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Timetable for cable digitisation
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When it comes to broadcast regulation, the Telecom Regulatory Authority of India (Trai) is perpetually caught between a rock and a hard place. In this case, between a ministry of Information and Broadcasting, which rarely, if ever, listens to the (carriage) regulator’s usually sensible recommendations, and a maddeningly fragmented industry that is incapable of lobbying as one. Nothing illustrates this as well as the Trai’s latest missive recommending a sunset date (December 31, 2013) for digitisation of analog TV services (read cable) across the country. To hasten the process, it suggests a 10-year tax holiday for companies that achieve it, rationalisation of service and other taxes, increase of FDI limits and licensing the cable business among other things.

These are very sensible recommendations. The sunset date may be slightly impractical considering the mess the business is in. Most developed nations, which had addressability in the analog form, gave themselves a decade or more to go fully digital. So, a three-year period is very ambitious by Indian standards. That is the first of two questions that this newspaper raises. What about the execution? To recap the facts — India has 134 million TV homes, of which 80 million are cable homes. However, a structural flaw means that only 10-15 per cent of the money they make comes back into the business. Policing those homes and the 60,000-odd cable operators who serve them has become a priority for three reasons — the tax loss on revenues, the skew it is creating in an industry that is abjectly dependent on advertising and the complete lack of equilibrium in revenue distribution within the industry.

All attempts to force digitisation, not surprisingly, have not worked. In 2003, the CAS Amendment to the Cable Act made it mandatory to sell pay channels only through digital set-top boxes. Seven years on, the results are pathetic — while market-led digitisation (DTH) has notched up 20 million homes, mandatory digitisation has led to just two million digital cable homes. This is because there is no incentive to digitise cable for either the retailer (cable operator) or the wholesaler (MSOs, or multi-system operators). Eighty million cable homes generate about '15,000 crore of cash a year. Digitisation means declaring 100 per cent of that, instead of just 10-15 per cent — is it a surprise then that cable operators, many of them local politicians, don’t want to digitise? On the other hand, MSOs have to invest thousands of crores in digitisation without the guarantee that the homes they control will be theirs. Unlike DTH where the operator has control over billing and collection, in cable, the last-mile ownership rests with “whoever is the bigger goon”, says one MSO. All you need is a pair of scissors and muscle to elbow an incumbent out. The recommendation on licensing helps tackle that.

That brings us to question number two — will the ministry convert them to policy? The Trai’s website is full of papers brimming with sensible recommendations that never see the light of day. If even 60 per cent of the recommendations relating to digitisation are implemented, there is hope for the '30,000-crore TV industry. Otherwise, we are staring at more advertiser-funded entertainment and news content, lesser revenues and a bigger mess in the years to come.

Source: Business Standard

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