Saturday, 21 January 2012

Full Digitalisation: For Whom ?

It is quite surprising that in a country where implementation of addressability (CAS) was held up in 2003, with the excuse that the public perception was against it as STBs were being forced on consumers to watch 'pay' channels, we are now forcing STBs on all consumers to watch 'pay' as well as Free-to-Air (FTA) channels. How has the situation changed within these seven years that we want even the poorest of the poor subscriber to buy a set-top-box to see his daily dose of entertainment from some FTA channels? 
The Cable Act amendment passed in 2003 mandated all 'pay' channels to pass through an addressable system using a set-top-box whereas one did not require any gadget to see the basic package of FTA channels. The amendment was drafted after long discussions with the stake holders and the bill went through the Parliament just like the present Bill. However, the implementation was halted on flimsy grounds. 

Wonder what dynamics have changed now that have made TRAI and the Ministry to think that every poor subscriber in the country can afford an STB and pay for the pay channels ( or they think that the poor need not have the television entertainment at all). 
Do you think the subscriber will benefit from full digitalization? Not the least, because in India out of 142 million TV homes, 90 million are having analog cable. Thirty five percent (32 m) Cable TV subscribers are in the rural areas and 65% in the urban areas and metros. 
According to CMS survey sponsored by TRAI, an average family watches only 7-15 channels. Average subscription paid every month is only Rs 150. Average subscription in cities is Rs 220 and in rural and semi urban areas it ranges from Rs 50-100. 
Also, as per the latest government announcement 63.5 million people do not get two meals in a day and are under the food security scheme. 
Planning Commission's latest report on poverty says that India's poverty has gone up in the last ten years. About 40% people in the metros and cities are also very poor with annual income less than Rs 3500.00. 
Do the Ministry and TRAI think these people can all afford STBs and pay monthly subscriptions of more than Rs 200/- which the broadcasters are hoping post digitalization? 
If not, then who will benefit from total digitalization? Let us see- 

a)The present system of total digital cable will encourage all free to air channels also to become 'pay' to extract more from subscribers. In CAS notified city of Chennai, many pay channels turned Free to maintain their viewership as subscribers rejected the STBs and the pay channels as they did not wish to pay more. 
b)Total digitalization will increase the cable network channel carrying capacity from 106 to 1000, so all existing 800+ channels will get a berth. 
c)Due to no scarcity of bandwidth, importance of carriage fee will decrease and only the placement fee may continue. 
d)Availability of bandwidth will encourage large broadcasters to push bigger bouquet to the subscribers with a driver channel. 
e)Due to sufficient channel capacity in networks, every channel can claim large TRPs. 
f)Since 2004, when TRAI took over the regulatory function of broadcasting industry, it has intentionally or unintentionally failed to control the price of pay channels. All tariff issues are in the courts challenged by the broadcasters who refuse to obey any government orders and get away with it whether it is content regulations, interoperability, cross media restrictions or any other regulation. After total digitalization, they will be more bold in increasing their pay channel rates. Addressability will permit them introduce more adult content with the excuse that there is parental control in STBs and a-la-carte choice. 
g)Because of high cost of digitalization, foreign broadcasters who also have stakes in large MSO companies will push in more FDI from their parent companies and will be able to control the last mile to have their channels pushed to the subscribers. 

Big MSOs 
a)Here again Broadcasters are involved because they have invested in most of the national level or big MSOs and even own some of them taking advantage of weak laws on Cross Media Restrictions. 
b)High cost of running total digitalization will force the smaller players to surrender before the big MSOs, thus giving them a total control of the 102 million households. 

Last Mile Operators 
a)They will not be the beneficiary because of high investment and difficulty in pushing the STBs to every existing subscriber. It is they who would face the ire of the subscribers when forced to pay for the STBs. Many of them will be forced to exit the business. 
b)Contrary to what the I&B Minister, Ms Ambika Soni said in the Parliament during the discussions on the digitalization Bill, HITS will not save these thousands of small operators. Firstly HITS was permitted by the government in a hurry without examining its viability in the Indian market. Private HITS platform for thousands of small networks is just not feasible because each small operator has to install a headend costing Rs 3-5 lakhs and force the subscribers to use STBs of the HITS operators. Thus he loses all control on his subscribers and becomes a collection and service agent of the HITS operator. 

a)Only 10% of rich and upper middle class consumers in the country may afford STBs and pay a monthly subscription of Rs 300 and more which the broadcasters are eyeing at. Even in the US, it took them 10 years to digitalise the broadcasting sector and the Government finally had to shell out 40 dollars to each poor household to buy an STB. Can India do that? 
b) If we talk of quality of digital signal, do we have a demand from majority of subscribers? No. If quality was the issue, most of the cable subscribers would have shifted to DTH in the cities in the last eight years of its existence. Only 10 % of the 40 million DTH subscribers are in the cities. 
In fact, I feel the Ministry is introducing total digitalization with a very narrow view, only to help the big companies to enable them to control the whole media market in the country. It thinks that the smaller players can not do that. This is the reason that there is no check on large acquisitions and mergers in media like Media Pro of Star and Zee, Reliance, ETV and TV 18, Sun Group and Network 18 etc. Since these mergers started happening just before the Digitalization Ordinance was issued, I feel these large corporate knew about what was coming and so prepared for this with the connivance of the government and the regulator. 

Can a Technology be Forced? 
Cable TV in India is a private business run by thousands of small entrepreneurs for the last twenty years. They have been changing their technology and upgrading their networks when ever their business demanded it. How and why is the government forcing them to adopt a new technology which is not even demanded by their subscribers is a moot question? It would have sufficed if the government mandated that all pay channels must pass through an addressable system. 
Government's own networks are all analog. All terrestrial transmissions are analog and their sunset date to migrate to digital as given by Planning Commission is end of 2017. I wonder if they can do that in this time frame, considering their past performance. We could not even carry out HD transmission of Commonwealth Games ourselves. 

Don't Neglect the Infrastructure 
All said and done, Digitalisation is the best thing to happen if implemented with the right intentions, helping to save the employment of thousands of Cable Operators for whom this is the only livelihood. Also it should aim to provide better services to subscribers with broadband triple play, giving TV, Internet and telephony on the same cable. It will help to uplift the economy. Big telecom players have already failed to do that in the last ten years. 
Unfortunately the infrastructure side of Cable TV has been neglected by one and all due to which it is still in a fragmented state after two decades of existence. The network part is regulated under the Telegraph Act, but Ministry of IT and Communications does not feel any responsibility towards it. TRAI also tried to take up the issue but none of its recommendations on restructuring have been approved by the I&B Ministry. The new DAS amendment talks about giving Right of Way to the networks but only that will not suffice unless we take up the issue of incentivizing it as a national infrastructure and get government help like the telecom infrastructure. 
Without improving the infrastructure none of the services like television broadband or voice can be improved and DAS or CAS cannot be implemented. At present there is no public demand for digital services so cable operators have no business case for upgrading their networks. They are migrating to digital only to compete with DTH. This must be realized by the government and this system needs to be regulated in this direction rather than force a technology in the industry.



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