Cable TV industry is at the threshold of digitalization that will help not only the whole broadcasting industry but will also help the Nation take a great leap forward in the era of Convergence. In the convergence world every 10% increase in broadband penetration increases the National GDP by 1.4 percent. Last 20 years’ neglect of the industry has cost the nation very heavy leaving the cable TV infrastructure fragmented and in poor state. It is not practical to finish the job by 2014 but a beginning is always a good new.
This is a known fact that telecom companies have failed to achieve the broadband penetration in the last ten years. Wireless broadband is never a robust solution and technology changes fast. Fiber optic cables are the best way to gain broadband reach for many years to come. Today, cable operators reach 100 million household and can carry much higher bandwidth than the telecom companies. TRAI knows this and have relied upon the cable networks for providing almost 50% of broadband connections by 2014 in their draft National Broadband Plan.
The present regulations must be framed with the above perspective in mind and not to help a few broadcasters to reach maximum population and make lot of money. Unfortunately, this is the focus of the new law as well as the present consultation.
Ground realities and present state of the industry has been totally ignored by TRAI. They should rely on their own research rather than get fictitious data from some sponsored research meant to help a section of the industry. It is not possible to start from point Zero after the industry has been left on its own for the last 20 years without any guidance and help from the government. It is best to start from where we are at present and then continue to progress without disturbing the eco system of the industry. Thus, it is not in the larger interest of the nation to migrate from 100% analog to 100% Digital, nor is it possible to digitalise 100 million analog cable homes within four years. It has not happened in even the most developed markets. What we are trying to achieve is something impossible. Another important point for the new regulation is that it should be totally of Indian origin and not made on the whims and fancies of some foreign companies who have no interest in nation building and are here only to make quick money. Hence it is very important for the regulator to understand the ground realities.
Some of the ground realities not to be ignored are:-
• Cable Operators are presently providing Television signals on co-axial / HFC Networks and broadband signals on CAT 5 for the last many years.
• Every last mile operator uses Fiber Optic Cables and Optical equipment to extend his network (including in rural areas).
• MSOs are only aggregators of channels and provide back-haul services to LCOs.
• Many ISPs are providing broadband services through LCOs.
• Regulations permit IPTV on Cable Networks but none is doing this as regulations do not support.
• Telecom companies have failed to provide IPTV as their last mile quality is very poor and does not support high bandwidth.
• 80% last mile is with LCOs. There are no permanent affiliations between MSOs and LCOs for distributing cable TV services.
• In no way the MSOs can take over or rebuild the 100 million households network within the next four years, even if they get 100% FDI and have all the money for it. Building this last mile is 10-15 years job, not possible in our country having so many infrastructure problems.
• Cable network last mile is much better for broadband than last mile of the Telcos, which even TRAI has accepted in their draft National Broadband Policy.
• Subscribers pay an average of `150 every month for cable TV services which are served as a whole package as there is no addressability to deliver ‘Pay’ channels.
• 63.5 % population of India is under the food security scheme and has a monthly income of less than `3500. It is evident that they cannot afford Set-top-Boxes and ‘Pay Channels’.
The above clearly makes- Cable infras-tructure the best for converged services of the future. However, Indian masses are not yet ready for TOTAL DIGITALISATION and PAY channels are an elite service. Thus the regulations should focus on this reality, strengthening the cable network infrastructure for converged services of telecom and broadcasting and not worry for distribution of pay channels to the whole country at the cost of millions of poor subscribers.
To develop cable TV networks as a national broadband infrastructure, they must get government protection and support to consolidate, upgrade and grow faster. Protection can be achieved by providing them a growth oriented environment keeping them away from unfair competition and creating a level playing field which does not exist today.
Much against the TRAI perception, there is no Level playing field and no adequate Competition scenario in the Industry.
Cable operators for the last 20 years are in a fragmented state, struggling to survive without any effective regulations, fighting with large multinationals that run broadcast channels, own DTH companies and MSO networks, have their own content aggregators and are growing unabated without any cross media restrictions.
DTH operators are deep pocketed, mostly owned by broadcast or telecom companies, operating total digital networks since 2003 and have millions of subscribers on a single network as against small networks of MSOs/ Cable operators having a few thousand connections. DTH operation started after MSO/ cable operator’s opportunity for digitalization was taken away by the government for superfluous reasons in 2003. Now, after DTH has acquired a substantial base of 37 million digital subscribers over the last seven years, government wants the small networks to adopt to the Digital Addressable Systems from the zero start and also compete with DTH. Obviously when MSOs/ cable operators are facing teething problems in implementation stage, DTH operators would be sitting tight, with prying eyes looking for some harassed cable subscribers. This is the time when all big MSOs would be waiting to gobble up the small cable networks who are unable to keep up with TRAI deadlines or the stringent specifications. DTH operators have already been permitted by TRAI to do mini cable networking using MDU systems in large buildings. The large dish (MDU) connects all the homes in the building through cables. In effect it becomes a small head-end unit of a cable operator based on the top of a building instead of on the ground. MDU is directly competing as a cable platform as the wiring is done from a central point to multiple households depending upon the size of the building.
Broadcasters will make the process so tough for the MSO/ cable operators that only their DTH companies and supported MSOs will benefit from the new LAW. If regulations do not support the operators, maximum loss will be of the nation, left with an under-developed broadband infrastructure. Sunset of analogue cable in the four metros is 30th June 2012. In approximately 5 months each MSO will have to seed 1.5 – 2 million STBs i.e. about 10,000 STBs a day which is a logistic nightmare. This means the DTH service which is continuing with a total digital system of distribution since 2003 is being offered subscribers on a platter as now subscribers will be forced to opt for an STB to watch Television. They are being compelled to make a choice between a well established service and a newly promoted service. Cable operator is already under threat of losing the subscribers to DTH because it has a direct support of the ‘Pay’ broadcasters. If DTH operator is allowed to operate as another cable operator (MDU), then the local cable operator stands to suffer greatly.
BECIL that does not have the requisite expertise for auditing digital addressable CATV networks is the only agency entrusted with this task by TRAI at present. They don’t even have the required instruments to carry out such testing but charge ` 5 Lakh and other sundry expenses for the job. An operator, big or small has to shell out this huge amount when we don’t even have BIS standards for the equipment and services in place. It is an irony that this certificate is just a piece of paper not accepted by any of the broadcaster as it lacks the integrity in itself. Moreover, TRAI has not entrusted BECIL with certifying/ auditing of any other broadcast services like TV channel broadcasting, uplinking/ downlinking, studio setups, IPTV services, Mobile TV services, DTH services, Value added services etc where quality is of prime importance. There is another great anomaly effecting the cable digitalization process adversely. DD Direct+ has been generating huge revenue through carriage fee (83 Crores in e-auctions), however it is becoming a potential threat to cable operators. When they are offering so many FTA channels free of cost, why would a consumer pay to cable operator and watch these FTA channels as encrypted ones in DAS?
However, now it is becoming a competitive platform to the cable operators as more and more private channels are being made to ride DD Direct + charging a huge carriage fee, jeopardizing the business of thousands of small cable operators who are making their living from only FTA networks investing their hard earned income.
There is no tax like service tax/ entertainment tax on DD Direct+ service, which is becoming a big threat to the proposed basic service tier to be offered by cable operators in the Digital regime.
Thus there is no level playing field for the cable TV industry to implement the Digital addressable systems.