Monday, 16 September 2013

Phase III & IV to be accelerated

Indian economy has gone further down with 4.4% growth in the first quarter. Consumer spending have reduced to a record low. Current  Account Deficit has increased to an alarming  situation. In such a worsening condition broadcasting sector cannot be left untouched.
Inspite of government doing all to lure the investors, conditions in the industry do not augur well for the foreign investors. Every one is on wait and watch mode.

Under such circumstances  I wonder who is benefitting from total digitalization  which the I&B Ministry  is pursuing so steadfastly. 
Consumers are the worst hit with none getting one’s choice  monthly billing has doubled and tripled and over and above they have to dish out  Rs 1000 or more for a poor quality  set-top-box that still does not belong to them.
Millions of existing subscribers are being scared of a TV blackout  on some pretext  or the other.  TV screens at  prime time are covered with a permanent message of the MSO/Broadcaster that due to non payment of dues or not filling up the CAF form, their channels will be switched off.
Last Mile operators who own the 100 million subscriber connections are striving to save their business with their revenue  share reduced to less than half. 
Their work load has increased many folds as they have to now convince the subscribers to sign digital cable forms(CAF) and submit to the MSOs so that MSOs and broadcasters may make more money  and if they do not  meet the deadlines, face court cases  for disobeying a government mandate. Already a dozen of them in the Capital have been prosecuted.
Cable Operators associations have taken their matter of being made sub-servient  to the large MSOs to Supreme Court. Gujarat Operators have filed a writ for infringement of their constitutional right to earn livelihood. I am told many other operators associations from other states are planning to join this petition. 
The only companies who are benefitting from this mandate of the government are three vertical monopoly players and their supported  MSOs. TRAI findings show that their connectivity has increased to an extent that one or the other has gained a monopoly  in the 38 Phase II  cities. They already  dominate different areas of the four metros.  Even they have improved their profits  many times as per their  Q1 and Q2 2014 results (Please see the box for details).  In fact these MSOs have made huge profits in the name of digitization by increasing the subscription to more than 100%, collecting crores from subscribers as activation charges for STBs and collecting security for STBs, mostly in cash from cable operators which mostly remains unaccounted.
Achievement of the MSOs are the result of unbridled exploitation of Cable Operators and consumers due to the biased laws and regulations. 
• None of the MSOs have given the choice to consumers. They are providing a default package to all consumers that costs about Rs 200-250, thus getting at least Rs 100 more than what consumer paid to the cable operator in analogue regime.
• MSOs have advertised in Newspapers that consumer should pay them directly, by passing LMOs . Now LMOs are on MSOs mercy’s to get their revenue share.
• Subscribers are being forced to make increased payments by making their screens go blank with notices and threatening to disconnect their Cable TV.
• MSOs are not selling their boxes but collecting Rs 1000- Rs 1500 from Subscribers for STB as security /activation fee this way they achieve double benefit.  The STB remains their property all throughout and whatever they have invested in STB purchase is depreciated to get tax benefits. All the money that comes to the MSO is their profits. Not only this even they collect a huge security deposit from Cable Operators while issuing STBs for the subscribers. This is mostly their unaccounted income as most of the LCOs have claimed that they have not been given any receipt for the payment while the payments are in cash.
The other beneficiary of these unfair regulations are the broadcaster groups who enjoy the  monopolies  in content as well as distribution. They are now showing increased TRPs and decreased payouts in carriage fee. It is quite obvious when their group MSOs enjoy monopolies in the Phase I&II cities in distribution and force subscribers packages of channels that belong to the group they will always benefit at the cost of smaller non-aligned broadcasters, many of whom are shutting shops. Many independent MSOs have been forced to become franchisees of these large MSOs by depriving them of content, so broadcasters don’t pay any carriage fee to them now. 
‘Pay’ broadcaster groups have also managed to get a stay on TRAI’s ‘Quality of Service’ regulations from TDSAT when TRAI filed cases against some of them for violating the 10+2 Ad cap regulations. It is so surprising  that the Minister, Sh. Manish Tewari is also advocating  for the broadcasters asking TRAI not to force the 10+2 Ad cap regulation on them . Not only the Minister, even TDSAT  has helped  by giving them  a stay on TRAI regulation knowing fully well that this 10+2 Ad cap is for the benefit  of the consumers and is already a law as per Cable TV Act Rule 7(11).
One wonders if any justice exists in India for the consumers and small business players.


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