ITV

Tag: LCO

  • I&B sees need to regulate local cable TV channels, seeks Trai’s views

    I&B sees need to regulate local cable TV channels, seeks Trai’s views

    MUMBAI: Alarmed by the mushrooming of cable channels, the Ministry of Information & Broadcasting (MIB) has sought the recommendations of Telecom Regulatory Authority of India (TRAI) regarding issues relating to transmission of local channels or ground based channels operated at the level of cable TV operator/MSOs.

    In its reference to Trai, the MIB has sought to know whether there was a need to put in place a comprehensive set of provisions for local channels which would cover issues related to registration mechanism, including eligibility requirements, fee, terms and conditions to be provided for such channels, including the definition of local or ground based channels and their area of operation.

    In the reference to Trai, MIB has also sought its views with regard to the issue of transmission of local channels at local cable operator level in Digital Addressable System (DAS) regime.

    Trai in its recommendations dated 25 July, 2008 had recommended that Local Channel Operators (LCOs) shall be permitted to transmit their ground based channels.

    However, in the current DAS regime only digital addressable signals can be carried out on the cable network which is generated at the MSO head end.

    The Ministry in its reference has also requested Trai to state whether there was a case for putting a cap on the total number of ground based channels operated by a single MSO/cable operator.

    Trai has also been requested to examine whether there was a need to prescribe separate eligibility criteria for cable operators transmitting local news and current affairs channels at their level.

    Specific recommendations have been sought with regard to eligibility criteria, terms and conditions including foreign investment levels, net worth criteria and requirement of security clearance etc. for such channels.
     
    The need for putting in place a regulatory framework for local channels being operated at the level of cable TV operators has been engaging attention of the Ministry of Information and Broadcasting for quite some time.

    This has assumed a greater significance in view of the digitisation of cable TV sector being implemented in the entire country in a phased time bound manner. Presently, Cable TV operators/MSOs are transmitting local news, videos and other locally developed content as separate televisions channels in addition to satellite TV channels obtained from broadcasters.

    These channels, popularly known as local channels, are presently not subject to a regulatory framework unlike private satellite TV channels permitted under the uplinking/downlinking guidelines of the Ministry. As a result, local channels continue to mushroom all over the country without having registration /license.

    Since the area/jurisdiction within which the programme generated at the level of cable operators can be transmitted has not been defined in the Cable Television Networks (Regulation) Act, 1995, it is possible for Local Cable Operators (LCOs)/Multi System Operators (MSOs) operating at the local levels to broadcast local channels over a larger geographical area i.e at Regional/State/National level by transmitting the same content over their entire network.

    Instances have been brought to the notice of the Ministry that some cable operators are also venturing into transmission of local channels over wider geographical area which includes inter-state and intra state transmission by sharing the same content with others on their network. In such a scenario, local channels are basically operating as State/Regional/National channels like permitted private satellite TV channels without getting any permission.

    The intent of allowing cable operators to generate and transmit local programme is to keep the local people informed of relevant local issues. However this intent is not fulfilled when LCOs and MSOs start networking of the content to cover a larger geographical area. Given the present state of technological advancement, the tendency to network content at a larger geographical area has gained strength, the MIB said in a statement.

  • MSOs, LCOs could soon face anti-monopoly regulations

    MSOs, LCOs could soon face anti-monopoly regulations

    MUMBAI: There could soon be caps on market shares of multi-system operators (MSOs) and local cable operators (LCOs) in a city, district, state and the country.

    The Information and Broadcasting (I&B) Ministry is keen that competition emerges in some states where monopolies have got created in the absence of any market share regulations and such monopolies do not form in other states, through reasonable restrictions on MSOs and LCOs.

    The Information and Broadcasting (I&B) Ministry on Thursday asked the Telecom Regulatory Authority of India (Trai) for its views on imposing of restrictions to prevent monopolies and the measures to prevent monopolistic operations by MSOs and LCOs.

    The I&B Ministry said it has asked Trai to provide its recommendations based on the following: “In order to ensure fair competition, improved quality of service, and equity, should any restriction be imposed on MSOs/LCOs to prevent monopolies/accumulation of interest? If yes, what restrictions should be imposed and what should be the form, nature and scope of such restrictions?”

    The ministry has asked Trai to also suggest amendments required in the Cable Television Networks (Regulation) 1995 Act and Rules framed thereunder.
    The ministry said it has observed that cable TV distribution is virtually monopolised in some states as operation of the entire cable TV network is dominated by a single entity in those states. At present, there are no restrictions on the issue of accumulation of interest in terms of market share in a City, District, State or country by individual MSOs and LCOs in the cable sector.

    MSOs and LCOs are currently free to operate in any area or areas of their choice after obtaining registration from the ministry.

    The ministry feels such monopolies may not be in the interest of cable TV consumers and may have serious implications in terms of competition, pricing and healthy growth of cable TV sector in that market.

    MSOs and LCOs are required to be registered with local Post Offices to be able to operate in the permitted areas of registration. However, as per recent amendments in the Cable Television Networks (Regulation) Amendment Rules 2012, it has become mandatory for MSOs to get registration from the I&B Ministry to operate in areas which are notified for analogue switch off and transition to digital cable TV delivery.

  • ‘Digitisation will not spur irrational price war as the Santa Clauses are broke’ : Hathway Cable & Datacom MD and CEO K Jayaraman

    ‘Digitisation will not spur irrational price war as the Santa Clauses are broke’ : Hathway Cable & Datacom MD and CEO K Jayaraman

    Hathway Cable & Datacom has an ambitious investment plan of Rs 10 billion as India opens up to digitisation across the country.

     

    In the first phase, India’s leading multi-system operator (MSO) plans to invest Rs 1.75 billion even as it expects DTH to take away 10-15 per cent of its cable TV subscribers in the two lucrative markets of Delhi and Mumbai.

     

    Sitting on a cash pile of Rs 2 billion, Hathway will not source equity finance at this stage. Though net losses will drag on for a long period in a digital environment, the MSO hopes to regain its old valuations if it manages to successfully implement the early phase of digitisation.

     

    Even as carriage revenue will shrink, Hathway’s endeavour will be to have an Ebitda of 20-25 per cent right from the start of mandated digitisation.

     

    In an interview with Indiantelevision.com’s Sibabrata Das, Hathway Cable & Datacom MD & CEO K Jayaraman talks about how no cable or direct-to-home company is in financial health to launch an irrational price war. He also elaborates on the MSO’s digitisation gameplan.

     

     

    Excerpts:

     

    DTH companies have made rapid progress in recent years. How is Hathway Cable & Datacom prepared to exploit the first phase of digitisation?
    We plan to invest Rs 1.75 billion in the first phase. This will include Rs 200 million towards marketing in Mumbai and Delhi over the next 6-8 months. It is the first time that we are splurging on media campaigns.

    Are you comfortably placed on the funding part or you plan to raise fresh capital?
    We have a cash pile of Rs 2 billion. We will not source equity finance at this stage. We are comfortably placed and will manage with bank debt and vendor credit.

    Will you need funding in the second stage?
    We will see when we reach there. We have already digitised around two million homes. We will need to digitise our remaining 6-8 million existing homes (including multiple TVs). Our funding requirement will be Rs 10 billion as we need to subsidise the set-top box (STB) cost and make further investment in infrastructure.

    Hathway was selling at Rs 500 a STB to its customers in voluntary digitisation. Will you further subsidise the boxes in a mandated digitisation environment?
    We are looking at charging Rs 750-790 a STB (including taxes) as the rupee has depreciated against the dollar.
    “LCOs will get a revenue share of 30-35%. They will gain from 2nd TV homes, operational efficiencies and Vas. Distributors will get a 5% rev share. They will also get a 30% share in carriage revenues”

    But DTH could go aggressive and there could be a price war situation?
    We won’t sell below this even if there is a price war. We do not have the financial resources to further subsidise the boxes.

     

    We, however, feel that no player is in a position to indulge in an irrational price war. Nobody in cable can do so. DTH will fight for market share on the basis of perception and brand. All the Santa Clauses are broke.

    Are you expecting a migration to DTH?
    We expect DTH to take away 10-15 per cent of our cable TV subscribers in the two lucrative markets of Delhi and Mumbai. But we see a surge in second TV homes. Besides, we will launch three packages – lower, middle and top-end. In all the packages, we will have a price advantage. Also, we will have more channels on offer than DTH because of our bandthwidth superiority.

    Will the supply of STBs be impacted due to a sudden rise in demand?
    We have ordered 1.3 million digital STBs and signed a letter of intent for another 0.5 million. We estimate our subscriber universe to be 1.5 million in Mumbai and Delhi. About 20 per cent of this will be second TV sets.

     

    We also have a presence in Kolkata through our joint venture company, Gujarat Telelinks Pvt. Ltd (GTPL), which acquired a 51 per cent stake in Kolkata Cable and Broadband Pariseva. We expect to at least seed 400,000 boxes there.

     

    We have already seeded 250,000 STBs on a voluntary basis in Delhi and Mumbai.

    Crucial to the whole implementation of digitisation is the appeasement of the local cable operator (LCO). Have you fixed the revenue share terms with them?
    The LCOs will get a revenue share of 30-35 per cent. There will be a loss of revenue for them but they will make up to some extent with the second TV homes, where they don’t usually charge anything from the subscriber. Besides, they will gain from operational efficiencies and will discover new homes in a digital environment. Also, there will be a revenue share for them from value-added-services (Vas). So they should reasonably settle with us.

     

    The distributors will get a five per cent revenue share. They will also get a 30 per cent share in carriage revenues. In Mumbai, we are comfortable with the distributors. There may be some issues in Delhi but we will manage to strike a smooth bond with them.

    Why haven’t the MSOs sat down together and decided on a common share for the LCOs who control the last mile to the consumer?
    That would attract the Competition Commission of India. But in any other form, we will make efforts to drive consensus up. We don’t want any fissure surfacing among the stakeholders. We can’t afford to derail DAS (Digital Addressable System).

    Do you expect carriage revenue to shrink considerably?
    We expect it to shrink by 30 per cent in the digital environment. This can even go up to 50 per cent. But we will be somewhat compensated by a reduction in content cost.

    How?
    We will do fixed fee deals with broadcasters and believe content cost in a digital scenario will fall in the region of 35 per cent. We are close to sealing deals with two big broadcasting companies.

     

    Even sports channels should allow us to price reasonably; customers should take it round-the-year. Otherwise, we will offer it on a-la-carte basis to consumers.

    Analysts predict that net losses of MSOs will drag on till at least 2016 in a digital environment?
    We can’t predict now. But Hathway aims to stay Ebitda positive. We expect our Ebitda to be at least in the 20-25 per cent range. We know it will be difficult at the early stage of digitisation but our endeavour will be towards achieving that range from the start.

    Hathway had fixed it IPO price band at 240-265 and the scrip is now quoting at Rs 116 per share. When will the valuation be regained?
    We will regain good valuations if we manage to seed the boxes. Investors are bothered about that and not about net profitability at this stage.

    Do you expect the second phase to be tougher for you?
    For Hathway, the ride in the second phase could be even smoother as we have already got a large population of digital subscribers on a voluntary basis in some of these major cities like Bangalore and Hyderabad. Our digital penetration in some of these cities is as high as 60 per cent. In Gujarat we have seeded 150,000 (out of our
    estimated current subscriber universe of 220,000) STBs, in Hyderabad we have 350,000 (out of 800,000) and in Bangalore we have a digital population of 275,000 (out of 400,000).

     

    And in Jaipur, Indore and Bhopal, we have a digital penetration of 40 per cent out of our current subscriber base. In Phase II, we are far ahead.

    Will you follow the acquisition route?
    We will not pursue acquisitions and will prefer to conserve capital for digitisation. We will not do any more analogue consolidation. It is bad to add analogue weight in the current circumstances. Our focus will be on digitsation.

     

    Post digitisation, we may be interested in acquisition in some of these cities. But it should come at the right price.

    Are you looking at launching value-added services?
    We will tie up with either Ericsson or Cisco for Video-on Demand (VoD) services. We will decide in March whom to partner with. We have launched HD services and also bundled it with our broadband offering. We hope it will enhance our average revenue per user (ARPU). We have 2000 HD subscribers. Given that we get Star bouquet on HD and spend on marketing, we expect HD to eventually account for 10 per cent of our subscriber base.

    Are you bullish on your broadband growth?
    Yes, that gives us an advantage over DTH. We are also ahead of the other big MSOs so far as broadband goes. We will be bundling broadband with digital cable to offer better value to the consumers. The broadband homes passed stand at 1.7 million and our actual subscribers are 400,000.
  • Content Code: MIB places self-regulation guidelines before Court

    Content Code: MIB places self-regulation guidelines before Court

    NEW DELHI: The Ministry of Information & Broadcasting today placed before the Delhi High Court a Self Regulatory Guidelines for the Broadcasting Sector (2008) that proposes a two-tier regulatory set-up to be run entirely by broadcasters, with the key being adherence to the Certification Rules of the Cable Television Network (Regulation) Act, 1995.

    The contentious issue of Content Auditor has been dealt with extensively in the Guidelines, giving the industry the powers they wanted, by removing the clause in the earlier Code that said that the Auditors would have to report issues of non-compliance to the government.

    Now, the Auditors would report violations to the Chief Editor and it would be his responsibility finally on what goes on air.

    The Guideline says that only cases in which the Broadcast Regulatory Authority of India (BRAI) would take action – suo moto or on receiving a complaint – would be violations of the Certification Rules that have repercussions on the security or integrity of the country or contravene restrictions under the Theme 6 (Regulation & Community) or Theme 9 (General Restrictions) of the Certification Rules.

    Also, segment-wise Broadcast Consumer Complaint Committees would have to be set up, which would include separate committees for MSOs (multi-system operators), LCOs (local cable operators), the Indian Broadcasting Foundation (IBF), News Broadcasters Association (NBA), Association for Radio Organisations of India, Community Radio Forum and the Prasar Bharati.

    The BCCCs would have wide-ranging powers, including directions to channels not to telecast programmes or advertisement, “pending discussion”; to edit the advertisement or programme, and order any punitive action “in accordance with the constitution of the BCCC of the relevant segments of the industry”.

    While the First Tier would ensure self-regulation at the BSP level, the Second Tier would be the domain of the industry as a whole.The BCCCs would play their role there, again a new concept ushered in by the Guidelines.

    “At both the tiers, it will be the industry that would regulate itself, which was their demand and so what more can one ask for?” said an MIB official, without wanting to be identified.

    A copy of the Guidelines is exclusively with indiantelevision.com.

    The first tier would be at the Broadcast Service Provider (BSP) level, where each such BSP would have to have its “own internal mechanism to comply with the Rules, for which it may appoint one or more Content Auditor of requisite qualification and experience”.

    Each channel would have to provide details of its Content Auditor/s on its website and channel for information of the public, and the information would have to be notified to the MIB.

    It says: “For the purpose of ensuring compliance, each BSP may develop its own internal guidelines and procedures. However, each BSP shall consult its Content Auditor/s for assigning appropriate categorisation as per the Rules in respect of each programme / advertisement.

    “The Chief Editor of the channel, by whatever designation he is known in the channel shall be responsible for the final decision to accept or modify the guidance given by the Content Auditor”, and shall be “finally responsible for self-regulation and ensure compliance with the Rules”.

    Another new aspect in the Guidelines is to deal with Live and interactive programmes.

    In these, the government felt, that participants’ words or ideas or gestures cannot be edited out, so the Chief Editor would have to satisfy himself that adequate briefing have been given to the participants about the certification norms and indemnify the BSP against any deliberate violations by them.

    An important new aspect that had been a demand of the industry, especially the news channels, has been taken care of, wherein the Guidelines says that while the Content Auditor would bring to the notice of the Chief Editor any violation of the Rules, “The ultimate decision of such a matter shall be the responsibility of the Chief Editor.”

    The second tier would be at the Industry Level, at which the “Central Government or the Broadcast Regulatory Authority of India would appoint industry-segment level organisations to set up their respective Broadcast Consumers Complaint Committees, who would have to deal with and respond to complaints within specific time limits.”

    It is here that the MSOs and LCOs have been empowered for the first time to set up their own BCCCs to deal with programme content complaints from subscribers.

    The list of other industry-segments that would have to set up their own BCCCs include the IBF, NBA, Association of Radio Operators of India, Community Radio Forum and Prasar Bharati.

    The Introduction to the Guidelines says: “These Guidelines set out principles… and ethical practices which shall guide the BSPs on offering programming services…” and also says that “These Guidelines have been drafted to introduce greater specificity …and minimse scope for subjective decision by the regulatory authorities or the BSPs.”

    Since the Guidelines are self-regulatory, which has been a consistent industry demand, the onus, the government says, would be on the BSP when forming a view on the acceptability of any programme.

    The industry demand for watershed timing has been accepted and made progressive, from 8 pm onwards, under the assumption that from that time of the day “parents are expected to share the responsibility of what their children are permitted to watch on TV”.

  • ‘Cas is here to stay’ : Nripendra Misra – Trai chairperson

    ‘Cas is here to stay’ : Nripendra Misra – Trai chairperson

    Nripendra Misra is a suave IAS officer with a reputation of being completely above board, and perhaps lacking the ‘guile‘ that puts many others in the topmost slots of the bureaucracy, fellow officials say of him in a positive sense. After the first initial setback for Conditional Access System in 2003, it was during Misra‘s tenure that Cas was enforced in parts of Mumbai, Kolkata and Delhi. And it was war… MSOs had to be readied, LCOs trained to shift to higher technology, broadcasters‘ resistance to be broken down by assuaging their fears and yet, the court order had to be implemented within the deadline: 31 December 2006.

    It could not have been a pleasant task. Amidst all this, Misra and his dedicated but small team is going about handling one of the noisiest of industries in the country, issuing consultation papers, and ushering in new technologies.

    Misra took his stand on various contentious issues during an interview with indiantelevision.com‘s Sujit Chakraborty.

    Excerpts:

    It has been nine months since Cas was implemented in parts of Kolkata, Mumbai and Delhi, after Chennai was brought under Cas. Towards the beginning there were uncertainties, and some people even opposed Cas. So today, what is your assessment of Cas? Is it a success or a failure in numerical terms?
    Well, we never had a target in terms of penetration percentages. It was left to the subscriber who wanted to opt for choice, whether he wanted pay channels or FTAs and which are the ones he wanted. The latest numbers tell me that about six lakh (600,000) homes have opted for Cas in the mandated areas.

    That is out of a universe of around 1.6 million cable homes…?
    Yes, so that is about 30 per cent of subscribers. Then you have also a similar facility in DTH, which has also been accepted by many. In Kolkata particularly, the response has been poor because most of the popular channels are FTAs. So if the criterion is in terms of numbers, I think it has been a very satisfactory performance.

    But it is not the number that is important. Unfortunately, we are always missing the true substance when attempting to evaluate Cas.

    What is it we are trying to do? We are trying to set up a mode of digital transmission, which is more efficient and more accommodative. It is the global practice. Analogue is gradually getting out of the scene, and so we have to make a beginning. That was made into a kind of a pilot in these four areas.

    Today you have a choice, you have DTH and you have Cas. Tomorrow you may have HITS… which is another option. You have voluntary Cas. So a beginning has been made, a seed has been sown, which must someday fructify in terms of an all India feature. Success has to be measured in terms of whether it is a trendsetter or not, and not in terms of how many people have opted for it or not.

    So would you say that the target of becoming a trendsetter has been achieved?
    Oh yes! It is perhaps a watershed in that in the broadcasting industry, digital transmission has begun.

    But one main area that remains disturbing is the quality of service, which in many parts of the mandatory Cas zones remains highly dissatisfactory. Lots people are not getting the channels they have opted and paid for.
    Firstly, I do not want to defend the quality of service, and there are problems of channels being discontinued. But it is not just at the level of local cable operator. I think somewhere down the line, the MSO also has to take his role seriously. Unlike in non-Cas areas, the role of the broadcaster and MSO in implementing Cas is far more important than that of the LCO. So, if these things have happened, they have happened because of the inadequacy of the functioning of MSOs.

    When it started in January, we wanted to take a very liberal view. We did not want to enforce all the regulatory provisions in the first four or five months. They wanted time so that the consumer preference could be registered, and we gave them enough time. The subscriber register that has to be maintained was not complete to the extent we wanted. Therefore billing got delayed, payments also got delayed… subscribers have also not made payments. But we have made it clear that come 1st of July, we are not going to forgive anyone.

    But how do you enforce this, as it has clearly not happened in many places till now?
    There are three ways of how to enforce this. First is the awareness of the consumer. There is a quality of service regulation in the Cas area which is operational. Therefore the subscribers must reach to and judge the performance of the MSOs and cable operators. There are great details in the regulation about the kind of rebate that has to be given if the channels are not coming, or how much time it should take which kind of interruption, what should be the response time for the MSOs… these are all standardised and fixed.
    ‘Broadcasters have been cooperative in rolling out Cas, despite serious reservations about the Rs 5 channel price‘

    But that brings us to a moot point…. The consumer is not truly aware and also does not seem to care about implementing his rights?
    It takes time…

    So you are saying that MSOs are primarily responsible for QoS, so where have they failed? Because there are lots of complaints about failure across the board.
    The MSOs initially were perhaps not ready with the level of demand. That has settled down, STBs have been imported and they are in plenty today. The second stage was to get the reference of the subscribers. Now, I know and it is correct to say that the MSO representatives have gone to the homes four or five times, asking the subscribers to fill up the forms. But the gentleman says, you have come at the wrong time, that he will have to consult his family.

    But gradually, that too has ceased to be a problem. Ninety percent of the subscriber registers have been completed and the choice is now there. Now the stage is where the subscribers must know what their right is. That is, the manual of practice of the MSOs must be made available to the subscribers. That manual of practice in most of the cases is not available. The contractual conveyance, that we have between us signed a contract, and this is our right, that message is still not being passed on, which is reflecting in the lack of awareness.

    Broadcasters have been extremely cooperative in rolling out Cas, despite serious reservations about the RS 5 channel price, and all the Reference Interconnect Offers are in place.

    So what have you told the MSOs about this?
    We have conveyed to them that look, we shall view very seriously if there are defaults. We have written to the state governments, because they are the enforcement machinery.

    So what is holding back the extension of Cas in the three metros?
    The Central government wanted us to report back on this, we have sent that report, we have said it will take six to eight months‘ time to implement after notification of the extension. But then the state governments said that it is better to evaluate before extending Cas. We on our own without waiting for such instructions have engaged some outside agency to advice us on the level of implementation.

    Has that audit been completed?
    It will take another two months, we are expecting the reports by the end of October or beginning of November.

    So it will further delay Cas extension by that much time?
    Well this has nothing to do with Cas extension, this is something we are doing independently, and as far as the government goes, they can extend Cas, and we have just said that it would take six months from the day of notification to implement the extension. It is for the government to take a view when they wish to notify.
    Resistance to Cas had been from the broadcasters, but even from the grassroots level, due to privileges of piracy and under declaration, there had been resistance from the cable operators as well, so have the realised that this is the business model of the future?
    I think they have realised this more than anybody else. Today there is demand from many, many parts of India that they be given the permission for implementing voluntary Cas.
    Like Ortel and Sristi in Orissa and West Bengal?
    Ortel is one, then Pune is another, and there is demand from Bangalore, Mumbai and many other places. Some have in fact gone ahead with the implementation of voluntary Cas. So what the LCOs know very well is that the competition from DTH is very strong. The LCOs thus know that of they have to remain in the industry, two or three things are required.

    First, investment is required, which is not come if the industry is so disorganised as it is today. Second, they know that there has to be some regulatory provisions to give stability, which will ensure certain amicable relations between them the broadcasters and the MSOs. So to answer your question as to why they are not implementing voluntary Cas, perhaps for that some regulatory initiative is required.

    Now, for that the expert committee had been set up, and it has suggested that voluntary Cas be rolled out in 55 cities and towns. But they have also said that you have got to have a regulatory regime for at least one year. Even for voluntary Cas, certain things are important, like Standard Interconnection Offer, what should be the connectivity, what should be the revenue sharing formula. So these are the issues we are looking at, and we are going to put up the paper on voluntary Cas.

    “Fixing of channel pricing in non-Cas is a challenge, but we shall come out with something that meets the expectations of both the high and low income groups”
    When is that likely?
    Oh any day, we are working on HITS and next is the paper on voluntary Cas.
    The consultancy paper on HITS is already out?
    Yes, but we have to now recommend the terms and conditions of licensing provisions to the ministry of Information & Broadcasting. Even the voluntary Cas paper is also in the pubic domain, and so we have to now concretise our views. And then specifics like what are the regulatory issues, what are the areas in which facilitation is required… perhaps some technical training is required, and the go ahead.
    But voluntary Cas would mean that channel prices will be dictated by the broadcasters and subscribers may suffer?
    Let‘s see. Voluntary Cas does not mean it cannot be regulated, and as such I do not have any views on the subject now.
    It follows that even in voluntary Cas you could regulate prices?
    If it requires so in the case of DTH I can regulate prices. In fact, there has been some judicial expectations on this, when TDSAT in one of its judgments asked that if channel price is regulated in Cas, why it is not there in DTH? We had our reasons, it is an infant industry, we wanted DTH to grow.
    But then Cas is also an infant system?
    The difference is that DTH is a new initiative, and I am of the view that there should be minimal regulation. Cas was a shift from the old cable industry.
    The cable industry has been insisting on a level playing field and they are pointing out to the IPTV and DTH consultation papers as proof that Trai is not creating that level playing field. And in Trai‘s own meetings on Cas in Kolkata and other places, LCOs and MSOs have accuse Trai of siding with broadcasters?
    There was never such an accusation. You may have been told so, but never, never has a single cable operator said that Trai is favouring broadcasters. It is all a matter of which platform you are utilising. You fix the price at RS 5, and someone will say, it is against broadcasters. If you do not do that, they will say you are favouring the broadcasters. There is a bogey being raised that in many of the countries channel prices are fixed. The truth of the matter is channel prices have not been fixed in a majority of the countries. And majority means, more than 90 per cent of the countries.
    So there, prices have panned out according to market pull and push?
    Of course.
    So how much time do you think we will need for market forces to create prices that are compatible with the pockets of the average consumer, who are the vast majority, that is, when would deregulation start and prices shape up as per market forces?
    It is already there, because in non-Cas it is already there according to the market forces. I haven‘t regulated prices there. The prices have been fixed by the cable operators and the subscribers. In 2004 when there was such a noise, there was an order on freezing the prices. You know that order was an interim measure. The ideal situation, which is there in our consultation paper, is it should go to forbearance. And I think that the day is not very far. The moment there is healthy competition and prices should be put on forbearance.

    There is the issue of price freeze versus price cap?
    That I won‘t answer because we have not issued the regulation on that so far.

    It is important for the cable industry to grow and I am not a great votary for centralised economic activity, or vertical integration, so franchise should be the mode.
    Is it in the offing?
    Yes, the next thing for the non-Cas areas.
    In recent meetings the ministry of broadcasting has said that content control in IPTV is not in their domain because that platform is under the ministry of telecom. Despite that Trai has said that it is I&B which should control content in IPTV, so do you think you have usurped some of the government‘s prerogatives?
    No, not all. It is a viewpoint. I can‘t say anything on content regulation, who will or who will not do. It is not within my powers. It is simply this, that we are of the view that the control of all content of all broadcasting and on all technological platform is best done by the broadcasting ministry. It is just a view point.
    So what are the forthcoming issues in the cable or rather the video-related industry?
    Well after introducing digitisation in non-Cas, there will be the issue of pricing. Then the other issue will be also of the structure of the cable operators. Can we contribute to their organisational strength? This comes from the understanding that there is the issue of investment, because we know there is an opportunity.
    But that investment with such small players would not be possible, so what does one do to ensure investment?
    In some manner it has to be there. Whether in the franchise mode, or through takeovers, or vertical integration. But I think that in countries such as India, perhaps there will be a role for everybody. I am not a great votary for a centralised form of economic activity. So it is better that we perhaps have a relationship in which franchise is the mode and there is mutually shared revenue principles.
  • ‘Higher price cap than Rs 5 would have allowed us to play within that float’ : Anuj Gandhi – SET Discovery president

    ‘Higher price cap than Rs 5 would have allowed us to play within that float’ : Anuj Gandhi – SET Discovery president

    SET Discovery has been riding high on the wave of ICC cricket for over four years. Having the ICC Championship and World Cup in a single year, the company is targeting a 40 per cent growth in turnover to end 2006-07 at Rs 4.5 billion.

     

    In an interview with Indiantelevision.com’s Sibabrata Das, SET Discovery president Anuj Gandhi talks of the challenges digital cable faces and how the distribution scenario would shape up in future to impact the pay-TV broadcasting business in India.

     

    Excerpts:

    Are you happy with the way Cas has rolled out so far?

    We are terribly disappointed. The multi-system operators (MSOs) were not fully prepared. Their systems were not in place and there weren’t enough set-top boxes (STBs). Some operators were even providing boxes without smart cards.

    MSOs say broadcasters created an uncertain environment till the end by approaching the courts. Isn’t it true that they got very little time for actual preparedness?

    There was enough indication that Cas would happen. We were challenging the pricing and not introduction of Cas. Broadcasters signed their contracts with the MSOs on time. Some local cable operators (LCOs) who were against Cas, moved the courts but could get nothing in their favour. If Cas has to take off, this blame game has to stop. All the stakeholders have to play their role.

    Is it a case of low consumer demand for boxes?

    That is a separate issue and, if need be, can be tackled with different marketing schemes. We are in a situation where the MSOs aren’t quite ready. There is lack of information flowing into us, the subscriber forms have not been filled up, and in some Cas markets analogue signals are available of popular general Hindi entertainment channels in prime time.

    Why then couldn’t this market substantially move to direct-to-home?

    DTH is more expensive. It has a higher entry price and there is no big subsidy on the STBs. Besides, DTH operators took time to service this market. With cable operators not capitalising heavily on Cas, we have lost an opportunity to create a build up for a massive ramp up in demand for STBs at the time of the World Cup.

    Will the World Cup drive a 40 per cent penetration in STBs as predicted by some positive analysts?

    We see the World Cup acting as a catalyst and expect the STB penetration to touch 45-50 per cent in the Cas markets. Only when we reach that level can all the stakeholders make money. Already DTH service providers Tata Sky and Dish TV have announced their schemes for the World Cup. MSOs should also be sorting out their issues and coming out with a plan for the big event.

    Is SET Discovery targeting a revenue of Rs 4.5 billion in 2006-07 on the back of the World Cup?

    We have set an aggressive target this year and are going to hit it. We will benefit from key cricketing events like the ICC Champions Trophy and the World Cup. Besides, we had cricket on Ten Sports. For the first time, we would be capturing revenues from DTH as we signed up Dish TV and Tata Sky during the year.

    Will Cas affect the business?

    In the overall scenario, Cas has a very limited number of cable and satellite homes. Besides, Cas has come into effect only in the last quarter of the fiscal.

    Do you see broadcasters dropping prices of their weaker channels in a bid to push sale of STBs?

    With a price cap on a la carte channels at Rs 5, it won’t make business sense to further drop rates. The whole justification for this is to have higher volumes. But we could have got the current levels of box penetration with a more liberal pricing.
    ‘DTH growth for the last six months has been as we had expected. It is only digital cable numbers which have been disappointing‘

    Are you suggesting a price ceiling but at a higher rate?

    This would have allowed us to play within that float. We could have weighed the weaker channels, observed their relative strengths in the marketplace, and come up with a differential pricing while staying competitive. The whole subscription model at Rs 5 doesn’t give us scope for such pricing play and is unfair to niche channels. There is precious little that content providers can do and dropping prices would be bad for the MSOs as well. Besides, we haven’t yet got any billing data from the MSOs on the Cas subscribers to chalk out a strategy.

    Are you planning to take any action as the deadline has crossed?

    It should have come to us by 15 February, but we haven’t received any information from them yet. If we don’t get any feedback from them in the next few days, we will issue them notices as specified by the Telecom Regulatory Authority of India (Trai) in order to safeguard our interests.

    Trai is trying to push for voluntary Cas. How do you think this can speed up in other parts of the country?

    Digitisation is a reality but will take a while to happen. Cas has been a learning process and we have to evolve a phase-wise strategy for digitalisation. We have to fix a sunrise and a sunset date where we have to give adequate time taking into account availability of boxes, prices and investments by MSOs.

    MSOs are saying that broadcasters should be more understanding and not ask for more subscribers in voluntary digitalisation as the collection of money from the LCOs doesn’t improve. Isn’t entering into commercial agreements between MSOs and broadcasters crucial for the success of voluntary Cas?

    The analogue and the digital markets have to be distinguished. The MSOs can’t argue that they can’t recover money and so can’t pass it on to us. Then how will broadcasters make money from voluntary Cas? There has to be some incentive for broadcasters to push for digitalisation.

    In the newly notifuied Cas market, we are seeing a three-MSO play. Do broadcasters welcome such a strong wave of consolidation?

    There shouldn’t be a problem so long as the business is transparent. If there was one monopoly player emerging in the cable TV distribution arena, then it would have concerned us. Besides, the market is large enough for other players to emerge. And the independent operators who have aligned with the MSOs would continue to remain as franchisees. We don’t see them disappearing from the chain.

    Will carriage spread to new towns where Tam has expanded its reach?

    It is too soon to say how carriage will impact in Tam’s new panel. A lot will depend on how the channels are getting affected. The market has more or less stabilised. Broadly, however, as ratings towns get added, carriage will move there. But I don’t see budgets of broadcasters towards carriage really bloating. What would happen is that they would be picking and choosing the places where they want better placement and carriage.

    When do you see DTH significantly contributing to the kitty of the pay-TV broadcasters?

    It will take DTH a while for getting those numbers. But it has certainly started impacting the business because MSOs are having to think twice before blacking out channels so that they don’t upset their subscribers. And DTH growth for the last six months has been as we had expected. It is only digital cable numbers which have been disappointing, but we will soon see that changing too.

    SET Discovery will have no cricket to play with in the next fiscal while in the GEC space, Sony TV is dropping in ratings. How tough will it be for the company to post growth?

    Cricket, no doubt, is a big play in India. In a MSO market, you can still do with no big impact hitting us. But when you go down into the interiors, this is the only driver. We have grown rapidly for over four years on the back of cricket. We will try to maintain what we have and ask for realistic increases. But we have no channel as such that will make carriage on cable networks a problem; there is strength in our bouquet.
  • ‘Trai has kept entry barrier low to make Cas acceptable’ : Nripendra Misra – Trai chairman

    ‘Trai has kept entry barrier low to make Cas acceptable’ : Nripendra Misra – Trai chairman

    The cable TV industry is on the cusp of change. The multi-system operators (MSOs) have chalked out plans to roll out digital cable, a transition that they believe will make their business models viable and add value to their networks.

     

    Perturbed by the cap on a la carte pricing of their channels at Rs 5, the broadcasters, on the other hand, have taken shelter in legal cases.

     

    Crucial to making Cas (conditional access system) a reality has been the role played by the Telecom Regulatory Authority of India (Trai). It has not only come out with a consumer-friendly tariff order but also made sure that progress is made by the MSOs on the implementation front.

     

    In this interview with Indiantelevision.com‘s Sibabrata Das, Trai chairman Nripendra Misra reiterates that digitalisation is the way forward. Cas will be implemented and even regulating direct-to-home (DTH) in areas of quality of service is on Trai‘s radar.

     

    Excerpts:

    How ready are the multi-system operators (MSOs) to implement Cas in the notified areas of Mumbai, Delhi and Kolkata?

    The progress is satisfactory and let there be no doubt in the minds of stakeholders that Cas is going to be implemented on the due date. There is no element of uncertainty. We already have reports of 10 MSOs (as of 16 December) having conducted the trial runs for testing out their digital systems under Cas. We want to be sure that there are no glitches in implementation of Cas and that the transition is smooth.

    In Delhi, Spectranet, Satellite Channels, Sanjay Cable Network and Star Broadband Services have been issued letters by the information and broadcasting ministry that they are not in a position to switchover to addressable system by 31 December as they are not ready with the digital systems including headend, Cas and set-top boxes (STBs). What is the action Trai has taken?

    There are four networks who we found are not in a position to roll out their service. We have asked the other MSOs (Hathway Cable & Datacom, Incablenet, Wire & Wireless India Ltd. and Home Cable Network) to step in so that consumers falling under the Cas belt of Delhi do not suffer blackout of their cable TV service. We are constantly monitoring the progress made by the MSOs.

    How many MSOs have applied for licence and got approval to operate in the Cas areas?

    There were 21 MSOs and five more applied later. Our focus is on 21. Out of this, as I told earlier, 10 (as of 16 December) have started trials.

    Estimates are that there are around 1.2 million cable & satellite homes in the Cas areas. Have the MSOs brought in adequate number of STBs?

    There are already a total of over 300000 boxes available with the MSOs. It is tough to estimate the exact number of C&S households in the Cas region. The whole cable TV industry is marked by high levels of under-reporting of subscribers. But supply shouldn‘t be a problem as the MSOs say that they can quickly import the STBs in case of demand. Their argument is that they shouldn‘t be stuck up with investments if Cas, for any reason, doesn‘t pick up. We expect 40 per cent of analogue subscribers converting into digital. That apparently is in line with the global trend. Digitisation is a way forward and consumers falling under the Cas notified areas should start ordering for STBs from now so that there is no crowding towards the end.

    What gives you the confidence that Cas will take off this time?

    Unlike in 2003, we now have a broadcast and cable regulator in Trai. We have kept the entry barrier as low as possible so that Cas can get accepted by everybody. Consumers also can select individual channels and we have fixed a price cap on a la carte channels at Rs 5. The tariff order also means that STBs are available on rental schemes with a fixed deposit amount (Rs 30 per month on a deposit of Rs 999 and Rs 45 for a deposit of Rs 250). Besides, this time there is competition from direct-to-home (DTH) with DD Direct, Dish TV and Tata Sky already offering their services. In fact, we have found medium-sized MSOs in some non Cas areas investing around Rs 15 million on diogital headends so that they can compete against DTH.

    The average monthly bill for digital cable TV subscribers will not see a sigificant drop as they will be loaded with an entertainment tax of Rs 45 (other areas different), Rs 45 as rent on the STB (if they pay a deposit of Rs 250) and a service tax. Add to this a payout of Rs 77 on free-to-air (FTA) channels and there is a slim chance of lowering down the bills. Would you agree?

    We shouldn‘t be talking of a system where we do not pay taxes. The taxes are applicable even under the current system. That is no way to calculate the cable TV subscription rates. Consumers can now pay as little as Rs 5 for the channel they want to see and limit their bills.
    ‘Regulating DTH in the quality of service area is certainly on our radar‘

    Will the rental schemes attract value added tax (VAT)?

    Yes. In any case, taxation is not a subject which falls within the purview of Trai.

    Consumers complain that costs will go up as they have to pay for the second TV set as well?

    We have decided not to regulate on the concessional rates for the second or more TV sets. Market forces should take care of that – as has been happening now. In any case, a large percentage are single TV households. We shouldn‘t regulate wherever we can, but only in areas where there is need.

    How long will this price of Rs 5 and a minimum subscription commitment of four months for any channel last?

    We are open to taking a relook at this. As we determined on a price as low as Rs 5, we also decided to balance it by asking consumers to subscribe a channel for at least a period of four months. After six months, we intend to first assess whether a review on the pricing and other related issues is necessary at all or not.

    Are you looking at coming out with some kind of regulations for non Cas territories?

    We are considering if we should step in and regulate the non cas areas so far as quality of service is concerned.

    Will Trai try to encourage various modes of digitalisation?

    We have a forward-looking approach. We generally feel digitisation is the road ahead. Besides mandated Cas, we are looking at voluntary spread of digitisation across all technologies. We will be having a serious of discussions from January-June. The first round table kicks off on 27 January. There are various alternatives – DTH, Cas, IPTV. We will be having a series of regional meetings where we want to discuss and review all these things. Then we will send our recommendations to the government.

    Is Trai going to regulate DTH as well?

    Perhaps, we need to look at regulating DTH in the quality of service area. It is certainly on our radar. As the DTH base grows, subscribers need to be protected. But DTH is at an infant stage and it may be too early to regulate it like cable. Let us not forget that cable TV has grown in India so far as an unorganised industry.

    As the DTH base grows, subscribers need to be protected. But DTH is at an infant stage and it may be too early to regulate it like cable. Let us not forget that cable TV has grown in India so far as an unorganised industry.
  • CAS: MSOs at odds over carriage, basic tier fee sharing

    CAS: MSOs at odds over carriage, basic tier fee sharing

    NEW DELHI: MSOs are divided on the issue whether carriage fee is retained by them and the basic tier fee of cable channels by local cable operators.

    While the Hinduja-owned IndusInd Media and Communications and Siti Cable (now renamed WWIL) opposed MSOs retaining carriage fee and LCOs keeping the basic tier fee, Rajan Raheja-controlled Hathway Datacom has supported such a model.

    In their submission to the Telecom Regulatory Authority of India (Trai), both Siti Cable and IndusInd have said MSOs should also get a share of the basic tier fee, which is collected by LCOs.
    Adding spice to the whole affair, the Cable Operators’ Federation of India (COFI) has suggested all round sharing of basic tier fee and carriage fee between MSOs and LCOs.

    All the three MSOs, responding to Trai’s call for feedback on interconnect regulations, have said that distribution of signals to subscribers should only be through digital set-top boxes as analogue boxes lack credentials.

    Trai had invited feedback from industry stakeholders on the proposed standard forms of interconnect agreements for CAS areas, draft regulation to mandate these standard forms and revenue sharing arrangements.

    The specific issues that were raised were the following:

    Should there be a uniform revenue share percentage between all broadcasters and MSOs and between MSOs and LCOs.
    Should the revenue share percentages for different broadcasters prevailing in Chennai be adopted in other CAS notified areas?
    Is there any other alternative method of arriving at the revenue share percentages amongst industry stakeholders.
    Upholding the rights of cable operators that it represents, COFI has suggested that franchisees of MSOs could be given a commission ranging between 5-10 per cent for selling set-top-boxes and other equipment to subscribers.

    The complete gist of comments of Hathway, Siti Cable, IndusInd and COFI on interconnect agreement is available on the regulator’s website at ww.trai.gov.in.

  • Hathway ready for the digital big fight

    Chief executive K Jayaraman is setting the tone for Hathway Cable & Datacom‘s duel in the digital era.Part of his aggressive ploy is to expand the network in newer markets through alliances with cable operators. His proposal to them: Hathway will invest and build the digital and broadband side of the business while allowing cable operators to retain earnings from their analogue operations and carriage fees.

    Jayaraman believes this will carry appeal to cable operators who do not have the financial resources to fight off competition from digital delivery platforms like direct-to-home (DTH). He is setting up a team to map out the growth potential in non Hathway areas.

    Jayaraman is also taking the acquisition route to widen Hathway‘s footprint. Local cable networks in Chandigarh, Mohali and Kanpur were gobbled up early this year to gain foothold in new territories, all northern prosperous markets where digital cable and broadband have potential to take off.

    Such buyouts, though, will be selective and limited. But coming after years of inaction, Hathway sees an opportunity in growing along with the digital market. “Competition from DTH is good as it will change the way cable TV has been functioning and open up the digital market. If cable TV can respond positively, it will increase our ARPU‘s (average revenue per user) and correct our business models,” says Jayaraman.

    Competition also means that Hathway will have to protect its own turf as DTH gets aggressive with full content and more service providers. With Tata Sky preparing for launch soon and Subhash Chandra‘s Dish TV recently sewing a deal with SET-Discovery for a whole host of channels including Sony TV, Max, Discovery and Ten Sports, the writing is on the wall: cable will have to move in fast to migrate its customers from analogue to digital.

    Jayaraman‘s initial task is to defend Hathway‘s direct points and the creamy customers of the local cable operators. “We will have to persuade our direct customers and the top-end subscribers of our local cable operators to opt for digital cable as they will form the main target for DTH service providers,” he says.

    So far, that has been an agonisingly slow process. Hathway has managed to deploy just under 50,000 digital set-top boxes (STBs), mainly in its direct points. The distribution chain has not been supportive and, as Jayaraman says, only one-fifth of the last mile operators (LMOs) have been co-operative.

    Hathway Cable & Datacom chief executive K Jayaraman

    For energising the chain, Hathway is giving operators Rs 400 per digital STB. And on niche content, the multi-system operator (MSO) parts with a 50 per cent share on margins. Besides, operators who buy STBs on bulk are given discounts. “At the retail level, the LMOs will have to figure out what they want. It is in their interest to protect their networks,” says Jayaraman.

    But how does Hathway woo customers and make them switch from analogue to digital? One way is to offer bundled packages along with the cable internet services. The idea is to lock in customers with ARPUs over a longer period while driving sales of digital STBs.

    There are various schemes launched over a month-long period. Internet subscribers who have been sitting with Hathway for two years will be given the digital box free to use for a year. They will also have the option to buy the box for Rs 500 (box costs Rs 3375) but have to remain as Hathway‘s internet customer for the whole year.

    Boxes are available at Rs 1,000 for one-year-old customers. And for an existing internet subscriber who has not completed a year, the box is sold at Rs 2750 while Globus (retail store) coupon of Rs 500 is given along with a 20 per cent discount on Onkyo Home Theatres. New internet customers who subscribe to a minimum period of six months will have the option to buy the box for Rs 1000.

    “We have started all these initiatives for the last one month. We are rewarding our customers for their loyalty while locking them for a longer period. We feel bundling will help as DTH can‘t ptovide such services. We are in a unique position compared to the other MSOs as we have a substantial broadband subscriber base,” says Jayaraman.

    Hathway is backing up the price incentives with a dose of marketing, unprecedented in the Indian cable TV industry. Discount coupons, roadshows, FM radio stations, hoardings, interactive contests – all these media vehicles are being used to promote digital cable. And it has a staff of 70 people on sales and customer support for the digital services. “Our monthly ad spend is Rs 800000-100000. We are now selling 5,000 boxes a month which is still low, but there has been an improvement in offtake,” says Jayaraman.

    Tieing up with companies for discounts and co-branding is another exercise Hathway has started. “We are going to tie up with Citibank for a co-branded credit card which we will offer to our internet customers. For our digital cable, we are in talks with Onida for discount offers,” says Jayaraman.

    Lining up premium content is not a focus area. Hathway, though, has launched an ad-free dial-up interactive music channel I-TV through its digital services. The channel, which is currently available in Mumbai and Pune, will also be taken to other cities. Hathway has also introduced gaming on its digital services last month, for which it has selected NDS technology.

    Expanding the digital services to new cities is also part of Jayaraman‘s plans. After launching in Mumbai, Delhi, Bangalore, Hyderabad and Pune, Punjab will be the next stop.

    Hathway is creating another arsenal for its fight against DTH. Plans are on to launch VoIP (voice over internet protocol) services by the end of the fiscal. Having built a two-way infrastructure for broadband, this is a natural progression for the MSO. “We had tested for analogue telephony with Bharti but feel VoIP is a better route for us. VoIP test is going on in Mumbai. We plan to launch at least in two cities this fiscal. We can bundle cable TV, broadband and VoIP services to customers which will add to our revenue streams,” says Jayaraman.

    As the digital platforms gather force, nobody knows who will win the big fight. But, as Jayaraman says, cable will have to develop a well-rounded revenue stream if it has to survive the race.