You cannot sideline the LCOs

Cable Television Networks (Regulation) Act 1995 has been amended last month to introduce mandatory digitalization of all cable TV networks in India by December 2014. It is surely a revolutionary step and was due since long but not in the way it has been brought now. 

On the surface it looks good to see the 100 million analog cable TV households getting a complete digital signal within the next three years. This means, all these households will be broadband enabled. This will take our economy miles ahead because for every 10% increase in internet penetration, country's GDP rises by 1.4%. Can we really achieve this? 

In the last ten years, all our telcos including the public sector BSNL and MTNL have added just 12 million broadband connections. Now within the next three to five years, TRAI believes that the magic wand of Digitalisation will enable cable operators to provide 72 million broadband connections. 

The present scheme of things has come because the broadcasters desire it. TV channels have increased more than 800 and the analog networks don't carry more than 106 channels. They have also been cribbing in the Ministry that they have to pay hefty carriage fee to make operators carry their channels (It is the broadcasters who first lured the operators with carriage fee to carry their channels on the networks). Surprisingly, the I&B Ministry is totally moved by their pleas and decided for total digitalization. 

Digitalisation is the best thing for the country, there is no doubt about it. However, there is no magic that can make 100 million of cable connections Digital in three years without bringing in structural changes in the industry where the cable infrastructure is developed as a national infrastructure because, ultimately the government will benefit from it. There are no thoughts going on in the Ministry and TRAI on this. Whatever they are doing now is again without getting enough information from the ground, listening only to the broadcasters or some big MSOs supported/ owned by these broadcasters. 

We must know that it is the LCOs who hold the last mile. They are the most important link in digitalization. In no way TRAI or the Ministry can think of ignoring them. Unfortunately, the MSOs who have no control on the last mile networks except giving them signal feeds to be carried to the consumers. Customer service, maintenance of the last mile network, CPE etc. is all with the LCOs. Consumers in India only know the LCOs and don't care who are the MSOs providing the signal feed. So we must ensure that the LCO network gets upgraded to carry digital signals and also the LCOs are well looked after so that the consumers are serviced best. Only then the broadcasters and the government will get the revenue. Also, it will help keep lakhs of people employed in the country. 

The quality of cable TV services depend mostly on the Broadcasters and MSOs who provide TV signal to the LCOs. LCOs are the direct link with the subscribers and face the public ire even on behalf of the MSO and broadcasters who are not accessible to the subscribers. 

If the Government genuinely wants the people of the country to benefit, TRAI must see the ground realities themselves rather than working on the picture painted by a few powerful ones. Chennai example is already in front of us where we have CAS fully implemented in the city and most of the popular channels became free to air because the consumers rejected the 'Pay' channels. 

What we expect from the government now is an enabling regulatory environment which does not threaten the existence of small operators and uses their talent and capabilities to create one of the largest broadband infrastructures in the world reaching out to majority of the population. Some of the issues we have raised with the Regulator are given below:- 

Basic Service Tier. The entire last mile is being built, operated, maintained, upgraded and serviced by the Last Mile Operators using their own funds. Basic Tariff should be worked out keeping this in mind. It must make their business economically viable. 

Making a-la-carte distribution mandatory at LCO and Consumer level. Last Mile Operator should have the liberty to demand a-la-carte channels from the MSO/ Broadcasters. By fixing the retail tariff for subscribers, TRAI has tried to look after the interest of the subscribers but regulations should also ensure that the LCO of small networks do not have to pay for all the packages of the MSO, what he has contracted with the broadcasters for the whole region. Regulations must protect the business interests of smallest of operators for whom it is the only livelihood. 

Problem of FTA Cable Operators There are many FTA cable Operators who serve only FTA channels to very poor people and are so small in size that the broadcasters refuse to give them their pay channels and MSO distributors refuse to give them the feed. How can these operators adopt digitalization? They should be kept out of the Digitalisation process till we have a solution for them and also a separate tariff order may be drafted for them. 

Distribution of STBs: STBs should be subsidized by the government for millions of poor subscribers who cannot afford to buy an STB but are cable subscribers for many years. They can be subsidized through a common fund like the Universal Obligation Fund (USOF), raised from the broadcasters and the MSOs, who would be the greatest beneficiary of Digitalisation as- 

their liability of carriage fee/ placement fee will no more exist, 

They will get enhanced revenues from total declarations and 

Their viewership will remain intact. 

Government will also get estimated 30000 crores annually as taxes. 

A swap- out scheme must be put in place by the broadcasters & MSOs, especially keeping the interest of poor people, when change of technology takes place for example from DVB-C to DVB-C2 or MPEG2 to MPEG4. 

Ads in Pay Channels. In view of the multiple gains to the broadcasters after digitalization, advertisements must not be permitted in pay channels as pay broadcasters would make money from subscriptions, SMSs and phone calls, selling the same content in international market etc. Retail Channel rates must be much lower than in non-CAS areas now. 

Pay Channels. Price of Pay channels with Advts must be controlled accordingly. However HDTV or 3D channels may have a free pricing policy. 

Tariff. CAS Tariff fixed by TRAI has been very successful as so far, none of the stake holders has gone to the Court against it. It can easily be implemented in digital networks immediately. 

Doordarshan Channels are still in analog and FTA. It will take a long time for them to digitalize all the terrestrial transmitters. Similarly, all FTA cable networks and the FTA feeds of the Digital cable networks should be kept out of the mandatory addressability so that immediately there is no adverse impact on millions of FTA subscribers. This will not even affect the revenue of the pay channels which are addressable. 

Revenue share between last mile operator and MSO The LCO has been building his network for years with his own earnings without any support from any Bank or MSO, his share of the subscription money from the MSO must be specified. The TRAI's Tariff Order No 1/2010 dated 21.07.2010 leaves it to mutual agreement which can lead to MSOs exploiting the LCOs as their livelihood depends completely on them in the new digital regime. 

Broadcaster should not ask for minimum guarantee for an area from new or old MSOs/ cable operators, which is in practice today. 

Must Provide Regulations must continue to sustain a level playing field. Broadcast companies will create vertical and horizontal monopolies in the market if left free. 

Must Carry Regulations can be got rid off as not relevent in a digital network. This will also provide cable industry a level playing field with DTH services. 

LCO should be permitted to get digital feed from more than one MSO to provide better choice/ more services to subscribers. Also, to avoid the disruption of services & thereby the suffering of consumers when broadcasters engage in dispute with the MSOs. 

Allow prepaid payment mechanism for consumers, like we have in DTH and mobile payments. 

Technical Training/ seminars may be organized for cable operators and their technical staff in different cities. 

Multi Dwelling Installation by DTH Operators. MDU used by DTH companies in large buildings and colonies must not be allowed any more as the system is nothing less than a cable network. 

Incentivise digital Cable TV networks from commencement of service till five years after the digitization deadline like it is done for telecom industry.

Source: http://cablequest.org/articles/roop-sharma/item/1348-you-cannot-sideline-the-lcos.htmlSource: http://cablequest.org/articles/roop-sharma/item/1348-you-cannot-sideline-the-lcos.html