assistance we would provide them all necessary technical and marketing help to speed up the process. You must be aware that the chief ministers of Andhra Pradesh, Karnataka and Maharashtra have already requested the I&B ministry to include many more cities in first phase of CAS.

The government is hesitant on account of the availability of boxes. However, as per our study, globally extra capacity is as high as two to three million boxes every month and the product is available at a very low cost in this digital era.

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