The government notification issued on 15 Jan 2003 mandated use of Conditional Access Systems (CAS) by MSOs (multi system operators) and cable operators within six months by 14 July 2003.

This has triggered misinformation, myths and negative press stories that have the potential to derail the process. As the deadline approaches, the stories - that repeatedly highlight the 'chaos in CAS' - have become increasingly strident. Such an approach has shaken the confidence of the key players and investors in the industry - operators who need to place orders; manufacturers who have to deliver; and ultimately, the subscribers who have to buy and install the boxes.

The expectations and fears about 'chaos' will result in a self-fulfilling prophecy by actually precipitating the chaos that all are trying to avoid!

The top 10 myths and misinformation about CAS are:

1. CAS is a crackpot scheme by the government: Everyone (and 90 per cent of the world cable market where it is deployed) agrees that CAS is essential and is the only solution to an organised cable industry. Like any other utility, consumers need to be billed and pay for what they consume - the home electric meter is part of a CA System. Without CAS, cable services would be similar to a power company billing all homes a flat Rs 150 per month - the home with an AC pays as little as the one with a ceiling fan.

2. Operators resort to massive under-reporting:
This is the very reason CAS was essential. Obviously, in the absence of CAS you had operators 'under-reporting' their subscriber base; and broadcasters demanding payment from 'all' homes connected (again, as foolhardy as an electricity board demanding payment for just transmitting electricity to your home irrespective of consumption). The stand off resulted in broadcasters cutting signals to operators, and the blank screens added to subscriber ire and unrest.

3. Between now and 14 July, 6.7 million boxes will be required:
That's 100 per cent penetration, even before CAS starts! It took other developed markets like the US and Europe over a decade to achieve one third of this level. And they did not have the problems of low purchasing power, 40 per cent B&W TV sets (which can barely tune into 12 channels); 20 different free to air channels; and the latest / pirated video movies.

Why would all homes buy a box if the free to air/basic tier gets more attractive with many more channels and perhaps some 'pay' channels were to also go free? Operators estimate a first year penetration of between 15-20 per cent - or one million boxes - if all channels remain pay.

4. Boxes will cost Rs 7000; cheaper boxes are easily hackable:
The box manufacturers out here are the same top companies who cater to the world market. Nearly 77 per cent of homes in leading cable markets like the US still rely on low-cost analogue technology. It's again a myth that all analog systems are easy to pirate.

Box costs vary from Rs 2750 (analogue) to Rs 5000 (digital). Orders are being placed at these prices, which have been achieved by local manufacturing. The 'Rs 7000' cost for a digital box (as advertised on Star) was an upper limit and is entirely misleading.

5. The subscribers monthly bill will not go down: Competition took average cable rates from Rs 100 to a just Rs 157 over a decade- a 57 per cent increase when pay channel costs shot up over 500 per cent in the same period.

Post CAS, there is no reason why the pay channel rates as well as the basic tier rates will not go down too because of competition. The broadcasters are going to communicate with the subscribers directly after 14 July, and if a channel's product and rate are not in line with competition and market realities, it will not survive.

Subscribers can now pick and choose (and pay for) only the channels they want to view, and stay within their earlier budget. CAS brings in a market mechanism which was not exist earlier.

6. CAS does nothing to reduce the power of the Last Mile Cable Operator (LCO or LMO):
On the contrary, the control of the CAS box - and hence over subs - now passes on to the MSO from the LCO, driving consolidation and buy-outs by MSOs who can now put a value to each CAS household. This would attract organised capital and large investments in upgrading the last mile, backed by better services, all to the subscriber's advantage.

7. Even broadcasters are not keen on CAS:
Currently, if operators were to pay-up on behalf of all subs, without under-reporting, the cost of pay channels alone totals Rs 252/sub/month. The broadcasters enjoyed the best of both worlds - hefty advertisement revenue and subscriptions, again unique to India.

With CAS, they will now have a system - paid for by operators and subscribers - that better controls their revenues and can reduce piracy ('under reporting') by over 90 per cent. In fact, if box penetration exceeds 10 per cent (the current 'under-reported' subscription levels they garner in the four metros) they would gain much more than they did in a pre-CAS market.

8. Implement in a phased manner, one city and then another:
Each CAS platform is unique and all the large MSOs have tied up with different CAS providers in the four metros. Each CAS provider in turn licenses box manufacturing and software integration to over 10 different licensees.

Each such licensee has a minimum production capacity in excess of 200,000 boxes pa. With a one-city roll out in, say Chennai, boxes from only one CA platform (Irdeto Access) can be used as that is the CA platform installed by the city's leading MSO. In Mumbai, it's going to be NDS and Nagravision, while Delhi would have more of Conax, with Dalvi in Kolkata. Low availability of boxes is simply a bogey to delay the inevitable.

9. Nowhere in the world has CAS rolled out so quickly: Neither have many parts of the world started without regulations; right of way; and exclusive operating licenses. If cable had started like cellular phones or basic telecom, CAS would have come in long before a government mandate.

10. Do it slowly and do it right:
The government is on the right track not rolling back on CAS. Any delay will only postpone the inevitable. There may still be a shortage of boxes - thanks to the confused (and deliberate) myths as above in the press that stirs uncertainty and shakes investor confidence. Why would operators and manufacturers sink in millions in such a situation?

The Worst Case Scenario:
When both operators and broadcasters see that there is no roll back (post 14 July) and yet there is a shortage of boxes, they will be forced to work together and cut deals to ensure a faster roll out.

Broadcasters will provide their signals on the free to air tier for a limited period against the operator/MSOs assurance to order more boxes. They would then work together to meet subscription targets within a specified period after which the channels would revert back to the pay mode. This would be a win-win situation for both of them, and would help manage the interim 'chaos'. This will not happen if the government blinks first and defers the deadline.

Sudhir Damodaran, director, Catvision Products Ltd.

(The views expressed here are those of the author. www.indiantelevision.com need not necessarily subscribe to them)