Are we on the right track?

Security problem in using Blackberry mobiles is in the news these days. It was surprising that after so many years of its existence in the country, the Government is now wondering ‘who let the Blackberry in’ to do business in India. 

But for our country perhaps, there is nothing surprising in it. Foreign TV Channels entered the country way back in 1992 and it was only in 2006, when we woke-up and registered them to do business in India so that they comply with the Indian laws and the government can have a share in their revenues generated from the country. Similarly, ‘pay’ channels entered in 1994 and only in 2004 we thought of regulating them by using CAS so that there is accountability of revenue collected from the consumers. Its implementation has been held up till date because consumers are our last priority. We are still wondering how to do it without annoying the mighty broadcasters who would lose most of their revenue once system becomes transparent. 

Well this is the way our governments work, be it UPA, NDA, or any other alliance at the centre. Some times I feel that it is the corporate world which runs our country and not the government or there is always a deep conspiracy against a section of society to benefit another one. Otherwise, what explains the impractical decisions by the authorities in the chair. 

There were two major decisions TRAI took last month which if implemented would affect the industry for years to come. First was the price regulation of Cable TV services in the non-CAS areas & DTH networks and the second was recommending the sunset date for digitization. Both the subjects are very familiar to them but still they took such out of date decisions which shun any logic. TRAI has been consulting on these subjects since 2004 with all the stakeholders. 

Tariff in Non-CAS Areas 

In the case of Cable Tariff, after freezing the rates as on December 2003, TRAI has been recommending an inflationary increase every year ranging from 4% to 7% but now they have recommended a reduction of Rs 10 in the subscription fee paid by a subscriber to a cable operator from their 2007 mandate of Rs 260/- and side by side allowed the broadcaster to charge 9% more from the cable operators as the cost of their pay channels. 

In the case of DTH, they have reduced the cost of pay content by 15% and brought it to 35% of the cost paid by small operators imagining that cable operators are underdeclaring their subscriber base by at least 65%. I doubt if anyone including TRAI and broadcasters have done any survey to substantiate this. It is only the broadcasters who assume that they should get pay-channel revenue to the tune of Rs 15,000 crore. Why do they assume that 100 cable connections in the country watch all 200 odd pay-channels when the only worthwhile survey done by TRAI along with CMS says that on an average a subscriber watches only 7-15 channels. It translates into a fact that a subscriber does not watch more than 80 percent of available pay-channels. If this is true, then 15 percent revenue going to the broadcasters is 100 more than what they should get. TRAI should make them return this extra revenue to the subscribers. 

What surprises me more is that first we allow illegal entry to pay channels in the country, without a regulation in place and without a delivery infrastructure in place. Then, we facilitate them by allowing them to go direct to the consumers on DTH networks by-passing the cable operators. By deferring implementation of CAS on cable networks, we have actually encouraged DTH operators (in reality the broadcasters) and allowed them to install HITS, Cable TV and IPTV networks and at the end of the day praise them that they have made much faster penetration of digital technology than the MSO/Cable operators and deserves more incentives. As a result, TDSAT has become busy in accepting litigations on the issue, almost on a daily basis but we keep waiting for the verdicts. That’s how we come back to square-one where it was a free for all run for the stake holders. Only the consumers will suffer without potent regulations. 

The second important decision of TRAI was sending recommendations to the I&B Ministry for fixing a sunset date of March 31, 2011 for digitization in the four metros and December 31, 2011 for tier-I towns having population of more than a million and December 31, 2012 for all urban agglomerations and December 31, 2013 for rest of the country including the rural areas. 

I remember that the discussion on fixing a sunset-date for digitization had started in 2003 when CAS Bill was passed. It was discussed in the PMO in 2005-2006 and a seven-year period of digitization process was recommended. It was further discussed with the stakeholders by TRAI itself and suggestions were made for facilitating the manufacturing of digital set-top boxes and head-end equipment within the country and also exemption of duties and taxes to incentivize digital implementation. Unfortunately, none of these has happened till date. 

No decision on the earlier recommendations made by the authority on restructuring of Cable Television, implementation of CAS, recognition of Cable Television Networks as national broadband infrastructure and providing Right of Way to the Cable Networks has been taken. If this is the present state, what interest the industry has to migrate to digital? The cable networks which have gone digital and implemented CAS in the non-CAS areas are not even recognized by the broadcasters for the CAS area tariffs of pay channels and TRAI has failed to help them in any way. If the government was tough in this regard, we would have half the country enjoying digital television by now. 

Will the implementation start merely by finishing the paper work? The only people who would benefit from such a policy will be the DTH companies and telcos providing IPTV. Even the large MSOs will not benefit unless adequate returns on their investments are ensured by the Regulator. 

Is TRAI really depending on DTH and the IPTV operators (In many cases they are the same) for digitization and has given-up with the cable operators? Such a move will misfire again. We have seen the IPTV achieving great success that too in a country where 80% people live without a broadband connectivity. It may look excellent for DTH technology as projected by many sponsored surveys done by some foreign agencies on which TRAI often believes (Some of the surveys have declared that DTH connectivity would grow twice by 2012 and four times by 2015), notwithstanding the fact that all DTH players are cribbing that they are bleeding. Several states are yet to levy entertainment tax on DTH subscribers as done on cable. Well, this could actually happen if government’s plan and TRAI’s efforts to delay the implementation of CAS in cable succeeds for another few years and provide room for DTH to build a monopoly in distributing digital signals. 

It is time for our government to realize that what the country needs is a robust wire-line broadband infrastructure provided by fiberoptic networks, whether they are owned by telcos or Cable Operators. No wireless technology including DTH, BWA or 3G can match the speed and bandwidth of wireline networks. 

Cable Infrastructure can do wonders with the economy of the country if they would be given the timely and right direction. The need of the day is to provide them a level playing field with CAS implementation and let the market forces decide on the winner. Only then we will do justice to consumer interest.

Source: http://cablequest.org/articles/col-kk-sharma/item/1435-are-we-on-the-right-track.html