Cable TV Digitization Dark-and-Grey Patches Ahead
On the one hand, viewers are being told that cable TV digitization means real power to them – that they will now be able to choose and pay for only those channels that they want rather than having to pick from packages with fixed prices. On the other hand, viewers are left with no option but to switch to watching television either via a set-top box from a cable operator, or a satellite dish, known as direct-to-home service. Whether they are willing or not, whether they can afford the forced transition or not, whether there is clarity among broadcasters and operators themselves, are all a moot point. Here, Hemant Upadhyay, IT & Telecom Desk, Consumer Voice, does a reality check on the transforming scenario.
Finally, the Cable Television Networks (Regulation) Act, 1995, has been implemented in Delhi, Kolkata and Mumbai, with Chennai to follow suit soon. The I&B ministry is claiming this to be so successful that they have decided to move to the next phase of digitizing major cities by 31 March 2013 and the rest of the country by 31 December 2014. By all means, the nationwide drive to digitize cable television has begun in earnest.
A digital addressable system (DAS) means the broadcasted channels will be provided by multi-system operators (MSOs) to consumers through local cable operators (LCOs) only in digital format and fully encrypted. This will require the consumer to fit a set-top box (STB) to be connected to their television which will decrypt these digital and encrypted channels to be viewed. Please note that for every TV in a household one needs to have a separate STB
Begging the question
Now, let us come to the question of why this insistence on digitization and encryption. Do bear in mind that there are about 14 crore TV homes in India, and almost 80 per cent of these are served by cable TV. So, with 100 per cent reporting and assuming even a minimum of Rs 100 per connection payout, cable TV will be generating a minimum revenue of Rs 1,200 crore every month.
The reasons given for the need for this for-digitization legislation are:
Ensuring authentic reporting of connections by LCOs
Improvement in quality of signal – digital over analog leading to enhanced viewing experience
Enhanced signal-carrying capacity as the present analog system can provide only about 100 channels whereasthe same cable can carry about 400 channels after digitization
Better control over local signals/casual signals
Gain some, lose some
The different stakeholders face unique actual gains/losses scenarios. These are expected to be along the following lines:
Government (central and state)
About 60 per cent to 70 per cent estimated increase in revenue (service tax as well as entertainment tax)
Total control over cable TV content
100 per cent censorship of cable TV signals possible if the government so desires
Total control over advertisements through broadcasters/MSOs since encryption will ensure no signal overlay till consumer-end
Registration fees from MSOs and LCOs
About 60 per cent to 70 per cent increase in revenue without much additional investment
Total control over MSOs and LCOs – and hence consumers
Control over advertisements since encryption will ensure no signal overlay till consumer-end; local ads run by LCOs will be totally eliminated
Competition in terms of local/small interest group channels will be eliminated
About 60 per cent to 70 per cent estimated increase in revenue
Total control over LCOs and hence consumers (now a captive audience, so to say)
Total elimination of local/small interest group channels and local advertisements
Substantial investment in digitization in terms of STBs, head-ends, SMS and other infrastructure
1.Substantial improvement in viewing experience
2.Choice of about 400 channels as against only 100 at present
3.Since LCOs will lose alternate avenues of earnings from local advertisement and local channels (estimated 20 per cent of an LCO’s revenue), they will not offer discounts on subscription
4.No improvement in channel blackouts because of power outages in the pathway of cable from MSO’s head-end
5.Customer service through MSO’s/LCO’s call centre will remain mostly futile, with wastage of time waiting to get connected and then not having a definite resolution
6.Consumers will miss out on niche channels targeted at small interest groups catered to by LCOs, since the groups are not large enough for broadcasters/MSOs
Since the digitization implementation programme has begun as on 1 November 2012 in the three metros, let us
review the ground realities post-digitization.
Set-top boxes (STB): There continues to be utter confusion about STBs being provided to consumers, with reference to:
Its quality – no Indian Standard prescribed yet
Its technology – DTH is already in with third-generation technology as against the first-generation technology being provided with STBs
Its portability – if you want to change your LCO-cum-MSO, you need to buy a new STB
The commercial terms – though the MSOs have declared a price of Rs 799, all terms associated with it are not clearly told to the consumer. Then there are rampant malpractices being indulged in by some LCOs who are demanding anything from Rs 900 to Rs 1,400, against the prescribed Rs 799
The Cable Rules prescribe an LCO-consumer agreement before providing STB enumerating all applicable terms, but almost no such agreement has been signed till date
2. Tariff: Although agreements among broadcasters–MSOs and MSOs–LCOs were supposed to have been signed before the digitization as per TRAI guidelines, the process is still on, especially between MSOs and LCOs. LCOs are not clear as to what monthly subscription a consumer will have to pay, how it will be determined, how grievance redressal will be done, and so on. In short, consumers do not know what commercial transactions they are entering into.
3. Billing: It is anticipated that major disputes will arise between LCOs and consumers whenever the first bills are raised. At an extreme level, it will not be surprising if law-and-order problems arise, especially in low-income groups and urban villages.
4. Technical/logistic issues: There are areas at the periphery of even the national capital territory of Delhi where digital signal is still not available.
In summary, though digitization has been implemented in the three metros, almost no commercial issue is resolved as of today. This is expected to lead to chaos when the billing is done.
Deconstructing the goals
Finally, let us review whether the so-called goals of digitization have been met.
Goal 1: Revenue gain: A major argument presented for bringing in the cable digitisation bill was under-reporting to the tune of about 60 per cent to 70 per cent – implying an anticipated gain in tax revenue for the government and the broadcasters. The requirement of STBs was projected to be about one crore for the four metros. However, in October 2011, when the ministry of information and broadcasting (MIB) collated the data provided by the industry with the Census data, it was realized that the total TVs to be digitized were only about 70 lakhs. So, in effect, under-reporting was around 30 per cent.
Goal 2: Total customer management: Since no agreements have been signed, MSOs/broadcasters/government have no consumer data at all.
Goal 3: Improved consumer experience: Commercially, the consumer may be feeling cheated with no clarity on: STB cost, its ownership, service responsibility; how to select channels and tariff implications; who the ultimate service provider is: MSO or LCO; grievance redressal system; and billing agency.
As matters stand, cable digitization has not met its goals so far, nor is it likely to meet them in the near future. In fact, some critics may suggest that revenue was never the goal – rather, it was absolute control to the broadcasters that was the overriding motive behind the whole exercise.
In other words
A digital addressable system (DAS) means that…
All channels being broadcasted will be only in digital form.
Every channel so digitized will have to be encrypted as well.
LCOs will only provide such digital and encrypted channels to consumers.
No analog signal will be available to consumers as per schedule prescribed.
Consumers will have to install one STB for every TV.
These STBs will be provided to consumers by LCOs within the tariff framework prescribed by Telecom Regulatory Authority of India (TRAI)