Phase I and II covered 42 cities including four metros with total C&S homes at 32 million. It is estimated that around 22 million have been deployed till June 2014. It is believed that this number includes non-addressable digital STBs too which act only as D2A converters for viewers. In other words there is still a gap of more than 10 million STBs yet to be deployed. Besides, this number increases if we take additional TVs in the home-based subscribers. However, the following two problems need to be addressed for Phase I and II Digital Addressable System i.e. DAS.
(a) There are still certain areas of Bengal and Tamil Nadu where STBs have yet to be seeded which will subscribe to bridge the gap of 10 million STBs as estimated above.
(b) In order to gain the transparency of subscribers, the MSOs have pushed the STBs so as to increase the actual base which averaged around to 25 to 30% in analogue. It is felt that all the STBs are not as per the specifications laid down by BIS IS-15245 and 16128). It may be realized that standards are drafted for manufacturers to manufacture as per standards. Since STBs are NOT manufactured in India, the imported ones do NOT conform to Indian Standards. The buyers do NOT seem to be aware of Indian Standards and do not insist on specifications verification at factory premises before dispatch to India. Insistance was on ‘CHEAP’ not realizing that QUALITY never comes cheap. Hence the subscribers have been complaining about faulty performance of STBs installed and there is no system involving repairing process. The life of the STB which should be around 5 years, it has to be seen how many years these STBs will last and what will be their rate of replacement.
(c) The STBs have been deployed at discounted rates i.e. deposit so as to compete and push the rate of deployment by MSOs who have retained the ownership of the STBs with them. A good amount of discount is covered by claiming depreciation. The economics of such operation need to be investigated.
(d) It is alleged that foreign suppliers of STBs have to some extent over invoice for kickbacks.
(e) Fruits of the Digital Addressable System i.e. DAS will come to the subscriber only after CAF is implemented fully. The hurdles faced by MSO fr0m LMO are issue of ownership and their status with the network given for digitalization. DAS as a system has NOT been understood by Cable operator (One who is NOT a Headend Service Provider registered with the MIB) with a Department of Posts registration. DAS, technically, is a B2C data flow in which B component is the Headend Service Provider and C component is the subscriber, whose neighborhood service front is the Cable Operator. CAF/SAF is a written agreement between the Headend Service Provider, who installs CAS and SMS and procures the STBs, in this B2C data flow. CADF/SAF, besides the location details required in the spirit of KYC, contain details of STB, make and model with price and procurement option, for entry of details and customer’s choice of programs in the SMS, allocation of customer ID to the subscriber and allocation of STB of a particular serial number. In the SMS, Customer ID and STB Serial Nos have to be paired for generation of itemized bill. Since rate cards for programs do NOT accompany SAF/CAF, option for acquisition of STB (outright sale, hire purchase or leasing) are not extended to subscriber, facility of EPG and 18x24 customer care with complaint redressal mechanism are not explained/appraised to the subscriber. Hence the subscriber does NOT understand DAS and subscription value chain.
The cable operator is required to sign an ICO with the HSP for a B2B agreement regarding appropriation percentages for Basic Tier and PAY TV upon realization of invoice in the SMS.
The Headend Service Provider is required to keep a record of these ICOs in a format laid down in TRAI regulations.
The cable operator is also allocated an ID which is linked with customer ID so that Cable Operator’s details appear in the system as well as the itemized bill.
Hence SMS, if installed correctly with B2B ICO between Headend Service Provider and the Cable Operator, ensures that Cable Operator’s ownership of customer remains protected.
The fiasco is clearly attributable to gaps in awareness generation and pathetic state of DAS implementation.
It is felt that at least 6 to 8 months more will be taken to complete the digitalization in Phases I and II cities including implementation of CAF unless Headends are ruthlessly audited for SMS performance and registrations suspended for meaningful implementation.
2. MAGNITUDE AND BENEFITS OF DAS IN CITIES / TOWNS, ETC. UNDER PHASES III AND IV
It is estimated that while Phase III has around 1800 cities with subscriber base of 37 million, the Phase IV is expected to cover 3500 towns with subscriber base of 51 million. In other words, Phases III and IV will cover 5300 towns with subscriber base of 88 million which is far higher than the subscriber base covered under Phases I and II. The scope is expected to be as below:
(a) Number of cities / towns:
The volume of subscriber base in Phases III and IV is as much as 2.75 times of the subscriber base of Phases I and II.
(b) There will be deployment of as many as 88 million STBs which will cost Rs. 8800 Crores at Rs. 1000/- per STB for consumer grade quality in MPEG-2 encoding. For MPEG-4 the price may be around Rs 1600/- per STB. Words, there is a tremendous potential for the industry across the country and we see no reason why manufacturing of STBs could not be undertaken by the Indian entrepreneurs.
STB manufacturers in India, except Videocon an electronic consumer durables manufacturer, are only SKD assemblers for a foreign design with addition of housing and connectorization.
STB is an intelligent interactive device for which stage inspections are not well established in India.
(c) With the implementation, while the revenues of MSOs due to nearly full transparency will increase manifold it will also add to their valuation which in turn will help them to lift funds fr0m the market by capitalization as well by inviting foreign investors for funding, the upper limit for FDI in the Cable TV industry is as much as 74%.
Besides, the revenue of Pay Broadcasters will also increase as much as 250% to 300% due to nearly full transparency for present declaration of subscriber base in towns under Phases III and IV is estimated at an average of 25% provided ICOs dispense with MG and provide that payments for content will be as per data in SMS.
The State Governments revenue by way of Entertainment Tax will also increase substantially so also the Service Tax for Central Government.
(d) Service quality will be critical for both subscriber retention as well as ARPU improvement and will need a change in mindset fr0m B2B to B2C business model. MSOs also need to upgrade and leverage their existing infrastructure to capitalise on the broadband opportunity in the mid-term, which can lead to significant ARPU increase.
(a) The magnitude of the business in terms of cities / towns and subscribers covered under Phases III and IV is voluminous and will require an organized effort all-round for consistently and progressively implementing of DAS.
(b) The condition of LMO Cable Networks in the cities / towns in India is pathetic. Most of them are only electronic slums erected in a few feet layer above the ground looking like an umbrella without a canopy under Phases III and IV is pathetic. The reason is that
(i) RoW was NOT provided in the original Cable Act but even after the provision in amendment 2011, no provision has been made in Rules 2012 (ii) wirline broadcasting is not taught in India,
(ii) bi-directionality which reflects upon quality of network is absent
(iii) neither training in wireline networking is imparted nor is such a qualification mandated for employment of cable technicians and
(iv) there is no system for mandatory technical audit of cable TV networks for renewal of registrations. There is no systematic networking of the cable connecting subscribers. The LMOs have yet to go for replacing cables with optic fibre to strengthen the network.
(c) In Phases III and IV, the average ARPU of LMO per subscriber is as low as Rs. 100/- to Rs. 150/- per month in existing hybrid analog/digital delivery based upon arbitrary connectivity figures infected by under declaration. Growth in cable ARPUs can be brought about by appropriate channel packs, premium content channels, HD channels, pay-per-view and other value added services. MSOs will have to aggressively compete with DTH operators to retain their subscriber base, while providing the subscriber with an equivalent or better value proposition and customer service.
(d) LMOs in Phases III and IV are unorganized and as such there will be slower pace of deployment of STBs.
(e) The MSOs will find it difficult to get Rs. 1000/- per STB per TV without giving assurance about the lifespan of the STB about 3 to 5 years as the cost of living has already jumped up and eaten away at the financial resources of the subscriber.
(a) MSOs and LMOs will have to come together to improve the quality of the Cable Network so as to ensure good reception and service. The conditions of cable networks of LMOs being pathetic, both together will have to play a coordinated role to strengthen the network.
The State Governments will have to make special provision for providing right-of-way (provision has been made in the Act. Requirement is to lay down procedure by way of standard application forms ad stipulations with a level playing ground with TELCOS, in that underground layouts must ensure restoration of surface to what it was before digging and refilling. Similarly for overhead strands specifications for brackets and holdfasts on poles have to be laid down with provision to get strands certified with every renewal of RoW) to the Cable Networks by laying cables on electric, telephone, etc. poles so also planting of independent pole of LMOs so that the cables are laid systematically with aesthetic value. Many State Governments such as Kerala, Madhya Pradesh, Rajasthan and Delhi have already provided this facility. In addition the Government should also provide free right-of-way for carrying the cable / optical fibre underground.
(b) Indigenously manufactured STBs should be substantially subsidized by both, the MSO and the LMO, so that there is no resistance for deploying the STBs by the LMO to the subscriber. The rate of the deposit fr0m the subscriber against the STB should be brought down to between Rs. 400 to Rs. 500 per STB.
(c) The broadcasters should also work out the packages at discounted rates for subscribers in cities / towns in Phases III and IV since their revenue will also increase manifold due to transparency giving them higher declared subscriber base. At present PAY TV is that content for which Headend Service provider, not the subscriber pays to the broadcaster. Hence rate card for subscriber is to be prepared by the Headend Service Provider. The grey area is that basis for pricing PAY content has not been revealed in public domain. When that is done rates of pay content will be about 10% of what is being charged today.
(d) Since the revenue of State Governments by way of Entertainment Tax will substantially increase, they should reduce the current rate so as to save the amount to the subscriber who can in turn pay deposit for the STB. The rate concession on Entertainment Tax should be made available to the subscriber at least for three years.
Cable TV is multi program, multi channel wide band wireline broadcast which is a central Govt subject. If this industry is treated as broadcast, it will come under Central Govt and Entertainment Tax will NOT be leviable.
(e) Similarly, the Central Government should waive Service Tax which is 12.36% for at least 3 years so that saving to the subscriber helps in their paying deposit for STB.
While, the four major MSOs – Hathway Cable & Datacom Limited (Hathway), IndusInd Media Communications Limited (IMCL), Den Networks Limited (Den) and SITI Cable Network Limited (SITI Cable) – were present in three Phase I cities (except Chennai) and 18 to 29 Phase II cities, it is observed that they do not have significant presence or dominant position in Phases III & IV, thus bringing the focus on smaller MSOs. In this regard smaller and regional based MSOs such as Gujarat Telelink Private Limited (GTPL) in Gujarat & Kolkata, Kerala Communicators Cable Limited (KCCL) and Asianet Satellite Communications Limited (Asianet) in Kerala, Fastway Transmission Private Limited in Punjab, Manthan Broadband Services Private Limited (Manthan) in Eastern region and Ortel Communications Limited (Ortel), that is the only designed network in India providing 3Play on cable TV, in Orissa have managed to finish considerable work.
Two more major players under the HITS platform that is present, JAINHITS (Delhi-based) and coming up HITS Platform of IMCL who have got the HITS license recently, would also play a significant role to accelerate the pace of digitalization in cities / towns under Phases III and IV since both the platforms are by and large aiming at digitalization in these two Phases.
Last but not the least, it is essential that the Government i.e. the Ministry of Information & Broadcasting should play a vital role in facilitating smooth implementation of DAS in Phases III and IV to achieve the dream of digitalization of Cable TV in India by constituting a Cable TV Cell comprising of experienced wireline broadcasting engineers to
(i) examine headend registration applications including scrutiny of CAS and SMS,
(ii) render advise on networks layout,
(iii) enable audits and certification of networks and
(iv) arrange training of trademen for wireline broadcasting..
A systematic State-wise programme will have to be drawn for implementing DAS in the cities and towns of Phases III and IV. This programme will have to be outlined by the offices of Entertainment Tax who are aware of the magnitude and under their guidance the said schedule could be implemented rather than centralized fr0m the Ministry of I&B. It is imperative that a lot of liaison work will have to be done with operators and subscribers for advantages of DAS by the MSOs / Independent Headend Providers and the Broadcasters.
Without preparing a comprehensive State-wise roadmap with time schedule, it will not be possible to implement by giving end dates since the LMOs are not interested in adopting this system.