pay TV debate is seriously hotting up in India. Even
as channels slug it out over subscriber bases and rate
hikes, the cable industry is irked at the broadcasters'
apathy to its woes.
indiantelevision.com proposes to initiate a healthy
debate on the issue and possibly throw up a few viable
solutions to the impasse.
this piece, Hinduja TMT executive vice president Ashok
Mansukhani holds forth on the side of the cable industry.
The National Readership Survey 2001 reveals that television
through cable is currently available in 38 million homes.
The reach of television in urban areas is 84.7 per cent
in urban areas/towns with population of one million and
above and 32.7 per cent in rural areas. The Survey further
reveals that in urban areas, a saturation point has almost
been reached. Most of the growth in the last one year has
been in semi-urban and rural areas.
POTENTIAL FOR GROWTH :
A key factor to note is that while the growth in cable
industry has been only 7.1% in the last one year, the potential
for growth remains high. The total number of television
homes is currently estimated at 70 million while the total
number of cable homes is 38 million. This means that there
are another 32 million homes in the target reach of the
cable industry in terms of current estimates. Viewers in
metropolitan cities have the potential to receive approximately
150 TV channels from at least 75 satellites. The importance
of television to inform, educate and entertain cannot be
overstressed in these troubled times.
ACT 1995 :
For the first five years of the last decade, the cable
industry mushroomed and indeed thrived in a non- regulatory
atmosphere. In 1995,the Cable Network Regulation Act was
brought in to regulate the industry. One immediate impact
was the entry of large companies, which consolidated the
small operators into becoming franchisees/associates of
the multi system operators (MSOs). This led to closure of
many customer service centers known as head-ends as small
operators began to take service from the MSOs. Even so,
today there are an estimated 40000 cable operators.
cable headend - heading for trouble?
The present size of the Indian cable industry at 38 million
homes is largely due to the entrepreneurial efforts of these
local cable operators who have built the industry from scratch
spending hundreds of crores without any financial support
from banks and financial institutions to create a massive
cable infrastructure enabling more than 90 channels including
20 Doordarshan channels to be made available to the viewers
at an average price of approximately Rs. 100/ a month.99%
of all satellite TV programmes are brought to the homes
of the rich and poor through these cable operators. The
cable industry is today upgrading its infrastructure to
provide return path capability for broadband and Internet
access and ultimately cable telephony.
FOREIGN PAY CHANNELS :
Apart from 20 Doordarshan channels, the balance channels
are being beamed from foreign uplinks at Singapore, Hong
Kong and Bangkok. The foreign channels entered the Indian
skies a decade ago in a free- to- air mode. Over passage
of time under the guise of digitalizing feeds they began
to encrypt the signals by forcing operators to buy decoders
at exorbitant prices. Ultimately they began to convert the
free-to-air channels to pay channels. Here too there was
a gradual increase in the pay-channel subscription rates
from a couple of Rs 2.85 to an average of Rs. 40 at present
for the Star package, Rs. 42 for the Zee Turner package
and Rs 24 for the ESPN-Star Sports package. The net rise
in pay channel cost for cable subscribers has been as high
as 400% in the past five years.
PROBLEMS OF CABLE INDUSTRY :
The ostensible cause for the steep increase in pay channel
rates has been the alleged steep increase in the cost of
sourcing content and alleged under -declaration of subscriber
base by cable operators. The cable industry has brought
out many irregularities being committed by the pay channels
but government has failed to act leading to frequent disputes
which frequently result in switching off of signals by pay
channels and consequent dissatisfaction with cable operators
The cable industry perspectives on some key issues are
BUNDLING OF CHANNELS : The
pay channels bundle weak channels with little or no viewer-ship
with popular channels and demand to be paid on a package
basis for channels not desired by the subscribers. They
refuse to provide an ala carte price nor is there any means
at present to restrict channels to only interested subscribers
by providing pay channels through a set-top box. Globally,
pay channels are subscribed on the basis of pay-for-what-you-view.
In India due to absence of regulations for mandatory conditional
access, the cable operators are forced to subscribe to the
entire bouquet and also absorb the entire cost of pay subscription
demanded by the pay channels even if the subscriber does
not pay. This is seriously affecting the financials of major
MSOs like Incablenet, Hathway and Siticable.
DOUBLE BENEFIT : Globally
pay channels charge either sufficient subscriber rates or
charge adequate advertiser rates to cover cost of content
and operating costs including satellite transponder costs.
In India in the absence of regulation the pay channels are
enjoying best of both the worlds by collecting both subscriber
revenue for viewers and advertiser revenue from advertisers
and are frequently increasing both subscriber and advertiser
rates on so called popularity based on television ratings
points which themselves are known to be cooked up and fraudulent
and have now been discarded by major broadcasters like Zee
PAY RISES :
Barring specific prime time programmes, audience research
data shows that most channels do not have regular viewers.
The fact is that viewers watch programmes not channels.
This is so even for sports channels. When India plays a
cricket match then viewer ratings soar whether it is on
Doordarshan or ESPN. When golf/baseball and basketball are
telecast the viewer-ship is so insignificant that it does
not appear in the audience ratings. Yet every 3-4 months
pay channels specially sports channels are raising rates
arbitrarily and want to be paid for all 365 days and entire
24/7day environment without any justification.
ILLEGAL SWITCHING OFF :
In the absence of agreement with the cable industry or
acceptance by the subscribers the pay channels resort to
illegal switching off of signals causing great economic
hardship to the cable industry and irritation to the viewers
who on the one hand blame the cable industry for non-provision
of channels and on the other are not willing to pay the
substantial hike in the subscription cost.
OF CABLE INFRASTRUCTURE COSTS :
Over the past decade the cable industry specially the
multi system operators have spent hundreds of crores to
set up the 35 million home cable industry without which
Doordarshan and satellite channels will not be able to even
reach the viewers. Globally cable systems are compensated
for their infrastructure costs by payment of carriage fees
or by allowing affiliate advertising for fixed time slots.
OF CABLE INDUSTRY :
In India the pay channels are not willing to help the
cable industry to survive by any means of helping them to
recoup the costs. The cable industry is turning sick due
to a conscious campaign by the pay channels to make cable
service so costly that the viewers do not mind the introduction
of direct-to-home service by a leading pay channel provider,
which will lead to the death of the cable industry and the
loss of employment to lacs of people connected with the
cable industry. This is the primary cause of under- declaration
and non- payment of pay channel dues by operators leading
to the vicious cycle of signals being switched off, litigation
and discontentment of the viewers.
OF UNDERDECLARATION :
The pay channels are now demanding to be paid for enhanced
number of subscribers on the plea of so- called popularity
of their channels without being able to justify viewer-ship
numbers or frequency and without regard to television rating
points, which show pathetically poor viewer-ship trends
even in prime time slots.
CONDITIONAL ACCESS :
In the absence of mandatory conditional access it is
impossible for the cable operator to restrict provision
of channels to viewers who actually want to watch those
channels or pay for them. Further the demand for full declaration
is a non-starter because not a single television rating
supports the plea of the pay channels that people are watching
their programmes on a 24/7 or a 365 day basis.
The cable industry has no dispute with the desire of
broadcasters to charge for their content or for viewers
to pay for these channels. The problem arises when the pay
channels continuously want increase in declaration and per
subscriber rates and the cable operator is unable to restrict
provision of pay channels to the paying subscribers.
AS YOU WATCH :
The pay channels are not interested in supporting the
demand of the cable industry for mandatory conditional access
because they are aware that given the choice both cable
operators and subscribers would choose not to watch a majority
of the pay channels and would only be willing to pay for
the actual period of viewing instead of the flat 24/7/365
day rate as demanded as present.
ACQUISITION OF SMALL CABLE NETWORKS BY PAY CHANNELS
TO FORCE ARBITRARY PAY RISES :
Leading pay channels have begun to acquire small cable
networks and are consolidating them into multi -system operations
to create a monopoly for their bouquet of channels. This
is more pronounced for Hindi entertainment channels and
sports channels. Their objective is to control the distribution
of content to Indian homes through digital decoders, which
are authorized or deauthorised from foreign locations.
revolution in the air?
TO HASTEN DTH REGIME :
Their ultimate objective is to make the cable industry financially
unviable so as
to enable introduction of direct to home telecasts at exorbitant
will create a situation by which the mass public will not be able to afford television, thereby denying governments
right to inform, educate and entertain the public through
BY FOREIGN CHANNELS :
A new and alarming development for the cable industry
is the effort through the formation of the Indian Broadcasting
Federation for cartelisation on rates and joint broadcast
industry actions like switching off of signals by foreign
pay channels. Recently the Zee group has entered into a
distribution alliance with Turner-AOL group, which in turn
is talking to Sony group for a joint distribution effort.
Star is also talking to both these pay channel groups for
a similar distribution effort.
The net result is that a foreign pay channel cartel has
already been formed which has immense power to influence
the supply of content not merely on commercial terms but
in terms of the information provided to the normal viewer
which is very dangerous in the present day disturbed environment.
This also results in Doordarshan being marginalized. This
has serious potential socio-political implications as decoders
from abroad control the content.
CONVERGENCE BILL :
There is no fixed time schedule for the passage of the historic
Convergence Bill. The problems raised above of the cable
industry would be largely resolved when the Convergence
Bill becomes law. In the absence of the passage the pay
channels are making merry at the expense of the cable industry.
- Till pay channels are compulsorily mandated to be
available only through conditional access systems on an
open architecture system, the pay channels should be directed
by the government to freeze the connectivity declared
by the cable industry as on 31/12/2001 and the subscriber
rate on the same date.
- To enable provision of set-top boxes at affordable price
to the subscribers, the government should reduce the duty
on these boxes to zero for a period of five years.
- The cable industry should be compensated for the cost
of servicing the up gradation of network and collection
of pay channel subscription by a 15% markup as availed
of by the advertising industry in India.
- The passage of the Convergence Bill should be expedited
so that the control of airwaves passes into public hands
as mandated by Supreme Court in the historic Cricket Association
of Bengal 1995 judgment.
(All arguments expressed in this article are the author's