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MSOs find Trai’s digitization deadline of 2013 too ambitious
In a bid to offer more choice and quality to consumers, the Telecom Regulatory Authority of India (Trai) has decided to phase out analogue TV services completely by the end of 2013.

The move will have an impact on 105 million households in which television viewers will be able to choose from roughly 800-1,000-odd channels and get more value-added services from both direct-to-home television (DTH) and cable service providers.

Better picture quality, access to niche high definition channels and better broadband services will be on offer.

Of the 105 million households, 25 million receive television channels from DTH operators. Nearly 85 million are cable TV homes of which only five million homes are digital.

“While Trai’s recommendations have created a level playing field and will offer far more transparency in the business, the winner, eventually, is the consumer,” said A. Mohan, executive vice-president (corporate) of Essel Group.

Essel Group owns Wire and Wireless (India) Ltd, a multi-system operator (MSO) that distributes television channels through analogue and digital networks, with a presence in 43 Indian cities.

Some industry stakeholders see challenges ahead in moving towards all-digital television networks. “We welcome the move but the timeline is ambitious. The move to digitize will require MSOs to add 75-80 million set-top boxes within just three years,” said Jagjit Singh Kohli, managing director and CEO of Digicable Network (India) Pvt. Ltd, a large cable TV operator that was acquired by Anil Ambani’s Reliance Communications Ltd recently.

The implementation will be in four phases, starting with Delhi, Mumbai, Kolkata and Chennai, which will be covered by 31 March, 2011. The second phase will cover all cities having a population of over one million and be completed by 31 December, 2011.

Phase three will capture municipal corporations and municipalities across the country (December 2012). Analogue services in the rest of India will be phased out by December 2013

“We are equipped to handle the challenge and we will be finalizing our new business plan based on these recommendations given by Trai,” said Kohli.

Ashok Mansukhani, president of the MSO Alliance, a trade association, however, admits that the “first and second phases are easy to achieve but the third and fourth will require enormous effort by local cable operators to upgrade and digitize and thus may take up to 2015.”

Digitization requires huge capital investment, estimated at between Rs20,000 and Rs40,000 crore by media industry experts. This will include upgrading equipment, devices and accessories used by the cable TV service providers for them to be compliant with the Bureau of Indian Standards. This will also include installing digital set-top boxes in homes.

While competition between DTH operators and MSOs will be intensified (cable service can facilitate a far more number of channels compared with DTH), local cable operators are already complaining.

“It’s a tactic to push us out of the way,” said K.K. Sharma, chief editor of Cable Quest, a magazine published by the Cable Operators Federation of India. “Cash-rich MSOs can invest in digitising cable TV services, what do we do? It’s impossible for us to invest so much money.”

Trai has also recommended that all service providers that set up digital distribution networks before the sunset date be given an income tax holiday from the date of setting up the network, or April 2011, whichever is later, until March 2019.

Even custom duty on digital head-end equipment and set-top boxes have been recommended to be reduced to be zero for the next three years.

“It is a welcome move, one which will offer far more transparency. The incentives given by Trai are immense,” says Gurjeev Singh Kapoor, CEO of Star Den Media Services Pvt. Ltd, a 50:50 joint venture between Star India Pvt. Ltd and DEN Networks Ltd to distribute television channels.

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