Cable TV Networks Bill proposes to digitise the Rs 270-billion industry through set-top boxes; cable operators won't be able to hide their undeclared connections anymore

Since the cable TV industry's stunningly chaotic beginning in India in the mid-90s, those in this vast and unregulated trade have had a free run. In the absence of government regulation and its accessory, red-tape -- the Indian cable industry has managed to climb to number three position in the world. But the coming summer, things are in for a shake-up.

(t)elementary: A digitised India will benefit the government,
broadcasters, MSOs, and direct-to-home operators, in terms of revenue. 
Representation pic

The centre has approved the Cable TV Networks (Regulation) Amendment Bill, 2011, which proposes to make it mandatory for every household in the metro cities (in phase one) -- Mumbai, Chennai, Delhi and Kolkata -- to have a set-top box, digitising the entire technology.  This will set the pitch to bring in transparency to a trade currently distended with black money, and glorying in the attentions of the underworld.

Industry regulator TRAI has proposed the four-phase migration from analog cable TV to a fully digital addressable system, starting with the four metros, by June 2012.

Huge revenue
Of course, the move, which has long been resisted by the cable mafia, and with good reason, will spell doom for them. Namrata Sharma, trade analyst with M/s Pioneer Invest Corp, who recently completed a cable and satellite industry market survey report, explains the repercussions through numbers.

"The Indian cable industry is worth Rs 270 billion and is the third largest in the world after China and the US. The number of TV homes in India grew from 120 million in 2007 to 148 million today. Cable reaches 94 million homes with 88 million analog connections and 6 million digital ones, while DTH has commanded 41 million subscribers," she stated.

Of these 88 million analog households in the country, local cable operators (LCOs), who were charging Rs 160 per month, rake in approximately Rs 170 billion in revenue. Nearly 80 per cent of this -- around Rs 136 billion -- is retained by the LCOs, and a mere 20 per cent, or Rs 34 billion, is declared, and half of the declared revenue, that is Rs 17 billion, is passed on to broadcasters to meet content cost.

Crime at bay
Joint Commissioner of Police (Crime) Himanshu Roy said, "Any rationalisation of the cable industry will bring transparency and better regulation will reduce the influence of the underworld on the industry. It is a welcome step, as the underworld is active in getting connections, keeping the number of connections intact. If there are set-top boxes and the consumer has individual choice, the bad characters can be kept at bay." 

A senior Telecom Regulatory Authority of India (TRAI) official said, "We were receiving a lot of complaints from MSOs and consumers as the LCOs were directly operating at the end-user level, and there was no transparency. The new bill will make the entire cable and satellite industry transparent. The Indian government loses more than $1 billion per annum in taxes due to under-declaration."

"While TRAI will remain the governing body, district magistrates, sub-divisional magistrates and police commissioners have to ensure that at ground level the cable operators implement the order. In case of any violation, the authorities are empowered to take action as prescribed in the Cable Television Networks (Regulation) Act, 1995 against the violators."

Vikram Mehra, chief marketing officer, Tata Sky said, "A digitised India promises a win-win situation for all the stakeholders, the government, broadcasters, MSOs, and direct-to-home (DTH) operators, in terms of revenue. And it is fair to say that the ultimate beneficiary will be the customer, who will get an enhanced TV viewing experience."

Fad of ads to fade?
Media consultant Sainath Iyer said, "High cost of advertising on TV channels is expected to be a thing of the past as increased revenues from subscribers are expected to make up for revenue and bring down the advertising tariffs of broadcasting television companies."

"So far, advertising was the key driver for broadcaster revenue of around 80%, as conventional analog cable distribution, due to their inability to grow subscription pie adequately plagued by under-declaration of subscriber base by the local cable operator. Under the present system, the local cable operators retain 80% or Rs 13,600 crore out of the entire collection of Rs 17,000 crore collected from viewers as subscription," he said.