Whether by accident or design is a matter of debate. But large parts of Mumbai serviced by Hinduja Group MSO INCableNet are currently virtually without pay channels. What is being witnessed is a virtual preview of what awaits many TV households post-14 July - the cut-off date the government has mandated for the rollout of conditional access in the four metros (Chennai metropolitan area, municipal council of greater Mumbai area, Kolkata metropolitan area and national capital territory of Delhi).

Is this what the defining moment for the Indian C&S industry, initiated to offer consumer choice and bring order to the business, has in store for all concerned? Consumers fretting and fuming in frustration; pay broadcasters taking a hit on advertising because too few viewers are buying set top boxes; the cable turf demarcations that had been brought to bear in the past four or five years under serious threat?

Quite possible, but the government has only one point to make: That the 14 July CAS rollout deadline, as well as its implementation across the four metros, is sacrosanct. The reason: Even if deferred by six months, it will make no difference to the situation. There is some truth in this argument. None of the actions of the broadcast and cable industry in the months since the CAS notification was issued offers any encouragement that if such an extension (to say post-February 2004) were given, the scenario would be any different. So deferment is not the answer.

If not deferment, what then? The answer still lies principally with the government first, then on down to the cable service providers and broadcasters, in that order.

It is the government that is the arbiter in this game so it behoves it to be clear as far as the terms of reference of the "new improved" dispensation is concerned.

Notifications seem to be the government's preferred route. On 7 May, the second CAS notification was issued - 30 free-to-air channels at a maximum Rs 72 (exclusive of local taxes, which will differ in the four metros and so will the price of the basic tier).

The notification also states if the cable op wants to provide more channels in the basic tier, he can't charge extra. The qualification seemingly shuts the door on speculation that viewers would have to pay a premium decided by the cable service provider for more than 30 channels.

Good for the consumer. Only problem is while it makes good reading to say there will be no extra cost to more FTA channels, there is no enforcing clause that spells out how it will be adhered to.

Which really brings us to the subject at hand. What was the reasoning behind the government's espousal of CAS and does the present dispensation stand up to scrutiny?

CAS is envisaged to become a pass through payment for the cable service provider, who would act as agents of broadcasters - as pipeline providers to broadcasters' content and as collectors of money from consumers for pay channels. The introduction of CAS has four stated aims:
i) Give consumers choice;
ii) Address the issue of underdeclaration;
iii) Address the issue of area-specific monopolistic distribution systems;
iv) Prevent frequent and arbitrary subscription hikes by distributors and broadcasters.

Are consumers getting choice? Not at all. Certainly not as far as the FTA channels are concerned. It will be the cable service provider who decides that. The government only stipulates the compulsory transmission of three DD channels; that entertainment, news, sports, children's channels must be available; and that the menu of channels should include English, Hindi and the local regional language. There is a rider even here. The notification states that the provision of the channel depends on "the availability of such channels in the areas mentioned".

And if not all FTA channels are available on demand, neither is there anything in the regulations that mandates that all the prescribed pay channels have to be offered by the cable service provider. One good move by the government as far as consumer interests are concerned is the notification it is expected to issue banning the bundling of pay channels vis-à-vis pricing (that is if the broadcasters don't fall in line and come out with the maximum retail price of individual pay channels). You pay for what you ask for.

Then there is the set-top box, which is at the core of CAS. The consumer has no choice over something he will have to pay anywhere between Rs 2,500 to Rs 7,000 and upward for. In terms of quality, price or make, it is not the consumer who decides but his provider. There is no service guarantee as purchase is not from the manufacturer. And once he makes that purchase, what can he do with the box if he decides to either move elsewhere or dump the pay channels altogether? Nothing.

In effect, the consumer is being made to invest for choice but is not being provided that choice. Is it any wonder that even among consumers who can afford it, there is next to no enthusiasm for purchasing a box?

Addressability is principally through the STB and involves subscription management, allocation of identification codes, billing and maintaining 24-hour call centres.

The amended Cable Act stipulates that illegal distribution (read under declaration) of channels will constitute a cognisable offence. Each cable operator is supposed to publicise in the prescribed format, the subscription rates and the periodic intervals after which they are payable for receiving each pay channel. The Act makes it compulsory for cable operators to declare details of the total numbers of subscribers and subscription rates.

Agreed, it is a cognisable offence. But what is the monitoring authority? I&B ministry secretary Pawan Chopra says that even a station house office of a police station to take action against errant people. but is the police, and more so a cop of the rank of a SHO equipped to address complaints in this regard? What is really needed is a body on the lines of the Telecom Regulatory Authority of India (TRAI) that has the authority to audit the SMS systems of the various providers. And if there is irregularity found it should have the authority to withdraw operating licences. Otherwise there will be no end to these charges and counter-charges about subscriber numbers, CAS or no CAS.

Is there any word on this from the government? Nothing.

AREA-SPECIFIC MONOPOLISTIC DISTRIBUTION SYSTEMS
Doing away with cable monopolies is really a prerequisite if the consumer is to be offered real choice. While no one is advocating a return to the "Wild West" scenario of the mid-'90s, now that the cable business is moving towards a corporate accountability model, consumers should necessarily be able to choose between two to three competing service providers. The mobile telephony business is a clear example of how competition has not only improved service quality, but also kept prices in check to a certain extent.

How the government proposes to move the CAS business in this direction remains a mystery though.

PREVENT FREQUENT AND ARBITRARY SUBSCRIPTION HIKES BY DISTRIBUTORS AND BROADCASTERS
The government is introducing fresh notifications meant to address this issue. Post-CAS, if a pay broadcaster wants to hike rates within six months after a price revision, the government will have to be notified. One would assume that this applies to cable service providers as well.

Viewed dispassionately, there is no gainsaying that the CAS arbiter has not got a grip on a situation that is increasingly unraveling into chaos.

And what of the other key players in the game, the cable service providers and the broadcasters?

CABLE SERVICE PROVIDERS
Are the cable service providers ready and waiting for CAS as some are saying? Most big MSOs in the four metros say they have put in place the back-end required (INCableNet claims it has invested Rs1,500 million towards CAS). There is no reason to doubt it really because despite reports that upgradation of cable systems for CAS would be a difficult proposition for smaller operators, there are estimates that say the implementation cost is just around Rs 500,000 for a 5000-subscriber network. And that the total head-end upgradation investment for a 70-channel network to service 5,000 subscribers can come within Rs 400,000. So scaling upwards is not too killing a proposition.

The central issue here is, as mentioned earlier, the SMS systems and of course the STBs. Much debate has revolved around the "easy hackability" of analogue set-tops. The fact is though, that even digital set-tops can be hacked into. While there is no denying that it is more difficult to tamper with a digital box, the only low cost option is analogue. Rather than dismissing analogue as a non-starter, it needs to be made mandatory that the analogue box on offer has a high security multi-tiered encryption addressable system in place.

Who should pay for the box? One argument is that in the US for instance, the operator offers the box free to the consumer. But that is because the cost of the box is underwritten in due course through much higher subscriber fees. In India, price sensitivities rule out that option. It is specious really to demand that the cable fraternity make purchase orders and offer subsidies for a product that the overwhelming majority of consumers appear unwilling to buy at this point.

We come back to the arbiter. There MUST be incentives introduced for the offload of STBs by way of duty waivers for the initial two years of CAS rollout. If the public is unwilling to buy the box then there has to be subsidies initially. After that volumes will take care of profit issues as prices fall.

Other than the SMS systems and STBs, there are still just too many issues unaddressed - retail margins for CATV delivery, sharing of revenues between satellite broadcasters and CATV delivery last mile operators, audits of SMS figures have been left for market speculation.

And what about consumer exercising choice as regards the cable service provider? The face-off between INCableNet and pay broadcasters in Mumbai, has already brought into the open talk of break-ups, defections, new coalitions and the like coming back in a big way in Mumbai. And across the country, franchisee cable ops and last mile operators (LMOs), who fear getting completely marginalised in a post-CAS scenario, are forming alliances in different areas and setting up headends.

At the end of the day, what consumers are looking for is customer service quality and programming choices. And that is what should determine market share, not muscle power. But unfortunately neither the government, nor the industry, has put in any safeguards against lack of quality service.

BROADCASTERS
"No pay channels would turn free to air." That was one of the lofty statements made recently by the Indian Broadcasting Foundation regarding a post-CAS scenario. But with STB offload being as good as zero and it not looking like being too different at the 14 July cut-off, there is a new proposal gaining currency - that of a dual feed transition arrangement. What this means is that in Mumbai's upscale Malabar Hill area for instance, viewers will be given a ten-day advance notice during which they have time to buy the boxes. After this it will be "no box, no pay channel". Basically what is being proposed is that CAS be implemented in the "well-off" metro localities first and then rolled outwards across the cityscapes.

There is only one flaw in this proposition. It pre-supposes that there will be purchase of STBs in the upscale areas. That is not happening, whether upscale or downscale, the common refrain is that no one wants to spend on a set top.

There is another "ground reality" developing. The list is already out on the channels that will definitely be FTA post-CAS - all news channels, Fashion TV, DD Sports, the Zee Alpha channels (denied by parent Zee Tele). There is also the obvious speculation around the flagship entertainment channels like Star Plus, SET and Zee TV. Are they willing to take a hit on both subscription (no boxes bought) and advertising for an as yet nebulous payback some time down the line.

The impact on advertising is of course a grave one for pay networks. No media planner/buyer is committing advertising on pay networks beyond 14 July. What this has in turn led to is the likes of Star India informing their producers to expect a halving of payouts post-CAS. The overall impact that this will have down the C&S value chain is immense.

Some would say that this is a true reflection of the real as opposed to notional demand for the different pay channels. That argument is valid only where the choice is being made. If the STB is not available (which is what it boils down to if no one buys it), then its not a choice issue but a pay channel blackout issue.

And are the FTA broadcasters crowing? They have different concerns. Since it is the MSO that decides the channels in the basic tier depending on the infrastrucuture it has, there is no getting away from the carriage fee trap. Some FTA news channels have already started feeling the heat and fear that post-CAS the problem would only increase instead of decreasing. For instance, officially nobody would admit it, but two Hindi news channels, including a recent entrant, had to shell out hefty amounts to an MSO in Delhi for being included in the prime band.

The only "unconditionally" satisfied entity in this whole game appears to be national broadcaster Doordarshan. The must carry clause will ensure the availability of DD channels in the prime band. Everyone else, whether consumer, broadcaster and even cable service provider, have been left desperately clutching at the short end of the CAS stick.

It is high time the arbiter went beyond being serious about just notifications. It has to get proactive on getting STBs moving in the market. If not, is the government prepared for a virtual pay channel wipeout from TV screens post-14 July? If the politicians and the bureaucrats of the I&B ministry are to be believed, then FTA channels should be adequate enough to satisfy the viewing hunger of telly-loving Indians. "Who has the time to watch all the channels that are on air at the moment and are fed to the 40-million cable homes in the country?" a senior government official quipped, when it was pointed out that in the short run CAS would not really give choice to viewers.

But that, again, throws up another issue. If the government and bureaucrats really think that the FTA channels should be enough to whet the appetite of the public and few people sitting in air-conditioned rooms in Delhi decide what an average Indian should see or not see, then it does not augur well for the country as a whole. Simply because, then that would mean, or would indicate, that through CAS, the government is controlling what should be viewed and what should not.

To sum up, CAS is certainly in the long-term interests of the industry. But the reality is that its smooth rollout involves much more than mere notifications. It needs that the arbiter be at the centre of the situation. A humble request to the government - "Get serious please, there is too much at stake here."