Monday, 10 March 2014

LCO Struggle Intensifies

General Elections for the whole country will be held in this year in the month of April-May. We may have a very different scene in Phase 3 and 4 areas if there is a change in the political party that runs the government. I don't find any change in the already concluded phases as STBs have been almost seeded. 

LCOs and Independent MSOs
LCOs struggle to retain their control on consumers has intensified with Gujarat High Court pulling up MIB and TRAI for not filing a reply to its notice. The Court had given a final chance to the Union Government, the Telecom Regulatory Authority of India (TRAI) and the multi-system operators (MSOs) on 03 February to reply to a petition filed by cable operators challenging the constitutional validity of the digital addressable system (DAS) Tariff Order and Interconnect Regulation. After still getting no reply on the 13 Feb, the last date for reply the Court has decided to hear the LCOs on 20th March 2014. Government's decision to digitalize television networks across the country has resulted in a huge protest by LCOs and independent MSOs across the country as control of consumers belonging to cable operators has been vested with the MSOs who are mostly large companies enjoying vertical and horizontal monopolies in the market.  
In Indore, Madhya Pradesh High Court has further stayed collection of Consumer Acquisition Forms (CAF) from subscribers for 21 days on 26 February. This has given local cable operators (LCOs) in the state some relief regarding consumer application form submission.  The court has given this verdict on the petition filed by Malwa Cable Operator Sangh (MCOS). 
Earlier the Indore bench of the MP High Court on 6th February had granted relief to LCOs by the CAF submission in abeyance for 21 days and directed them to seek remedy from appropriate authorities. The MCOS following the direction made by HC filed a petition in TRAI about its grievances with regard to the implementation of digital addressable system (DAS). However, the association is yet to get any response from the sector regulator.  

In Bangaluru Kolkata based MSOs Meghbela Cable & Broadband Services has decided to bring 10 lakh set-top-boxes in the city earmarked for digitisation in phase III and phase IV. The company has already installed around 1.26 lakh STBs in Kolkata city, where digitisation of cable TV services happened in phase I. According to the company seeding of 10 lakh STBs will involve an expenditure of Rs 110 crore.
Company already has one million subscribers in areas which fall under DAS III and IV like Haldia, Bankura, Arambagh and Hooghly. Majority of these subscribers are on analogue networks.
Ministry has also cancelled permanent registration of four multi-system operators (MSOs) for not complying with the digital addressable system (DAS) guidelines. These four MSOs are Nalgonda-based IB Communications, New Delhi-based Eminent Cable Network, Amritsar-based God Father Communication and Gurgaon-based Supersonic Networks. Pune-based Intermedia Cable Communication's (ICC) registration had also been cancelled, but the MSO had subsequently got a stay order against the cancellation. The MIB has cracked the whip on 20 erring MSOs for failing to meet the licensing criteria of providing digital cable services in Phase II cities.
Digitisation has had an added impact on the National MSOs financials who are part of the vertical monopolies of large broadcasters like Star TV, Zee TV and Sun TV. Their carriage or placement revenue earned from broadcasters is decreasing but subscription revenue has increased manyfolds.
Hathway Cable & Datacom's income from placement of channels fell 14 per cent to Rs 73.6 crore in the third quarter ended 31 December, 2014. Den Networks too saw softening of its placement revenues to Rs 117.8 crore, down nearly 2 per cent from Rs 119.90 crore a quarter earlier. 
Digitisation gains led Den Networks revenues to rise to Rs 105 crore in the third quarter, up 6 per cent from Rs 99.11 crore a quarter earlier. The quarter-on-quarter increase in subscription revenues for Hathway Cable was sharper. Its subscription revenues rose to 74 per cent to Rs 119.1 crore in the third quarter from Rs 68.5 crore a quarter earlier. SITI Cable Network saw its total revenues in the third quarter rise 42 per cent to Rs 177.3 crore from Rs 124.7 crore a year ago.

Direct-To-Home (DTH)
The Jharkhand High Court has dismissed petitions filed by five direct-to-home (DTH) operators and upheld the state government's authority to levy entertainment tax. The HC in its order stated that the state government's levying of the Jharkhand Entertainment Tax Act, 2012 on DTH operators is in accordance with Entry 62 of List II of the Seventh Schedule. 
Since entertainment given to subscribers by DTH and cable operators is the same, it is logical that state governments must make all subscribers of DTH to pay the same entertainment tax as cable subscribers. In some states DTH operators have been exempted by the courts only because the regulation is incomplete.

I and B Ministry
According to latest report from the Information & Broadcasting ministry, it has spent Rs. 308.82 crore ( Rs. 3.09 billion) in the financial year 2012–13 on the DTH sector, promoting the infrastructure of Prasar Bharati to spread Free Dish, its free-to-air (FTA) DTH service. Total spend on DTH in FY13 saw a 74 per cent increase compared to Rs. 177.91 crore ( Rs. 1.78 billion) in FY2011–12. 
Prasar Bharati's DTH service spreads across the country and offers 59 FTA channels to customers. Prasar Bharati has been progressively increasing its investments so that it can carry more channels on its DTH platform but it has not achieved its target so far. One of the reason is that FTA channels find it cheaper to ride on private DTH players like Airtel Digital, Videocon and Dish TV as Prasar Bharti has increased the base price of carriage to Rs 3.50 crores a year. One wonders why government does not do its operation efficiently.



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