It was one piece of news that cable TV networks were waiting to hear for long, too long in actual fact!

Buffeted by potential competition from direct-to-home (DTH) operators, the timing of the Delhi High Court ruling that has ordered the government to enforce the rollout of conditional access system (CAS) in India within four weeks couldn't have been more crucial. Tata Sky is preparing to launch in June and Dish TV, at present the only existing private sector DTH service provider, is expected to sort out programming contracts with Star India and SET Discovery by then.

Cable TV can take DTH head on with its digital service. It has the firepower to do so, having built a rich battery of last mile operators (LMOs) who have serviced consumers over the years.

Firstly, it can cobble together more channels than DTH can offer at the initial stage when the consumer is making the shift from analogue to digital. Already, some MSOs are making available a little under 150 TV channels. DTH operators, on the other hand, are limited by transponder space on satellite and can only ramp up under MPEG-4 compression technology.

Second, cable TV can bundle broadband and, with preparation in future, telephony services.

Third, it can develop interactive features with its fibre network.

Fourth, it has manpower in place which can be quickly energised to push digital set-top boxes (STBs).

Sure, MSOs and independent operators would have preferred the courts to have come up with the same verdict much earlier, after the government withdrew CAS in 2004. That would have given them a first mover advantage with a considerable time lag before DTH could kickstart operations.

But there was one issue which had still to be sorted out for an effective rollout: LMOs felt insecure and did not back the rollout of digital cable. With competition from DTH looming large, they now have the support of their franchisee operators.

But what if the verdict on CAS had come after Tata Sky's launch and Dish TV's content contracts had been stitched with Star and Sony? Cable TV operators would have been able to fight against DTH with two weapons in their armoury - analogue cable and voluntary digitalisation. On analogue cable, operators have the flexibility of dropping subscription fees drastically. With a price warrior in place through analogue service, digital cable could offer an alternate choice to consumers to combat DTH head on. On the flip side, the digital service would still remain unaddressable while DTH could provide consumers the choice of selecting channels and packages they want to pay for.

Under CAS, cable operators do not have the flexibility of delivering pay channels on their analogue network. Consumers will have to select between DTH and digital cable for receiving these channels. They will, in other words, have to buy either a DTH or a cable TV set-top box.

But delaying the direct knock-to-knock face-off between cable and DTH operators hardly serves any purpose. The business model for MSOs and independent operators can only get worse if no CAS is in place. Because the way out to stop DTH from invading into cable territory without a properly tiered and price-packaged digital service would have been possible only through rate drops. While LMOs would have been unaffected, the MSOs would have felt the pinch.

Retooling business strategies and organising the sector is in the commercial interest of the cable operators. The hour has come to change the mindset and bring in quality and service-oriented practices. It will be meaningless to wish away competition from DTH and later IPTV providers.

Several networks already have a stockpile of digital STBs. So far, they have been unable to place these boxes in consumer homes. Even Hathway Cable & Datacom, the more aggressive of the digital cable TV players, claims it has managed to distribute just 40,000 boxes. It would do better for operators to take a more positive view: that with CAS, digitalisation, either through cable or DTH or IPTV, would move faster.

After all, the market is too big and diverse for any single player to cover it all.

Ensuring a ramp up in supply of boxes, erecting a solid encryption system, and having a sound billing mechanism should be the focus areas. Also, it is crucial for operators to find more, better and premium content which can lure customers. They will also have to work out rental schemes and low up-front charges to subsidise the boxes in order to stay competitive with DTH.

Another hard lesson to be learnt from this is that investments on old technologies won't help. For those who have put their money on analogue STBs, the chances of surviving the battle look grim. Yes, there is a market for free-to-air analogue service. But no, not for analogue STBs as that will limit the channel offerings at a time when supply is growing rapidly.

There will be competitive pressure for cable operators to upgrade their networks and services. Territorial monopolies will end and cable operators will also have to fight amongst themselves for retaining or acquiring subscribers.

DTH, of course, retains one advantage. It has a national footprint while CAS is limited to the four metros in the first phase. This will give DTH economies of scale, but then it will still face the big hurdle of drawing in consumers to buy a box in the non-CAS areas.

By bringing in CAS, the MSOs realise the entire business model changes in favour of them. Gaining control over the entire value chain across the network and having an addressable system will pump up valuation of cable companies and draw in global investors.

The green signal on CAS couldn't have come at a riper time. If there is any year which can drive digitalisation forward, this is it. In June-July, ESPN Star Sports will show live the football World Cup. The other key properties on the roster are ICC cricket Champions Trophy in September and the cricket World Cup early 2007 (both events on Sony).