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Tag: MSO

  • India Talkies outsources ad sales to Guru Time Media

    India Talkies outsources ad sales to Guru Time Media

    MUMBAI: India Talkies, the pan India Hindi movie channel, has outsourced its ad sales to Guru Time Media.

    India Talkies is the brainchild of Jagjit Singh Kohli, Yogesh Shah and Ketan Kanakia. Kolhi and Shah are the executive directors of Reliance Digicom while Kanakia is the CEO of Mega Reach Novex Communications.

    The channel is being carried by all multi-system operators (MSOs) and claims to reach out to over 160 locations including major Tam towns and metro cities.

    India Talkies, which works on server technology placed at various locations, has a library of over 4000 movie titles and songs, which include works of Raj Kapoor (RK Films), Subhash Ghai, Bimal Roy, BR Chopra, Dev Anand and Hrishikesh Mukherji.

    Kanakia said, “In today’s scenario across industries, outsourcing to experts has become the mantra for success and I have full confidence in Guru Media. The Guru Media team is headed by Amardeep Singh who has a varied experience of 15+ years in media sales spread over print, cable, regional, sports and English genres.”

  • Indiantelevision.com’s interview with You Telecom CEO EVS Chakravarthy

    Indiantelevision.com’s interview with You Telecom CEO EVS Chakravarthy

    Citi Venture Capital International-owned You Telecom India has resized its investment plan amid the economic downturn.

    The trimmed-down plan will mean a fresh investment of Rs 2.5 billion over two years, instead of Rs 4 billion as earmarked earlier.

    Narrowing down the spread, the expansion plan will focus on depth and consolidation of the business in the cities where You Telecom runs operations.

    The redrawn map will mean that You Telecom stays as a niche player in the market for at least two years, shunning away from a frenzy among many multi-system operators (MSOs) to land grab and build scale.

    You Telecom is in talks to rope in Indian investors for Digital Outsourcing, its cable TV arm. Tulsi R Tanti and his family members, promoters of wind power company Suzlon Energy Ltd, hold 49 per cent stake in the company. You Telecom has 36 per cent stake while the balance is held by high net worth Indian individuals.

    In an interview with Indiantelevision.com‘s Sibabrata Das, You Telecom CEO EVS Chakravarthy talks about how important it is for cable TV companies to work on their business models, stay away from reckless acquisitions, conserve capital and penetrate deeper into last mile services.

    Excerpts:

    Two MSOs are in the process of tapping the capital market. Do you think the cable TV sector has reached a stage of maturity for listing?
    The two preliminary draft prospectus filings are the first in the cable TV sector of significance for raising money from the capital market. The outcome of these two IPOs will send strong signals for the future. Investors will watch carefully the pricing of the issues, the intrinsic value of the business it captures and the sustainability of it. Hathway Cable & Datacom and Den Networks need to do everything to make sure that the sector becomes attractive for current and future investors.

    How does this impact companies like yours?
    We are not in a hurry to capitalise on the high valuations in the market today. We want to see if this is sustainable. We prefer to go to the market as a profitable company with a strong business model and management bandwidth. We want to time the IPO appropriately.

    Are you saying that Hathway and Den are in a hurry to raise money via the IPO route?
    Both the MSOs expanded aggressively through acquisition of cable networks. They need further capital to fuel their growth.

    Will these two listings aid digitisation?
    Consolidation will happen faster than digitisation. As a process of consolidation, I wouldn‘t be surprised if Hathway buys Den – or the other way round. Besides, more and more cable companies will get listed.

    Will the climate be favourable for foreign strategic investors like Comcast?
    Foreign strategic players will still stay away because no single Indian cable TV company has built that scale. Post consolidations, they will show interest. For Comcast and others to come, it is 3-5 years away.

    ‘Post listing of the two MSOs, consolidation will happen faster than digitisation. As a process of consolidation, I wouldn‘t be surprised if Hathway buys Den – or the other way round‘

    Since the IPO is throwing open early exit options for private equity firms, won‘t they find the cable TV sector attractive?
    Some of them came into the sector with the hope that the government-mandated Cas (conditional access system) will spread to other cities. That has not happened. Still the sector attracted further private equity investments as everybody saw an opportunity in the distribution business. New PE players will wait to see if the market price of the listed companies is sustainable. The calls that they will take now will be more informed due to the last two years of collective experience of the industry.

    You Telecom had plans to expand in the bull phase and had decided to invest Rs 4 billion over two years. What made you scale back your investment plans?
    We have decided to pump in Rs 2.5 billion over the next two years to boost our cable TV and broadband business (the investments for cable TV are made through a subsidiary company, Digital Outsourcing). Our focus will be on depth and consolidation of the business in the cities where we run operations. We had earlier planned to expand into 15 new cities, including 10 for cable TV services. But in a capital scarce scenario, we will go to six more cities in the first phase. For cable service, we will be adding 2-3 cities to our existing operations in Mumbai, Bangalore and Vizag. After that, we will rework on our fund requirement.

    So you plan to stay as a niche player in the market for at least two years?
    We have seen how some MSOs have been pursuing a high-growth subscriber universe by recklessly acquiring cable networks. Having a large universe can become a liability. The capital has dried up for them and there is no change in their business models. It is important to be consistent, strong, stable and profitable.

    We are looking at an optimum size of 4-5 million in the first phase, up from our current reach of two million. You can‘t just focus on the reach universe when there is just a 20 per cent revenue share (due to under-reporting). Our focus will be to penetrate deeper into last mile services.

    But if government announces a policy for HITS (Headend-In-The-Sky), will you scale up?
    When the regulation comes, we will be one of the applicants. We are ready as far as the rest of the infrastructure is concerned. We will partner with Cisco on technology; we already have an existing head-end infrastructure with them. We have also signed an MoU for the transponder. We plan to invest an additional amount of Rs 1.5 billion for HITS.

    Will Tulsi R Tanti and his family members (Suzlon promoters) commit investments for such expansions?
    They currently hold 49 per cent stake in Digital Outsourcing and stand committed. We might also bring in other Indian investors.

    You Telecom acquired a majority stake in Scod18 Networking to have a cable TV presence in Mumbai. What are the expansion plans under this entity?
    Scod18 has been a Mumbai-centric MSO. We will continue to be a significant player with a significant market share in Mumbai. We will expand in areas around Mumbai and in parts of Maharashtra along with them, if and when we get the right opportunities. Our focus will be on digitisation and other value-added services like on-demand and TV-commerce.

    And for Bangalore?
    We acquired a 50 per cent stake in Digital Infotainment, a small-sized local cable network, and our investments in this venture so far has been Rs 500 million (out of a total investment of Rs 5.5 billion). We will expand in Bangalore and other areas in Karnataka through this joint venture.

    Will acquisition be the only growth route for you?
    Yes, that is how we will grow. We are planning to offer stock in lieu of last mile acquisition. This is how Cisco grew from a $2 billion to a $22 billion company – by offering stock. Pragmatic cable companies, after all, have to start a trend. But for this listing is important.

    Having taken the position of a niche player, how important is it for you to launch premium products to drive in higher ARPUs (average revenue per user) as a strategy?
    The market today is not matured for premium products. The content cost is exorbitant and pricing is a big issue. The MSO that could have monetised on value-added services is Hathway Cable & Datacom as it has a million digital subscribers. But as this has not been a focus area for them, there must be compelling reasons for this.

    What will the focus area for MSOs this year?
    MSOs will have to make sure that they have enough capital with them.

  • ‘We plan to raise Rs 5 billion’ : Ravi Mansukhani – Indusind Media & Communications CEO and MD

    ‘We plan to raise Rs 5 billion’ : Ravi Mansukhani – Indusind Media & Communications CEO and MD

    Hinduja-owned IndusInd Media & Communications Ltd (IMCL) has survived the scare from a wave of new multi-system operators (MSOs) that threatened to land grab even in the lucrative market of Mumbai.

    IMCL has expanded its footprint to 27 cities and thrived on a hefty carriage revenue that helped the MSO turn profitable. In FY‘09, carriage made up for almost 50 per cent of IMCL‘s turnover as broadcasters coughed out Rs 1.4 billion to place their channels on the network.

    The media subsidiary company of Hinduja Ventures Ltd plans to list through an initial public offering (IPO). Ahead of that, it is in talks to rope in an investor. The total fund-raising agenda: Rs 5 billion.

    Operating its cable TV distribution business under the Incablenet brand, IMCL has agreed to dilute one per cent stake to Ashley Investments at a valuation of $644 million. As part of this exercise, 0.22 per cent has been diluted.

    The MSO has aggressive plans to grow in the digital environment. IMCL is also gearing up to grow its fledgling broadband business, after upping its primary connections to 200,000 that would give it access to the last mile.

    In an interview with Indiantelevision.com‘s Sibabrata Das, Indusind Media & Communications CEO and MD Ravi Mansukhani talks about the MSO‘s growth plans.

    Excerpts:

    IMCL is planning to take the IPO route. How much are you going to raise?
    We are out in the market, looking to raise money. We may get an investor before we possibly do the IPO. We feel this is the best route to take. But if there is no match on our valuations, we will go on our own. We plan to raise Rs 5 billion to fund acquisitions and our digital cable TV expansion. But we are not in a hurry. We want to list with the right fundamentals and the future for digitisation.

    Why are cable TV companies suddenly rushing to list?
    DEN (Digital Entertainment Networks)a late entrant, is planning an IPO this year. There are media reports also about Hathway Cable & Datacom readying to tap the market. Wire & Wireless India Ltd (WWIL) is in the process of raising money through a rights issue. The fact is that cable TV companies are looking at expansion as they feel there is a huge potential left open. Unfortunately, DTH has not been able to fight analogue cable because of the pricing. And with digital cable growing slowly, DTH has not grown to everybody‘s expectations.

    But is it not true that all the DTH operators are mopping up subscribers very aggressively?
    DTH is growing either in cable dark or bad cable areas. In urban India, they have made penetration in mostly multiple TV homes and, thus, co-existed with cable. A very small percentage has come at the expense of the cable TV operators, perhaps because the ARPUs (average revenue per user) are low.

    A wave of new MSOs have entered the market. How has this affected Incablenet?
    In the urban areas, this led to ground warfare as the entrants wanted to grab territory. Subscription rates, undoubtedly, got affected as we had to retain our base. This was particularly felt in case of franchisee fees. But we held on – and are slowly getting back the old rates.

    We have actually grown in revenues as we expanded through acquisitions. We are present in 27 cities, up from 12 a couple of years back. We have laid more infrastructure and have over 6000 km of hybrid fibre network. We have posted a 45 per cent growth year-on-year over the last two years. We have also turned around and become profitable.

    Wasn‘t this largely because of the steep growth in carriage fee which accounted for almost 50 per cent of IMCL‘s FY‘09 revenues?
    Yes, the placement charges helped to a large extent for IMCL turning profitable. But we are no more stuck as just a cable MSO. Though video is the mainstay of our business, we have laid infrastructure and will now aggressively push for broadband.
    ‘This is a good time to make acquisitions as the cost per point has come down. In prime locations, valuations have fallen by a quarter and in other areas by almost 50%‘

    The company has been talking about broadband for the last few years but very little has happened. The revenue from broadband for FY‘09, in fact, was under Rs 50 million. So what changes this time?

    The three bottlenecks that hindered our broadband growth are now behind us. Bandwidth costs have fallen. Secondly, we have merged the broadband company with the cable outfit, so that saves us from paying out any network charges. The third and the most important fact is that we have grown our primary points from 50,000 to 200,000 and, as we own the last mile here, we don‘t have to pay commissions to franchisee operators. We are targeting to double our revenues from broadband this year. We will also get into commercial clients as it will give us higher ARPUs. In the retail segment, our ARPU stands at Rs 400

    Was there a conscious decision to acquire more of primary points?

    When we went in for acquisitions, we ensured that we got into good ARPU areas. We also took care that we acquired 30 per cent of primary connections from the cable networks that we snapped up.

    Were you driven to new geographies because of the carriage market and also because of a land grab situation from new competition?

    The older MSOs like us expanded into new cities because of the promise of digitisation which would lead to transparency and ensure that we carve out a commission system for ourselves. The new MSOs came under the plank of carriage fees. Undoubtedly, placement charges helped all MSOs to survive and grow – including the digital business.

    The economic slowdown is hurting broadcasters and they are pulling down their carriage costs. How is this going to affect IMCL‘s growth this year?

    Carriage revenue will not dip but flatten for us this year. There are new channel launches but they are not of that scale as last year‘s. This will be a consolidation year for us.

    How much is IMCL investing this year?

    We had invested Rs 1 billion in FY‘09, equally split between acquisition, digitisation and laying of infrastructure. For this fiscal, we plan to invest a similar amount. We will add two digital headends to our existing eight. We will also supply digital feed to four more cities during the fiscal, in addition to the four that we have currently linked up.

    We have so far seeded 350,000 digital set-top boxes (STBs) across eight cities. We haven‘t got fresh STBs this fiscal as the government has imposed duty on the import of boxes. But we have placed orders and expect supplies to arrive in November. Our target is to add 150,000-200,000 boxes during the fiscal. The Commonwealth Games in Delhi also could act as a big boost if the government comes out with a digitisation policy to coincide with that event.

    Will you be aggressive on acquisitions this year?

    We will continue to make acquisitions where we see an opportunity being thrown on us at the right value. This is a good time to buy as the cost per point has come down. In prime locations, valuations have fallen by a quarter and in other areas by almost 50 per cent. Operators need the support of bigger MSOs because of the huge subsidy in digital boxes. We will consolidate in states where we are already present.

    And there will be more disturbance on the ground?

    Warfare for territory will reduce as the new MSOs will not be that aggressive. Money is drying up and they are back in the market trying to raise funds.

    Is there a drive to restructure the content business under associate company Planet E-Shop Holdings India Ltd?

    The movie business is moving into Planet E-Shop. This is also housing the distribution of channels for retail and commercial. We are distributing ESPN in Mumbai and are in talks with two other major broadcasters. We have also taken up marketing and distribution of foreign channels like Arirang and Miracle Channel that seek downlinking in India. We are looking at signing up three more foreign channels this year.

    Will the cable movie channel, CVO, move into this company?

    The channel is part of IMCL and there are no plans as of now to shift this out. We may make it a pay channel down the road as the digital environment grows. We have bought 100 movies this year and are planning to add 300-400 more as prices have fallen. The revenues are getting squeezed for cable movie channels. But we have a library of 700 movies and later may create thematic channels for digital subscribers.

    What plans do you have to grow the content side of the business?

    We will create server-based local channels when the time is ripe. Cable news channels in metros may not be viable as it makes more sense to get placement fees than run your own channel in a choked analogue environment. The situation can be different in smaller towns. Our interest is to create these server-based local channels that do not depend on advertising but pay revenues.

    Will the cable movie channel, CVO, move into this company?
    The channel is part of IMCL and there are no plans as of now to shift this out. We may make it a pay channel down the road as the digital environment grows. We have bought 100 movies this year and are planning to add 300-400 more as prices have fallen. The revenues are getting squeezed for cable movie channels. But we have a library of 700 movies and later may create thematic channels for digital subscribers.

    What plans do you have to grow the content side of the business?
    We will create server-based local channels when the time is ripe. Cable news channels in metros may not be viable as it makes more sense to get placement fees than run your own channel in a choked analogue environment. The situation can be different in smaller towns. Our interest is to create these server-based local channels that do not depend on advertising but pay revenues.

  • 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.
  • CAS: Government to revert to Delhi HC next week

    CAS: Government to revert to Delhi HC next week

    NEW DELHI: The government is likely to revert to the Delhi High Court with a status report on CAS’ rollout early next week even as the Indian Broadcasting Foundation (IBF) has raised several queries on addressability’s efficacy.

    “A senior official of the information and broadcasting ministry admitted that it has to go back to the court with a feedback on CAS, but said it’s timing is still not clear.

    “One month for us would be calculated from the day we received a certified copy of the court order. As on 10 March, a verbal order was passed,” the official said.
    Still, the official also added that the court would have to be apprised of
    the progress on CAS front and “it would be done.” With diverse signals emanating from the industry stakeholders, the government is slightly confused, the official said.

    However, the deluge of facts and figures relating to CAS and various time lines proposed by stakeholders also gives the government some breathing space.

    On 10 March, the Delhi High Court directed the government to implement CAS in Kolkata, Delhi and Mumbai within a month’s time. The judgment came on a petition filed by some MSOs, including INCablenet and Hathway.

    While a large section of the cable fraternity has been pushing for quick
    implementation of CAS, a section of broadcasters and consumer organisations want a certain comfort level before CAS is rolled out.

    IBF AGAINST PRICE CONTROL UNDER CAS

    Meanwhile, the IBF in a submission to the government has said that there should not be any price control in a CAS-enabled regime and the issue of piracy should be addressed as a priority.

    “Under the Trai (sector regulator) recommendations to government for CAS implementation, presented on 1 October, 2004, it was recommended that there should be no price control in addressable markets. In view of this, we believe that for CAS notified areas, there should be no price fixation,” the IBF letter states setting the cat amongst the pigeons (read the cable operators).

    The letter, a copy of which is available with Indiantelevision.com, drops broad hints that pay broadcasters would not give a la carte price for consumers — something that has been in demand for over a year now during confabulations on CAS.

    “Broadcasters are whole sellers to cable operators as the consumer price for cable TV is fixed by the operators,” IBF has said, adding all pending litigations and outstanding dues involving the cable industry must be resolved before CAS is rolled out.

    Hinting that the claims of MSOs and cable ops on availability of set-top boxes might be exaggerated, the IBF goes on to state that effective steps should be taken to ensure that in the notified areas, adequate number of boxes is available with MSOs and last mile operators to cater to the demand.

    “There should be no instance that consumers want to install STBs and
    MSOs/LCOs are unable to provide them. MSOs/LCOs would also need to ensure that there is proper coordination between them and their LCOs. The MSOs/LCOs should provide a detailed STB implementation plan,” the IBF letter says.

    The broadcasters have also urged the government to ban carriage fee, which is demanded by cable operators and also given by most major broadcasters whether free to air or pay.

    “The IBF members are of the view that the government should make sure that cable operators not demand carriage fee from the broadcasters… in view of the fact that they collect subscription revenue from the subscribers,” the letter states.

    Another point raised by the IBF is that since CAS is being mandated by the government, unlike in other countries where market forces bring about its rollout, other addressable systems like DTH, IPTV and broadband should also be similarly mandated to create “a level playing field” for those platforms.

  • Manthan goes online with Irdeto for Cas

    Manthan goes online with Irdeto for Cas

    MUMBAI: Kolkata-based multi-system operator (MSO) Manthan Broadband Services has integrated its enryption system using the Irdeto system and has gone totally online with it.

    Manthan is deploying the Irdeto Digital TV solution as part of its analogue to digital migration project in Kolkata and outlying areas. “We have totally gone online with the Irdeto system,” says Manthan director Gurmeet Singh.

     
    Irdeto will provide Manthan with it’s newest smart card, the Irdeto Zeta Card. The Zeta Card contains advanced security functionalities like Irdeto’s patented FlexiFlash technology for the rapid, secure deployment of new functionalities and security upgrades, as well as an advanced DRM feature that can be used to enforce business rules for content stored on personal video recorders.

     
    Says Irdeto CEO Graham Kill, “Irdeto is providing a next-generation digital TV solution and support services to help Manthan expand the digital era in India.”

  • TDSAT upholds Rs 5 tariff by Trai, imposes costs on ESPN Star and Set Discovery

    TDSAT upholds Rs 5 tariff by Trai, imposes costs on ESPN Star and Set Discovery

    NEW DELHI: The Telecom Disputes Settlement Appellate Tribunal (TDSAT) today upheld the tariff of Rs 5 per channel fixed by Telecom Regulatory Authority of India (Trai) against which three broadcasters had appealed. It also imposed a cost of Rs 50,000 for each of the broadcasters in favour of the sector regulator.

    In its pronouncement on the appeal filed by Set Discovery, ESPN Star Sports (Singapore) and ESPN Software India, TDSAT held that the case was devoid of merit, and thus the appellants are liable to pay costs, totaling Rs 150,000, to Trai, which had proved its case.

    In a related development, some of the respondents in the case that includes Trai, Indus Ind Media and Communications Limited, and Hathway Cable & Datacom Private Limited, have filed a Caveat in the Supreme Court, since the broadcasters are most likely to appeal against the TDSAT order in the apex court.

    While giving its ruling, TDSAT said that the broadcasters had themselves said that 70 to 80 per cent of their revenues come from advertisements, and the bench noted that “at various fora”, it has been argued by the broadcasters that they also generate revenue through sub-licensing and through fees paid by consumers in sending SMSs to the channels.

    It held that the same broadcasters had said that due to underdeclaration by LCOs and MSOs, they get only 20 per cent of the subscription revenue actually generated.

    The tribunal noted that under the Cas regime, wherever Cas has been implemented, there is no longer a question of underdeclaration, and therefore, data on subscription revenue is 100 per cent.

    In this situation, whereas the broadcasters were – as they themselves said – earning only 20 per cent from subscription, the Trai order on Interconnection gave them 45 per cent, which is a sea change.

    Hence, going by the arguments of the broadcasters themselves, the case is devoid of merit and liable for dismissal, with a cost of Rs 50,000 per appellant.

    The tribunal, comprising the full bench of chairperson Arun Kumar, and members DP Sehgal and Vinod Vaish, made the following observations:

    “We have carefully considered the procedure undertaken by Trai for conducting the exercise. We have also considered the justification for the regulation. We find that the approach of Trai in regulating the CAS regime at its introductory stage in the notified areas is fully justified.

    “We find nothing wrong in the process undertaken by the Authority. In this connection we note that the Trai was conscious of its difficulties and the problems which it had to face while conducting the exercise.

    “It was a virgin field and the Chennai model could not serve as a good guide. The exercise was complex and it was made all the more difficult by the non-cooperative attitude of the broadcasters. In the given circumstances, Trai, in our view, has acted fairly by balancing the competing interests.

    “The Authority has promised to revisit the issue, including consideration of deregulation if the circumstances so warrant. The experience to be gained after introduction of CAS would enable it to reconsider everything.

    “This being a transitory phase, the appellants ought to have had patience and ought to have waited till Trai was able to revisit the issue. The hurry on their part to raise the issue before this Tribunal was not necessary.

    “We also cannot help observing that the broadcasters are either unmindful of the fact that they stand to gain in the CAS regime or they are intentionally feigning lack of knowledge of this fact.

    “To say the least, they have not been fair in placing their case before us. We find no merit in these appeals. They are liable to be dismissed. We order accordingly. Appellants will bear the costs of the Respondent, Trai which we quantify at Rs 50,000/- for each appeal. Costs are awarded only in favour of Trai,” the TDSAT order concluded.

  • ‘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.
  • Impasse over Tamil Channels continues in Bangalore

    Impasse over Tamil Channels continues in Bangalore

    BANGALORE: The impasse over the airing of Tamil channels continues here, the capital of the southern state of Karnataka, with seemingly no end in sight since the Kannada organizations are strongly against broadcast of the same.

    MSOs had stopped telecast of Tamil channels after the verdict on sharing of Cauvery river waters that Karnataka finds unfavorable for it.

    A source in the Karnataka State Cable TV Operators Association reveals that MSOs and cable operators are in favor of restarting airing Tamil Channels, but are facing stiff resistance from Kannada activists. “We fully support the people of Karnataka on this issue, as do the Tamil people based here in Karnataka. Entertainment should be kept away from issues that are politicized. Have Tamil channels on DTH been stopped? Have flights or trains between Tamil Nadu been stopped?” pleads a cable operator. “Cable is reachable and hence threatened,” adds another.

    The Tamil basket in Karnataka consists of around eight or nine channels, depending upon the MSO, area and the cable operator, from a possible bouquet of 11-12 channels. Of these, the Sun Group has five, Raj TV three, Jaya TV two, along with one each from DD and Vijay.

    Currently 2-3 channels are being aired in Bangalore. Sun’s KTV and Star’s Vijay were available in some areas while some had DD’s Tamil channel and other areas had Sun being aired since today, and yesterday. One Sun Tamil channel was switched on in monochrome in some areas.

    Regular Tamil channel broadcast in many areas of the state are on against token resistance from activists, as per information from some districts. However, the situation in some sensitive areas such as Mandya, Mysore and the surrounding areas could not be verified at the time of filing this report.

    The sharing of the Cauvery waters issue has plagued the southern states, with the major protagonists’ being Karnataka and Tamil Nadu since the past few decades. The interim water sharing verdict in December 1991 saw riots break out in Bangalore and the state, with loss of life and property. Even the 5 February verdict saw protests and a ‘bandh’ recently.

    The Karnataka government has yet to file an appeal against the 5 February verdict – they have 90 days to do so.

    Meanwhile, the people of Bangalore, a significant percentage of whom are non-Kannadigas, with Tamils forming a big chunk, are impatient and want entertainment to be kept away from these kinds of issues and enjoy their TV fare.