54 Days to D-Day | Industry voices concerns on sunset date (Video)

08 May,2012

By Shruti Pushkarna


With less than 60 days to go for the switch from analog to digital distribution, different stakeholders of the broadcast and cable industry are battling out their respective concerns with the government and the regulatory authority. Following the Tariff Order and Interconnection Regulations for the Digital Addressable Cable TV Systems issued by Telecom Regulatory Authority of India (TRAI), a lot of stakeholders have raised issues that will affect their business in which they deem the order to be unfair.


While the News Broadcasters Association (NBA) protested against the carriage fee mentioned in the order, local cable operators (LCOs) carried out a black flag protest during the recent Assocham event attended by the Minister for Information and Broadcasting, Ms Ambika Soni. The LCOs have objected to the revenue share prescribed by the regulator and the Multi System Operators (MSOs) have expressed concern over the increased number of ‘must carry’ channels mandated by TRAI.


MxMIndia spoke to a few representatives of the industry to understand their concerns in the run up to digitization.


Ashok Mansukhani, President, MSO Alliance

What’s your first response to the Tariff Order?

The Tariff order has a mixture of good and bad. Fundamentally, it lays out the path for digitization but there are certain issues which worry us like the mandatory ‘must carry’ channels. We don’t think that’s a fair thing to do, if the broadcasters have the right to decide how many channels to bring to India or create within India, we should have the right to decide what should be the capacity, obviously the capacity is much larger in a big city than a small city. Apart from that, there are some issues on revenue share, which is based on a formula which is pending in the Supreme Court. Our worry is that if the Supreme Court decides otherwise, the whole business model would break down. These are the main two concerns.


News broadcasters are objecting to the carriage fee mentioned in the order issued by TRAI, what’s your view on it?

Now everything will be transparent. What is possibly going to happen is that carriage fee, which is creating such a big hoo-ha today, will get replaced by genuine pay channel ecosystem but that is about five years away. In the current process, we have to digitize about a 100 million homes and enormous sums of money are required but no fiscal incentive or tax incentive or infrastructure incentive has been given by the government. I think in the run up to digitization, the broadcaster should not derail the process; rather they should sit down with the cables operators and the MSOs and work packages with attractive content and at compelling rates to attract consumers. I think that’s really what they should be doing instead of writing editorials about carriage fees.


Do you think the sunset date of June 30 is achievable?

No, it’s not achievable. There are just 60 days left. The negotiations with broadcasters have not begun. The revenue shares are default revenue shares but no discussions with operators have taken place. No agreements are in place. Out of 10 million boxes, only 2 million boxes have been installed. Many of those boxes don’t have smartcards, in other words, they don’t have the conditional access system, and they are vanilla digital set top boxes. I think it’s high time for the government to carry out a reality check. I am sure this will be discussed in the next task force and I am sure government will fix a new date.


Jehangir Pocha, CEO, INX News

What’s your first response to the Tariff Order?

The TRAI order has been a disappointment to news broadcasters because we were repeatedly told that there would be no carriage fee. We were repeatedly told that there would a mandated EPG or menu system, which has not been delivered. These two things add up to a huge financial burden on broadcasters, especially news broadcasters, an industry that is, contrary to public assumption, not doing at all well, that is facing huge financial burdens and many channels have gone bankrupt.


Apart from carriage, do you see any other issues in the run up to digitization?

I think the other issues are really about the willingness and commitment with which the policy can be rolled out because this is going to disrupt some vested interests, it’s going to disrupt a regular way of doing business and therefore, there is going to be a natural push back. But the concept of digitization is superb, it’s wonderful that the government and the regulator have pushed for it, but there have been some imperfections in what they have presented. Another thing that doesn’t make enough economic common sense to me is how the price was set so low for free channels and pay channels because the entire industry’s problems stem from the fact that the consumer is literally being subsidized by paying such low price for content, which in every other country, costs so much more. How this price has been set, by whom and who’s paying for the inherent subsidy in this, there hasn’t been enough transparency on this.


Both NBA and the IBF have expressed disconcert at the carriage fee in the order issued by TRAI, but the TRAI maintains that there is no cause for dissatisfaction on carriage fee. As a news broadcaster, what will be your next step?

I think we will have to explain to TRAI and the ministry just what the imperfections in this otherwise very positive bill are, and how they will create a huge financial burden for news broadcasters, how it will push us towards bankruptcy, how it will stop us from being able to create quality content and how it will, in fact, stop us from growing. If the government is interested in inclusive growth, news broadcasters play a very valuable role in this industry and in this nation. And our financial concerns should be addressed in some manner both by TRAI and the government.


Do you think the sunset date of June 30 is achievable?

Everything is achievable if the intent is there. There may be some practical concerns but let’s be realistic, while the policy is being presented now, we knew for 6 to 7 months that it was going to happen and I’m not sure if MSOs and LCOs spent adequate amounts of money, time and effort on preparing for this day, which they knew was coming. Now they are saying, this day has come and we need more time. We have seen consistent attempts to delay digitization, and I think we should have very little patience with more delays.


Pulak Bagchi, VP, Star India

What’s your first response to the Tariff Order?

It’s a step towards the right direction and I think it will be path breaking in terms of the reforms it triggers in the cable space.


What’s your view on the concerns being raised by news broadcasters over carriage fee?

Carriage is a phenomenon which is certainly not new – it’s been around since the inception of the industry. What TRAI has done is only put a method into the madness, which should be commended. Earlier, there was no transparency in the payments that were being made, now atleast you’ll be having a foothold into the figures. You’ll also be able to determine whether they are reasonable or not. TRAI has also said that they will be intervening in cases of arbitrary levels. So there’s really no cause for concern. I think we should not be pressing the panic button; it has taken so many years for the government and the regulator to come up with these formulations. It’s important that we live up to the mandate and we must also give regard to the expectations of the people of this country. Given that digitization is a reality today, the sooner we embrace it, the better.


Do you think the sunset date of June 30 is achievable?

It is, because it’s targeted towards four major cities where it’s not an alien concept. Perhaps there will be some incremental approaches that will be taken in those respective areas and I’m sure that the deadline could be met. There’s no difficulty in abiding by the timelines.


Are there any marketing initiatives or consumer awareness campaigns that you are undertaking in the run up to digitization?

Star and IBF have made it mandatory for all members to spread awareness in their respective channels. We are carrying out marketing campaigns, we are also doing citizen focused awareness programmes where people can be brought up to speed with what digitization is all about. And we are also trying to infuse in the public sensibilities as to why it is good for them.


Roop Sharma, President, Cable Operators Federation of India (COFI)

What’s your first response to the Tariff Order?

It’s very bad from LCO’s perspective. Since there is a vertical monopoly and no cross media holding, none of the MSOs will be negotiating with the cable operator and if they don’t negotiate with the cable operator, the latter will end up taking only a Rs45 share, with which the business becomes unviable and the LCO will be unable to give better quality service to the consumer. Even the set top boxes, which are going to be put, are of vanilla quality, they are very primitive boxes. Consumer will not be able to get internet, broadband or other services on the same box. Cable operator has to spend so much money in upgrading and the government has just mandated a technology. We are even ready to upgrade, but we must get a proper share. The regulator wants to be the controller of the business. As a result, lot of cable operators will be forced to sell off their network or the network will die its own death. There will be a lot of unemployment generated in the market.


Do you think the sunset date of June 30 is achievable?

No, the timeline is very short. First is the procurement of boxes – in Chennai none of the MSOs have given any orders for boxes. Even in Kolkata, we are hearing that the state government was not consulted.


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