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Trai recommends 4-phase digitisation; 31 December 2013 is sunset date
The Telecom Regulatory Authority of India (Trai) has recommeded a four-phase digitisation process for cable TV networks in India while setting a sunset date of 31 December 2013 for complete switchover to digital cable.

The first phase shift from analogue to digital cable
in the four metros of Delhi, Mumbai, Kolkata and Chennai should be complete by 31 March 2011.

Currently, the cities of Delhi, Mumbai and Kolkata are partially under Cas (conditional access system). Chennai, however, totally falls under Cas.

In the second phase, to be completed by 31 December 2011, the implementation will be in all the cities having population of over one million.

The third phase will cover all other urban areas (municipal corporations/municipalities) across the country by 31 December 2012.

The final phase will see the complete shift to digital addressable system in the rest of India, for which Trai has set 31 December 2013 as the cut-off date.

Trai said digital addressable systems will enable consumers to watch high quality digital TV channels of their choice on a-la-carte basis and also have the capacity to carry more channels.

“In fact, the capacity crunch and the non-addressable nature of analogue cable TV systems is coming in the way of orderly growth of the cable TV sector in India,” Trai said.

Trai has also recommended incentives to stakeholders to boost the process.

The sector regulator has proposed to give an income tax holiday to all service providers who have set up a digital addressable distribution network before the sunset date (s). This tax holiday is proposed from 1 April 2011 (or the date of setting up of the network whichever is later) to 31 March 2019.

It has proposed cutting basic custom duty on all digital headend-end equipment and set-top boxes (STBs) to zero for the next three years.

Trai has also said Multi-system-operators (MSOs)/ Local Cable Operators (LCOs) should be given the Right of Way (RoW) permission to lay optical fibre/cable, on non-exclusive basis and MSOs/LCOs to be licensed.

It urged for rationalization of taxes levied on the broadcasting distribution sector.

In its recommendations, Trai also stressed on the need of educating the stakeholders about the benefits of digital addressable cable TV systems.

The equipments, devices and accessories used by the cable TV service providers should be compliant to relevant BIS standards.

The Cable Television Networks (Regulation) Amendment Act 2002 will have to be suitably amended for implementing the sunset date for Analogue Cable TV services.

The Authority recommends that the licensing provisions made in the - “Recommendations on Restructuring of Cable TV Services” dated 25 July 2008 should be implemented for LCOs and MSOs.

The industry has experienced rapid growth since it started in the early 90s, with the number of subscribers increasing from just 410,000 in 1992 to more than 91 million by the end of 2009 – a growth rate of nearly 40 per cent every year for the last 17 years. This expansion of subscriber base is mirrored by commensurate growth on the supply side.

India today has a large broadcasting and distribution sector, comprising around 550 television channels, 6,000 Multi System Operators (MSOs), up to 60,000 LCOs, sevem DTH/ satellite TV operators and several IPTV service providers, Trai said.

Will the Government accept Trai's recommendations?

The government has taken its own time to accept the Trai reccomendations in the past. Digitisation is also a politically sensitive issue and the government has earlier developed cold feet in extending the Cas to other pockets of the three metros of Delhi, Mumbai and Kolkata.

So will the Trai recommendations get the government nod this time?

A senior Information and Broadcasting Ministry official told that the Trai report was only by way of a recommendation and, therefore, it was not possible to react to it without studying all its implications.

He said the Ministry would react in due course after studying all aspects including the sunset date of March 2013.

He said the I&B Ministry could react to the recommendations relating to tax matters only after consulting the Finance Ministry.

MSOs welcome Trai's recommendations

While the multi-system operators have welcomed the move, they have expressed doubt about the feasibility of completing the switchover from analogue to cable by 31 December 2013.

"It is an ambitious target but, at least, some movement is happening. Hope the government accepts the recommendations. The first phase is feasible. There are around 8 million homes and if we are to take a 60 per cent digital penetration, the MSOs should be able to do it by 31 March 2011," says Digicable MD and CEO Jagjit Kohli.

You Telecom CEO EVS Chakravarthy believes it is a revoultionary recommendation. "Cable companies will be able to raise capital in the new revenue model environment," he says.

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