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.

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.