The Hindu : Confused Arbitrary System?

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Sunday, Sep 21, 2003

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Confused Arbitrary System?

For now, CAS presents a fuzzy picture, a far cry from the promise of a new digital era, writes G. Ananthakrishnan.

ON THE night of August 31, Chennai was hit by an entertainment blackout. The city became the first in the country to adopt the Conditional Access System (CAS) to view pay channels on television, as laid down by the law. The two Multi-System Operators (MSO) pulled the plug on the pay channels, and only those who acquired a set-top box (STB) could view movie, sports and cartoon channels they had taken for granted for years.

The advent of CAS produced reactions of frustration among some, a writ petition in the Madras High Court by consumers seeking a restraint on it, and, ironically, relief among thousands of subscribers.

There were angry outbursts that Chennai was turned into a guinea pig for an experiment that no other metro was willing to try. The State Government remained inscrutable, not voicing any opinion. In Delhi, the Government described the introduction of CAS, offered as a panacea for all the ills of the cable TV sector, was a success in Chennai. On the ground, only one thing was clear — pay channels were not entering the homes of nearly all the 10 lakh subscribers in the metro.

After nearly a decade of receiving satellite television through cable when they were at the mercy of faceless cable operators and seemingly invisible MSOs, besides unaccountable broadcasters, Chennai's subscribers braced themselves for another period of uncertainty.

CAS came at the worst time for most households, which were forking out about Rs. 300 a month towards purchasing a more basic necessity — drinking water. These households had also spent a few thousand rupees to install compulsory rainwater harvesting systems, and investing simultaneously in an STB for what they were getting without any fuss till the previous day was simply impossible.

But then, like their counterparts in any other city, Chennai's cable television subscribers have learned to live with little help from Governments. The distribution network has been unprofessional ever since it started in 1991, with practically no choice of service. In the early days, cable penetration was spurred by the enterprise of small entrepreneurs, who set up control rooms and extended the reach of satellite television, beaming the indelible images from CNN of the First Gulf War.

Soon thereafter, locally influential persons took control of the last mile, drove many entrepreneurs out of business, centralised the distribution facilities and offered a "take it or leave it" package that was priced arbitrarily in different localities. Price hikes every three or six months raised the bill from Rs.50-60, when satellite TV first arrived, to Rs.150-240 a month in various localities, in the months just preceding September 1. Then everything changed.

September 1 put a cap on the monthly cable bill by law, for the first time, for the free to air (FTA) channels, at Rs.72 plus taxes. The operators were quick to add arbitrary non-receipted "taxes" to the bill and pegged it at Rs.100 a month. This FTA fare provides the major Tamil channels, the news channels and even some lesser known film channels, including one called Hollywood that screens more recent films than the movie pay channels.

Reading the consumer pulse quickly, some of the channels that were in the pay mode previously like STAR Vijay or Raj group went into the free mode. The major losses for the subscribers were in sports channels such as ESPN-STAR Sports, and the cartoon channels.

Summing up the budget-conscious middle class view, consumer activist K. Surendrakumar says, "We welcome CAS. It has ensured that we need pay only a fixed amount for television. But there should be no bundling of channels." That view was conveyed at a face-to-face with a team led by an Additional Secretary in the Information and Broadcasting Ministry, which visited the city in the aftermath of CAS introduction.

In Chennai, CAS faltered and virtually collapsed, as the consumer was given short shrift.

When the Centre postponed the introduction of the system on July 15 after repeatedly asserting that there was no going back, it was obvious that it was not able to rein in the influential broadcasters. The failure of the broadcasters to advertise their prices before the second CAS deadline, September 1, only confirmed that the I & B Ministry was not being taken seriously. The MSOs, meanwhile, made no effort to work out schemes to seed the STBs through attractive schemes, indicating that no sector was sure about the future of CAS. Political opposition in Delhi, Mumbai and Kolkata seemed to seal its fate.

In technological terms, CAS was meant to be a quantum leap, a transformation of pay TV into a digital future. Yet, there was no attempt at a professional rollout of the new scheme. The Union Ministry did not organise regional level presentations, to bring in elementary transparency and win consumers over. There was no licensing system for the cable TV operators, resulting in the continuation of the existing monopolies. The situation took such a sharp turn that the two MSOs in Chennai, Sumangali Cable Vision (SCV) and Hathway Cable, charged that their operations were being sabotaged by vested interests who simply cut the cables. In all this confusion there was little official intervention.

Post-CAS, whether it is deliberately dithering or maintaining a studied indifference, the Centre is on the threshold of a more complicated regime of television distribution. Direct-to-Home (DTH) is likely to make its entry soon. Issues of high cost and technical quality held against DTH are largely artificial, say industry professionals, who believe that these will be addressed by easy financing options in an era of low interest rates, and optimal use of technology.

CAS will still be relevant, but not for basic television. It will have to provide more value, such as pay-per-view and video-on-demand, which has helped the STBs and DTH co-exist in the developed markets of Europe and the U.S.

Another issue debated for the orderly growth of cable television is regulation, made more painfully evident by the CAS debacle. The Federation of Indian Chambers of Commerce and Industry (FICCI) in its assessment of the Indian entertainment scenario, says the cable TV segment has a current size of Rs.24 billions, which could be driven by increased penetration and provision of internet service, pay-per-view and video-on-demand to Rs.70 billions, by the year 2005. In FICCI's assessment, addressability (or conditional access) is a key factor in growth of the advertising revenue, as CAS would enable segmentation of viewers. Licensing of cable operators to professionalise this segment, and bring in financially viable parties, is another point emphasised in the presentation.

In the case of television broadcasting as a whole, FICCI projects that the sector could be valued at Rs.84 billions by 2005, if multiple service tiers including DTH are introduced.

FICCI is also in favour of having an independent broadcast regulator for the country, which will handle the entire spectrum of issues, including licensing of broadcasters, fixing of tariffs, encouraging competition, and settling disputes.

"There is a need for a regulatory authority, but if it is going to be like the TRAI, it will be compounding the problem. It should regulate, not censor," says Sashi Kumar, Chairman, Media Development Foundation. Moreover, the question of regulation would have relevance only when all aspects of the broadcasting chain are covered, and a professional cabling regime is in place.

Under the amendments to The Cable Television Networks (Regulation) Act the responsibility for the cable TV service lies with the last mile operator. In practice, such operators only supply the feed that they receive from the MSOs, and have little control over the content, except for local video channels. The law as it stands seeks to effect controls without specifying the remedies, penalties and the machinery to do so. It is also on weak ground, without a comprehensive Broadcasting Act that would address terrestrial broadcasting licences, direct broadcasting through satellite, and cable TV. Ironically, the amendments do not prescribe remedies for the more common consumer issues, such as cable operators not issuing receipts for deposits or for the monthly payments that subscribers make.

The Information and Broadcasting Ministry's repeated emphasis on the `consumer friendly CAS', has left such factors as price of pay channels and choice of channels under the FTA to be determined by the "market", which has not helped the consumer in the final analysis.

In the developed cable television markets, factors such as price and equity of access are under close scrutiny. The Office of Telecommunications (OFTEL) of the United Kingdom, which regulates cable, has stressed the importance of arriving at channel prices on a cost-plus-profit basis, in a transparent manner. At another level, the Federal Communications Commission (FCC) in the U.S. has begun work on setting standards for production of television sets that are "digital cable ready" and can accept cable service from different operators, thus eliminating the need for an STB.

As media analysts scan the horizon for some indication of what the digital CAS future will be like, the Centre has opted to get the States "involved" in its implementation, as a post-facto decision. Tamil Nadu, which has been the entry point for the CAS technology, has witnessed a complete silence on the issue at the political level. Only the State bureaucrats expressed their concern to the I & B Ministry, on the lack of purchase and lease options for consumers.

For now, CAS presents a fuzzy picture, a far cry from the promise of a new digital era.

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