Government plans to retire analog Cable TV

14 Oct,2011

Ninety million homes in the country receiving television programmes via analog cable networks will need to switch to digital set-top boxes beginning March 2012, with the government approving complete digitisation of TV transmission over a two-year period.


The Cable TV Networks (Regulation) Act will be amended through an ordinance, Information and Broadcasting Minister Ms Ambika Soni said after a meeting of the cabinet committee on economic affairs on Thursday. Consumers in the four main metros – Delhi, Mumbai, Kolkata and Chennai – will be the first to switch to the new system.


The first phase will require 12-15 million set-top boxes and cost multi-system operators (MSO) about Rs 3,000 crore. The digital technology will offer improved quality of transmission and greater choice of content, albeit at a higher cost to consumers. “This will bring a paradigm shift in television viewing experience,” said Mr Avnindra Mohan president (legal) at Essel Group, which owns Wire and Wireless India Ltd (WWIL), an MSO.


“Consumers can avail of digital cable, broadband and telephony services, all bundled in a single connection.” The announcement boosted stock prices of publicly-listed MSOs, the conduit between broadcasters and the neighbourhood cable operators. WWIL shares surged 19.92%, while Hathway Cable & Datacom rose 10.3% and DEN Networks gained 0.80% on BSE. DEN and Hathway have raised money and got listed on the stock exchanges over the past two years in anticipation of the new law.


There are an estimated 130-140 million households in the country with TV connections. Of these, 90 million are cable and satellite homes while about 35 million have direct-to-home (DTH) connections. The remaining, in remote corners of the country, use old analog antennae-receivers.


According to industry estimates, MSOs will need to invest Rs 25,000 crore to carry out the digitisation. “This will benefit the entire broadcasting industry, both economically, and from the point of view of content,” said Mr Uday Shankar, president of the Indian Broadcasting Foundation and chief executive of Star India.


He said the government should ensure that the deadline is honoured. The broadcasting industry has been suffering from poor bandwidth of analogue cable, which will be resolved with digitisation, he said, adding this will also plug leakages in the revenue system by solving the problem of under declaration of subscribers in the analogue cable system.


“India has been the world’s cheapest cable and satellite market with an ARPU (average revenue per user) of $4 (Rs 200) for a bunch of channels, a majority of which are unsolicited,” said Mr Yogesh Radhakrishnan, MD and CEO of Prime Connect, the distribution company of Times Group.


“This move will change it drastically and people will end up paying only for what they wish to see.” A change in hardware may inflate the consumer’s cable bill. “They will pay an initial conversion fee to digital cable operators to buy set top boxes, but it will be more value for consumers,” said Mr MG Azhar, president (strategy & business development) at DEN Networks. This could lead to higher ARPU for both the DTH and digital cable industry. Currently, ARPU for the cable operators ranges betweenRs 100 and Rs 200, depending on the city or town.


For DTH, it is betweenRs 170 and Rs 180. “The ministry and Trai will now have to come out with interconnect as well as tarriff orders as the ordinance is notified,” said Mr Ashok Mansukhani, president of MSO Alliance. “But the current level of extreme competition between DTH and cable will continue and, at best, customer will have to pay marginally more, specially for niche and sports channels.” DTH operators are hoping they will get a piece of the pie.


“We can connect consumers with television even in the farthest and remotest of areas,” said Mr Salil Kapoor, COO of Dish TV. A senior executive with a DTH service provider said with the increase in demand, prices of DTH could go up in the first phase by 10%-15%.



Source:The Economic Times

Copyright © 2011, Bennett, Coleman & Co. Ltd. All Rights Reserved

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