Wednesday, 21 April 2010

Are we Ready for more FDI ?

We have to check whether any further increase in FDI will render thousands of people who are employed with cable operators, jobless while opening the doors to foreign media houses to take control of Indian media and infrastructure. Like this, several pertinent questions are yet to be answered. Let’s try to sum-up this, here. - Mrs Roop Sharma 
There is no doubt that the FDI plays an important role in the economic development of a country by enhancing competitiveness through transfer of technology, strengthening infrastructure, raising productivity and generating new employment. In case of broadcasting however, I wish to know whether any evaluation of foreign investments in the industry has been done so far since the last regulations to increase the FDI cap from 26% to 49% were introduced. I feel that there is still a need to take a stock of the goals achieved in terms of transfer of technology, betterment of infrastructure and generation of new employment due to FDI poured-in the country, till date. 

We have to check whether any further increase in FDI will render thousands of people who are employed by small cable operators jobless while opening the doors to foreign media houses to take control of Indian media and infrastructure. 
Like this, several pertinent questions are yet to be answered. Let’s try to sum-up this, here. When the Government favours a speedy digitization process to make the cable TV services better for consumers, it appears to have forgotten that the cable TV industry had not been re-structured for the future services. Despite demands from several quarters for the last 20 years, cable TV networks have not been accepted as a broadband or next generation (NGN) telecom infrastructure. We have not even set a sunset date for completing digitization of Cable Networks. 
Since 1992, big companies such as Hindustan Times in JV with Falcon Cable (USA) and others have tried to use NRI funding or foreign funding using different routes to dominate the last mile operators but have not been able to penetrate more than 25% of the market till date. 
It was mostly used to buy the small networks in the garb of consolidation but ended up rendering many operators and their workers unemployed. These companies now desire more foreign funds to achieve their unfulfilled dreams of taking over the last mile. Aren’t we putting the national security at risk by allowing the foreign media to dominate the electronic media in India? 
New Guidelines issued by the Department of Industrial Policy and Promotion covered under Press Notes 2 and 4 of 2009 permit backdoor entry of FDI beyond the laid down limits. This can prove very damaging to the Indian media industry and the nation as a whole if the funds are being diverted from a clandestine source. Despite the cross-media restriction existing in the country, foreign funds have successfully been helping media giants to create vertical monopolies across the DTH, cable TV, radio, IPTV and print media. 
With over 500 TV channels today exists in the country, cable operators are expected to carry the maximum number of channels without assessing the consumer’s needs in terms of number of channels desired, types of TV sets owned by consumers deciding on the number of TV channels that can be received by them and paying capacity of consumers in different economic strata of Indian society. No such survey has been done in the country so far, to the best of my knowledge at least. The reality is that at present, all the TV channels in analog system can not be tuned on half the TV sets boasted by consumers in the country. Moreover, an average paying capacity to cable TV services in India ranges from Rs 50 to Rs 250 in different sections of the TV owning population. Interestingly, the cost of all pay channels amounts to more than Rs 700, giving out a picture of regulation (or better be called “irregulation”) in the sector. Our regulations do not force broadcasters to provide a-la-carte channels to consumers thus not giving them a choice to receive what they can and pay for it. 
When we look at the cable TV industry established by small entrepreneurs way back in early nineties, it clearly appears that without receiving any support from the Government, the last mile cable operators have connected more than 90 million TV households across the length and breadth of the country. It has also employed lakhs of jobless and unskilled people and has trained them as well whereas FDI in cable TV industry has mostly been used to lure small cable operators to sell their networks to big media giants and go out of business snatching away employment of many workers. In spite of all their tricks, not more than 15-20% C&S connectivity is today, in the hands of these companies since the process started in 1992. 
In the last twenty years all new technologies in the Cable TV industry like broadband amplifiers, HFC networks, Ethernet for internet service, On-demand services etc have been introduced by operators with their own funds. They have not even had the chance to fully utilize the services of local financial institutions, government financial sources or Indian banks to upgrade their networks as our regulations do not encourage that. 
Cable TV network infrastructure does not have a formal acceptance as telecom/ broadband infrastructure which may enable it to demand Institutional finance or FDI. Regulations only recognize Cable TV as services and not as an infrastructure. These services can not be improved unless proper attention is given to improve infrastructure which can be done only when it becomes legitimate. 
I urge the regulator to first look into the following aspects of the industry before going-in for a further hike in FDI in broadcasting sector, so that it can absorb additional FDI rather than make FDI a burden 
a) Restructuring Cable TV services 
b) Accepting Cable TV Networks as National Telecom/ Broadband infrastructure 
c) Fix a sunset date for completing migration to digitalization 
d) Make same tariff regulations apply to all addressable networks 
e) Extend CAS in Cable TV industry all over the country so that it is at par with DTH, HITS, IPTV and Mobile TV


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