“Carriage Fee is Our Right”

Says Roop Sharma on the recent controversy in the matter where the broadcasters have expressed that they are being victimized by the MSOs, Cable Operators and DTH Players.

Cable TV started in India in 1989 but all other technology platforms for television delivery have been made addressable and with conditional access, giving them a more regulated and transparent regime. Cable however, is still suffering from lack of a proper regulatory regime. Implementation of CAS has been kept pending since 2003 under some pretext or the other, mostly on political grounds, where as other technologies like DTH, HITS and IPTV which also operate nationwide delivering the same content to the same population and all fully addressable, have been allowed to be launched and take a lead over cable. Thus, there are more investments coming in these new platforms of television delivery and they are on the growth path from the day one.

This is the reason that Cable TV is not in a position to attract consolidation and investments. Last Mile Operators are facing lot of unhealthy competition as a level-paying field does not exist between Cable TV, DTH players, IPTV and other technologies. There seems to be a deliberate attempt to keep this industry fragmented and unregulated with some excuse or the other so that it dies its own death. 

The result is that this sector is still being exploited by one and all, particularly by the major Broadcasters. These companies belong to large media houses or the telecom operators who are present in every segment as ‘cross media restrictions’ have never been implemented on them and government is mutely watching them exploit the market creating vertical monopolies. The result is that the last mile operators are being made “economically weaker” and pushed to extinction.

Other technologies like DTH, HITS and IPTV which also operate nationwide delivering the same content to the same population and all fully addressable, have been allowed to be launched and take a lead over cable.

‘Carriage Fee’ in the cable TV sector is as genuine a demand as in other industries. For example, Companies/ Governments who build highways are allowed to collect “Toll Tax” for maintenance and up-gradation. DTH operators including Prasar Bharti collect carriage fee from all channels in the name of maintenance cost. 

It is the cable operators who came first and build their networks with one video channels using their own finances and entrepreneurship skills. The Broadcasters came much later in 1992 eying the cable network business. Since they made a hefty sum from advertising and were never checked by the government, they kept on launching channels unabated without considering that the analog infrastructure of the cable TV operators was getting choked.

Broadcasters started converting their channels in to ‘PAY’ in 1994 and demanded high rates and made operators pay for all their channel bouquets else they would switch off the signals. Using their powerful media presence through their News channels and corporate clout, they have been trying to delay the implementation of addressability and CAS, blaming cable operators for all ills including ‘Under Declaration’.

Cable operators upgraded their systems with their own money and hard work so that they could carry more and more channels to give variety to the consumer. They carried these channels for 10 years without taking a single rupee as carriage charges from broadcasters. Broadcasters had a free ride on the infrastructure built with operators’ money. When cable networks faced bandwidth constraint and maintenance costs became unbearable, operators started demanding ‘Carriage Fee’ as was done in other developed cable markets. 

Broadcasters encouraged this trend as to fight the competition amongst themselves they paid the operators to have maximum visibility in the prime towns (the TRP towns) so as to get more advertisement revenue.

Revenue Sources Of Broadcasters

Over the last few years, broadcasters have increased their viewers and revenue sources tremendously by adopting multiple ways of selling same content on different platforms but have not reduced the subscription charges they ask from the operators on behalf of their subscribers, unlike the telecom and mobile operators who are forced by TRAI to reduce the price of their service as the consumer base increase. Some of these revenue sources are:

• Advertisement Revenue (India and International) 

• Subscription Revenue (CAS areas and NON CAS areas), in national and international markets. 

• Advertorial Revenue. This is the revenue earned from companies/individuals including politicians for their interviews or promotional programmes etc. 

• Privilege Revenue (in cash or kind). Privileges enjoyed by them being media houses like getting cheaper plots in Industrial Areas (for example NOIDA) and land for their Educational/ Professional Institutes etc. using the influence of their “News Channels” and media clout.

• SMS Revenue. Almost every channel makes programmes where they ask viewers to participate by sending SMS. In a single reality show SMS worth crores are sent. Mobile operators providing the service share this revenue with the channels. In a recent case the National Consumer Dispute Redressal Commission has asked a channel and a mobile operator to pay a punitive damage of Rs 1 crore. The companies had collected 13.92 crores of SMS revenue in a reality show. 

• Repeat channels Revenue.Broadcasters are repackaging their old content in to new channels and selling them separately like the ‘Star Utsav’ Channel of Star India and Zee Next from the Zee Group. Thus they make additional advertisement and subscription revenue on the same content.

• Dubbed channel Revenue. Same content is packaged in to two or more languages and sold as separate channels to the subscribers. This enables them to earn additional ad and subscription revenue at minimum cost. Discovery, NGC, Cartoon Network are just a few examples.

• Commercial Revenue. Collected from Hotels, Resorts or Business Establishments. 

• Analog Revenue. Analog cable networks pay a negotiated price to the broadcasters every month apart from cost of decoder for receiving their pay channels. Minimum connectivity slabs have been fixed by broadcasters for rural as well as urban networks (300 and 500 connections respectively) irrespective of their actual connections.

• Digital Revenue. Where ever cable operators are migrating to digital networks installing digital QAM equipment, Broadcasters demand an additional amount from them before supplying the QAM modulator for their channel.

• IPTV Revenue. By selling channels on IPTV.

• Mobile TV Revenue. For selling the same content repackaged for mobile TV.

• Video Revenue. Selling channel content on CDs/DVDs.

• Inflight Revenue. Revenue coming from providing reception equipment inside an aircraft for receiving their channels and providing service to the air travelers in international as well as domestic flights.

• Train/Road transport Revenue. Revenue for providing TV service during the journey in a train or a road transport with the help of a mobile reception system. 

• Other revenue source like sponsorships and in-programme advertising etc.

Keeping the above in mind, I feel the broadcasters should endeavor to reduce their superfluous expenses and pay carriage fee to the cable networks so that the basic cable infrastructure can be improved and made digital. This will increase the channel carrying capacity of the networks. Consumers do not pay for any up-gradation. Since India is still an evolving market, it does require an environment of growth through a properly framed regulatory regime and a coordinated effort by all the stake holders. None of the stak-holders ie. Cable operators, MSOs, broadcasters and the consumers can work in isolation.

Source: http://cablequest.org/articles/roop-sharma/item/1354-%E2%80%9Ccarriage-fee-is-our-right%E2%80%9D.html