Saturday, 21 June 2008

-Restructuring Of Cable TV-

Trai has started a consultation process to restructure the cable TV industry. Two open house discussions were held in Bhopal and Pune respectively in the last two months. However, I fail to understand the need of such an elaborate exercise which may not lead to any fruitful results. 
What could be the aim of this consultation? To save the multi crore industry run by thousands of small entrepreneurs or to eliminate them altogether to make way for the big sharks to grab the pie in the name of organizing the industry? The industry was organised in 1994.

• Cable Operation was recognized as a Small Scale Service and Business Enterprise (SSS&BE) by the Ministry of Industries vide their letter No. 2(3)/93-SSI bD.& Policy dated 01 February 1994.
• Cable Television Networks (Regulation) Ordinance was passed in 1994 and enacted in 1995 which regulated the cable TV networks including their registration, monitoring and control, punishments for violations, programming and broadcasting codes, implementing authority etc. The Act has been amended many times to bring in newer aspects like revision in programming and advertising codes and introduction of CAS. 

The Industry has two components:
• Cable Network Infrastructure connecting about 75 million households.
• Cable Television Services providing consumers a number of TV channels and in some cases value added services like internet, games and video-on-demand.

The business of cable television depends on the following revenue streams-
• Broadcasters or content producers sell their products to the cable operators at a price depending upon the type and quality of their products.
• Cable operators sell these products (TV Channels) to the consumers at a cost including their operation and maintenance cost and cost of the content.
• Entertainment Tax and Service Tax paid by the subscribers and collected by the cable operators/ MSOs to be paid to the government.
• At times the operation/distribution cost is divided amongst MSOs and Cable Operators. 
• MSOs and Head-end Owners also get the Carriage-Fee from broadcasters. 
From the above it is evident that Cable Television and Satellite Broadcasting go together to make the business. No one can do without the other. Both are dependent on consumer service and pricing. Earning revenue from network operation and Up-grading to new technologies come side by side.
TRAI can not plan to restructure cable TV without regulating the pay channel prices that form a major part of the monthly subscription fee in the absence of CAS in the non-CAS areas.
If we have to restructure the industry, we must ensure that all the components of the industry including the Distribution Networks, Services, Content Broadcasters and taxation are brought under a regulatory regime simultaneously so that there is an organized way to generate the above revenues to the extent that all segments do a viable business generating reasonable profits for their further survival. We must remember that livelihood of lakhs of people engaged in this business depend on the way a regulatory environment helps the business grow.
Unfortunately, since 1994, all efforts of the government were aimed only at reining the cable operators because they were too small an entity. When ever the question of regulating the broadcasters arose, they lobbied for self regulations.

Fixing the Cost
Even while fixing the costs to the subscribers, TRAI has tried to fix prices of sale to the end consumers by the distributors without fixing the price of the product (TV Channels) being sold, which is much more than the price fixed by TRAI. TRAI has not suggested how this huge shortfall will be made up. Channel prices and bouquet prices have been fixed only in the CAS areas which comprises of just 5 million subscribers out of 75 million. In the non-CAS areas, prices paid by the subscribers have been fixed but at what price the broadcasters will sell their a-la-carte and Bouquet of channels has not been fixed. 
Addressability and CAS needed so badly to bring transparency in the business has been unduly delayed under some pretext or the other. Now the hurdle in their way is Piracy. Piracy exist in mobile communications, DTH, IPTV, credit card banking and each and every field that we can think of. But that does not disturb the government. 
Unless the above issues of revenue distribution are resolved, how do we expect the industry to improve its QoS, provide better services, upgrade to new generation networks etc? Every process needs funds. Increasing the FDI to 74% in cable television will not help unless the basic infrastructure and functioning is not improved.

Some Basic Considerations 
Industry infrastructure is not only meant to distribute TV signals, it should also be viewed as the last mile infrastructure for the broadband services like triple play which it can transmit better than the DSL, ADSL or WiMax technologies because of its high band-width carrying capacity. It is opined by experts that no last mile technology will be able to carry the triple play services of the future except Fiber. All others will run short of bandwidth.
With little modification the cable infrastructure can become the last mile for MSOs, Telecom operators, WiMax operators, HITS etc. They are the best to provide converged services as video is the toughest to carry and all cablenetworks carry Video.
Cable Operators are best in laying the last mile cables including co-axial, fiber or CAT-5 cables, in the shortest of time and in every type of terrain and environment. 
Their last mile services are much better and more personalised than the services of DTH, mobile, or telecom operators. 
TRAI should find a way to integrate these networks into the national new generation networks (NGN) considering them a national asset.
TRAI should also draft regulations assuring the livelihood of existing cable operators. 

Post offices are the most convenient for registration of cable operators. All head post offices are connected with intranet these days and communication with a central agency should be no problem. Hence, registration of LCOs can continue in the Post offices as they are well located in the rural as well as semi-urban areas. We can catagorize them as having less than 5000 homes passed.
Independent MSO's registration can be done through district level authorities. They can be categorized as having more than 5000 to 50000 homes passed.
Multi-city MSOs and National MSOs can be licensed by a central authority and may have criteria of minimum networth, registered company etc.

Customer Grievance Redressal 
Cable TV service survived because of better and personalized customer services. They provide service 24x7 where as none of the telcos or DTH operators do that. Consumer Forums have been handling cases of cable TV consumer grievances and nothing more is required. 
In the present age of competition with DTH and IPTV, cable operators are doing better in serving the customers. This is evident from comparatively lower penetration of DTH in last four years. Even free STBs don't get them connections. Inspite of using super stars like Shahrukh Khan to plead to the consumers in their advertisements, they are unable to lure customers. 
In Banglore and Kolkata BSNL could get just 1000 and 500 IPTV connections respectively in one year. The CMD, BSNL agreed in a meeting in the presence of the IT minister that it was difficult to beat the cable operators in convincing the consumers.
Along with attending to the grievances of the consumers we also need to check illegal connections, non paying subscribers and tampering with the cable TV lines by the consumers so that services do not suffer. 

Question of monopoly does not arise now when IPTV and DTH services are already there in the market. The monopoly that we talk about generally is created by the distributors of the MSOs and the broadcasters which has not yet been addressed by the regulator.
To create monopoly in an area distributors resort to harassment of the LCOs by cutting their cables, stealing distribution equipment like amplifiers and tap-offs etc. so that they are terrorized and do not take signal from another MSO.
Not only the above, over a period of time, these distributors who earlier were looking after the interest of only one MSO, have become distributors of all MSOs in their area. 
In such cases the LCO has no way to go and faces the wrath of the customers who bear with poor quality services. 
Once monopoly is created on the ground, these distributors become the agents for the broadcasters and strengthen their monopoly. 

Monitoring and Reporting 
Implementation of CAS and addressability will remove 90% of the problems of monitoring and reporting. Its need has been emphasized in the Consultation Paper by TRAI too. Why don't we implement CAS all over the country when DTH & IPTV have been permitted where CAS is in-built.

In Cable TV piracy generally takes place in the undermentioned manner. Some solutions are also suggested alongside. 
• Running a non-CAS area signal in a CAS area. Make the whole city as CAS area.
• Running a broadcast channel illegally using a pirated decoder. Finger printing by Broadcasters already exists. They have their anti piracy agencies checking for them.
• Stealing the signal from a neighboring cable operator. It does not last long. It can be checked very fast as each cable operator's pay channel signal has a fingerprint that can be recognised in any customer’s house.
Broadcasters and MSOs are already dealing with Piracy. The nodal officers can be made to implement the anti piracy laws that already exist. The government is dealing with video Piracy, Cinema Piracy, Mobile-simcard-Piracy etc.
Piracy in cable should not be made such a big issue that stops the government in implementing CAS and addressability and scuttle the growth of the industry that revolutionised the concept of mass entertainment in the country. 

Quality of Service
Already the BIS standards exist for customer premise equipment (set-top-box in our case), distribution equipment, network performance etc. We need to specify standards for- 
• MSO's signals at LCO's control room. 
• LCO's signal at customer end.
• Digital Signal Transmission.
• Provide Right of Way to cable operators so that they can lay their networks to confirm to these standards without getting tampered every now and then.
• Rationalise the pole rent paid by the operators to the concerned electric supply companies in every state. It should be reasonable to maintain the support system and not considered as a means to fill up state government coffers. In the US it is calculated based on the percentage share of cost of carrying a service on the infrastructure of utility poles and not an adhoc rent. In India in some state it is Rs 750 and in another Rs 75.
• Training of Operators and Workers is very essential to improve the quality of service. So far the operators learnt every thing from their experience and the knowledge imparted by the trade magazines. There is no organized training in the cable TV field like we have in IT, Film and TV production, computer networking etc. This was basically the reason that the industry was not organized and was always looked down upon by the broadcasters, film industry and the government. 
 We need to introduce training programmes in the ITIs and other technical institutes recognized by the All India Council for Technical Education (AICTE). This can also be made a part of the syllabus for under graduate science students and engineering students.
Cable Operators carry Doordarshan channels in their networks free of cost as ordered by the government. Prasar Bharati always complains that operators do not carry their channels at all or carry them in frequencies not received by the subscribers well. The fact is that in the rural and semi-urban areas cable operators do not have the information of these regulations. Even they are not so good technically. Doordarshan engineers are always available in remotest of places manning Terrestrial TV transmitters. They are well trained and experienced and can be given the task of organizing technical training for the operators and their staff to operate and maintain their cable networks in a proper manner as per the laid-down standards. Such training could be easily carried out in the school premises which generally lie unutilized in the evenings. 
Cost of training if any can be born using the Digital Services Obligation Fund mentioned in the next Para. 

Digital Services Obligation Fund
There is a need to initiate a Digital Services Obligation Fund (DSOF) to support up-gradation of networks to digital and provide training facilities for Cable TV staff & operators.
This fund can be created from the license/registration fee paid by the broadcasters, MSOs and LCOs.The fund can be managed the way Universal Services Obligation Fund in the telecom industry.


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