The slapping of a 5 per cent service tax on the cable industry in finance minister's Union Budget 2002 has bitterly disappointed the trade. Vikki Choudhry, president, National Cable and Telecommunications Association (NCTA), a Delhi based body, makes a case for the cable op.

The levy of 5 per cent service tax on the Cable TV Service providers will have a cascading effect in further putting the burden on the Cable TV Consumers. The Cable TV Subscription will now reach levels where the Indian masses will not be able to afford the most common medium of home entertainment.

Till date this medium of home entertainment was highly subsidised for the masses due to being an unorganised sector, under declaration to the pay channel broadcasters and much more due to the understanding of the service providers of the burden on the masses for subscribing to Cable TV services.

As of today the monthly Cable TV subscription rates are in the range of Rs 150 - 300 per subscriber that too when the following expenses are incurred by the service provider per subscriber home per month:

Amount payable in advance each month to Pay channel Broadcasters
Rs 153

Amount payable towards copyright charges for screening Hindi films
Rs 16

Entertainment Tax as levied by the state Government of Delhi
Rs 20

Further is the cost of network maintenance, upgradation, equipment archaic & depreciation: Pole charges
Rs 40

Operational cost: Electricity, telephone, wireless, conveyance, generator Fuel/ Batteries, tools etc
Rs 20

Salaries & Wages, collection charges, employee safety Insurance, Employee Welfare, etc
Rs 35

Office / Administration: Rent, printing & stationary, billing, audit, entertainment and others
Rs 25

Moreover is the investment on infrastructure made in setting up the Headend "Control Room" and the Cable TV distribution Network:

Control Room for 70 channels (Rs 30,000 per Channel)
Rs 2.1 million

Distribution Network at Rs 2,600 per Home connected that need to be recovered in a maximum of 36-40 months as technology changes very fast (Example: if there are 3,000 homes connected x Rs 2,600 = Rs 7.8 million)

Even if a Cable TV service provider expects on the above investments a return of a mere 2 per cent per month, then he will have to charge an additional Rs 70 per month per subscriber.

In the given situation, the cable TV service business has become unviable and a loss making enterprise. The Indian government, instead of understanding the problems of the Cable TV service providers have further levied a 5 per cent service tax instead of taking any measures against the pay channels or in the interest of the consumers. This means that subscription for cable TV services will go up to Rs 400 per month or more.

The Government should in the above circumstances permit the subscribers to pay for what they desire and are ready to pay for, the issue of conditional accessibility requires urgent attention by the Indian government.

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