Friday, 16 August 2013

Fallout of a Hasty Digitisation

Local cable operators (LCOs) and multi-system operators (MSOs) in Kolkata have been given the deadline of August 23, 2013, to submit filled-in Consumer Application Forms (CAF) to the central Subscriber Management System (SMS) for feeding in consumer choice and generate billing accordingly. All cable TV subscribers in the city will have to collect consumer application forms (CAF) from local cable operators (LCOs) and multi-system operators (MSOs) and furnish their personal details and channels of choice before August 23, 2013, or else they won't be able to see any channel after that.
"If any MSO fails to implement this process by this deadline, its transmissions will not only be snapped, but the truant operator will also attract criminal prosecution. From now on, Trai will monitor the manner in which MSOs in Kolkata are going about executing the SMS on a regular and systematic basis," threatened N Parameswaran, principal advisor to TRAI.
"We will also run advertisements to bring consumers in Kolkata abreast of the August 23 deadline." TRAI is umbraged by the "sluggish" pace at which Kolkata MSOs have gone about the unveiling of DAS. According to Parameswaran, despite set-top boxes being seeded in all 28 lakh cable TV subscriber households in the city, a "meagre 20% of these subscribers" have come within the SMS ambit. 
This situation in Kolkata speaks about the plight of all cities where DAS has been implemented in Phase I and II of mandatory digitization. There is confusion all around as the real action of filling up the forms and submitting to the LCO/ MSO is the responsibility of cable TV subscribers. TRAI can threaten him to disconnect his cable service if he does not submit his choice form but it cannot do anything else. Kolkata cable operators are protesting against the high handed attitude of some national MSOs. They are demanding that LCOs must be involved by the MSO for making channel packages for subscribers because only they deal with the subscribers every day. 
Operators in Nashik and Mumbai are protesting against a very high rate of entertainment tax they are forced to collect from the subscribers who are not willing to pay heavy monthly subscription for pay channel packages and pay tax in addition.
The Nashik Cable Operators Association held  a meeting on the 12th of July to discuss and tackle the unconstitutional laws passed by the central government with regard to Cable TV business. The highlight of the meeting was the presence of the Maharashtra Cable Operators Federation President, Shri Arvind Prabhoo and his team who gave the attendees invaluable insight on the subtle games being played by vested interest to grab the business from the hands of the LCO, the pioneers of the cable TV business.
He also discussed the issue of the Government's regressive step to allow a third party, the MSO, to collect the entertainment tax directly. This dangerous trend can very well wipe out the total identity of the local cable operator and leave the subscribers at the mercy of the corporate who will end up billing the viewers at exorbitant rates. To tackle this issue Arvind discussed and advised a course of action which will be soon followed to challenge this unconstitutional move by the Government of India.
Gujarat cable operators also held a meeting on 22 July to protest against the DAS regulations making operators subservient to the MSOs endangering their livelihood. The Association is also preparing to file a writ in the Supreme Court challenging the Tariff Order of TRAI that makes the MSO decide their revenue and control their business.
I wonder why did the regulator force operators to install STBs in consumer homes without explaining them the implications and getting their CAF forms filled. TRAI has the experience of telecom and mobile services where unless the consumer submits the form with a photo and an ID, connection/ sim is not given to him?
The way DAS is being implemented, no stake holder appears to be happy. Only a few national MSOs and DTH companies are jumping with more profits because they got a chance to increase their monopolies in the TAM markets for 'Pay' channels from their group. It has raised many other issues never thought of earlier that are causing quite a heart burn in the industry. One such issue is of following the 10+2 ad cap by the TV channels.
10+ 2 Ad Cap
With the Telecom Regulatory Authority of India's (TRAI) diktat on 10+2 minutes restriction on ad inventory every one hour programming on a channel set to be in place from October 2013, broadcasters are trying to find ways and means to offset the expected revenue losses from this order. At present, 20 minutes or more of ads are being inserted in a clock hour of programming.
As a result of the impending 10+2 ad cap, broadcasters have already started to increase their ad rates. News channels are making the maximum noise on this issue as they have to create content 24x7 according to the news value and cannot adhere to a fixed time slot for inserting ads. Now they are deciding to increase their ad rates.
It is to be noted here that it is not just the news channels that are increasing their ad rates; some infotainment channels as well as GECs too have started to hike their ad rates. On an average, these channels have so far increased ad rates in the range of 15 per cent to 20 per cent.
“The rationale is that we as a broadcaster have still not seen the full impact of digitisation in the form of either a fair share of reduction in carriage fees or subscription revenues. Given that we are a responsible broadcaster and intend to follow the guidelines set by the regulator, we believe that to stay on course and in order to meet the revenue objectives, we are left with no option but to increase ad rates,” said a senior executive of a channel.
Now, the news broadcaster association has gone to TDSAT against the 12 min cap of ad duration that will be implemented from 01 October 2013.
In fact, there is no substance in their case against the regulator TRAI because the CAP on ad duration is already a part of the Cable TV Act 1995 and not the brainwork of TRAI. TRAI is only trying to implement this along with many other regulations concerning Tariff and quality of service in the sector.
Independent MSOs in Phase II cities are still struggling to get their DAS license. 
In an order that may help multi-system operators whose applications for DAS licence are pending with the government, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) has directed Media Pro Enterprises to restore television signals to Lucknow-9 Cable Network of Lucknow as an interim measure.
The Lucknow-based operator had said that his application for licence under Digital Access System (DAS) has been pending before the Information and Broadcasting Ministry for several months.
Media Pro counsel had told the Tribunal that his client could not supply the signals as it was prohibited from doing so under clause 3(2) of the Telecommunication (Broadcasting and Cable Services) Interconnection (Digital Addressable Television Systems) Regulations, 2012 'for the simple reason that the Petitioner did not have a license under Regulation 11 C of the Cable Television Networks Rules, 1994.'
But Counsel for the operator said as there was inordinate delay in the grant of license, the operator had approached the Lucknow Bench of the Allahabad High Court which had disposed off the Petition by order dated 2 June 2013 directing the concerned authority to rid the application for license within 15 days from the date of receipt of the certified copy of that order. Counsel also stated that the date stipulated in the High Court's order has expired on 2 July 2013 but it has so far not received any communication in regard to its application for the license.
Even after 18 months of commencement of Digitisation in the four metros and then in 38 cities of Phase II, no impact of digitisation is seen and instead situation is becoming bad to worse. Cable Operators are too small entities to approach courts for every problem but since their very livelihood is in danger, they are left with no choice. 
State governments are threatening them to pay heavy entertainment tax or face criminal action. I wonder what any state government has done for operators. Many of them even don't give any Right of Way (RoW) to lay cables as prescribed in the DAS law.  Many state governments are already collecting the taxes from operators for many years without providing any facilities to the cable operators. Even the Pole charges are exorbitant and mostly enforced to collect more and more revenue for the government. 
One of the responsibility of the government is to provide employment facilities to every able bodied  adult  in the country. If thousands of LCOs could exist for many years giving satisfactory service to millions of consumers why the regulator and the ministry did not think a way to make their business grow so that they retain their employment. What surprises is that government spends crores in providing employment to people, but does not hesitate to snatch away the employment many who have risen on their own.


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