Who will pay?
TOWARDS the end of a stormy Parliament session, the Government introduced a bill to usher in what is known as addressability in the cable industry which now covers some 38 million homes. And the controversy this proposed amendment to the Cable Television Networks (Regulation) Act generated last week, served to conveniently detract attention from the fact that yet one more session has gone by without the Communications Convergence Bill being introduced. (Unless that happens in the next two days this column is going to the press before the session has quite ended.) The latter would have brought in regulation into the entire broadcasting industry in the matter of spectrum, licences for services, codes and standards. This has been hanging fire since 1997.
Addressability, or conditional access, makes it possible to differentiate the channels that come into an individual cable subscriber's home. You can choose which cable channels you want to pay for. And for the privilege of doing that, you will have to invest in a set-top box which will cost Rs. 3,000 - Rs.4,000 at the very least. (Twice that if you opt for the digital set top boxes.) The amendment bill is silent on the question of who pays for the box, but it will most likely be the consumer.
The politics of why addressability is being hurried in is a bit of mystery. The present Minister of Information and Broadcasting, Sushma Swaraj, has been enamoured of the idea for some time, two of her predecessors in the same ministry who are now cabinet ministers with other portfolios, are reportedly against it, thought the cabinet passed the bill. A task force had gone into the issue and given a report. Many different interests are involved: that of consumers, two kinds of cable operators big multi-service operators and small ones, the interests of broadcasters, of advertisers and of the Government.
The broadcasters are alarmed, and some of the powerful ones such as Star, Sony and Zee, whose bouquets are currently pay, are unhappy with the idea. They could lose both viewers and revenue if people don't invest in the set top box and opt for conditional access. Advertisers assume a certain viewership for these channels, which will now be affected. They will be a basic bouquet of free-to-air channels that every operator will offer, and the Government now intends to fix the price for this. The Big Three private broadcasters will also have to consider whether they want to redesignate some of their pay channels as free-to-air.
Cable operators will also have to upgrade their equipment if they are to opt for condition access. The implications for them are the following: they can introduce pay channels they do not offer today, if they have subscribers who are willing to pay for these. They cannot under-report pay channel subscribers to the broadcaster as they do now because the equipment will clearly show how many households the pay channels are going to. They can of course still under-report free-to-air channels. They may lose revenue as the basic bouquet price will be fixed by the Government, and will be lower than what many of them charge now. They may lose subscribers to pay channels because viewing these will become much more expensive for the average consumer.
What's more the cable operator will come under more scrutiny from the Government than before: the amendment prescribes a stringent reporting system whereby cable operators will now have to regularly report to the Government how many subscribers they have, what rates they pay, how many subscribers are there for the free-to-air channels, and even what programmes are being shown on the pay channels. How the Government intends to handle such a nitty gritty reporting system is not clear, it took years for districts to designate which officers would implement the basic cable act brought in in 1995.
There are two kinds of cable operators: big ones like Siti Cable owned by Zee, and smaller ones, thousands of them. Some of the latter will find it difficult to absorb the costs of the new system and opt for offering only free to air channels. They are already paying a five per cent service tax to Government. But if they do upgrade they can charge more. The big ones which includes the Hindujas' In Cable and Rahejas' Hathaway will be fine, they will invest in the new equipment, and subscribe to new niche channels to sell to their higher end subscribers. They will make more money by charging more from the smaller operators who take the signal from them.
Advertisers will have to review media buying decisions in accordance with a much more complicated set of viewership figures. They will have to gauge whether channels like Star Plus or Zee are getting the same viewership under the conditional access system as they did before.
The Government will be the only clear winner if the amendment bill is passed in Parliament. It will acquire powers that it does not have today by increasing its control over cable operators. It has given itself the right to maintain a scrutiny over channels being offered, prices being charged and programmes being shown. And it will try and push in more Prasar Bharati channels on a must carry basis into the free-to-air bouquet. They are now talking of taking the number from the current three (including DD Bharati) to five.
And what happens to the consumer? At the lower income end he will pay more for a far less attractive bouquet: the free to air bouquet will cost more than what many cable operators charge in slum areas and chawls today. And it will not include the movie channels and the top entertainment channels in each region. At the upper income level he will pay more too: for the set top box, and for the pay channels. He could end up forking out as much as Rs. 400 a month where he is now paying Rs. 200 or less, apart from investing in a set top box. However there will be a degree of regulation: neither broadcasters nor cable operators will be able to raise fees arbitrarily. And the very well off will be able to get channels they do not get today.
Did you doubt that this is increasingly becoming a rich man's country?
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