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Moneylife » Personal Finance » Spending » Cable TV digitisation and the chaos about pricing of STBs, packages

Cable TV digitisation and the chaos about pricing of STBs, packages

Yogesh Sapkale | 17/10/2012 06:36 PM | 

As TV viewers from four metros are getting ready for digital cable TV, some issues like diverse pricing for STBs and channel packages being charged by MSOs are creeping up. In addition, there is no clarity about revenues and cost sharing between LCOs and MSOs

With the government and players in the cable TV industry forcefully marching ahead with the digitization of cable TV signals, it seems that from 1st November onwards viewers in the four metros—Mumbai, Delhi, Kolkata and Chennai—would not get any analog signals on their TV sets. However, while the government is claiming a high rate of installation of set top boxes (STBs) in the four metros, there is no parity on price of STB or information on whether the pricing declared by multi-system operators (MSOs) or broadcasters would remain the same.

 

Several local cable operators (LCOs), who would continue to provide last mile connectivity between TV channels and customers, are complaining about the difference in pricing and revenue share. STB pricing in Mumbai is higher compared with other three metros. In Mumbai, LCOs are charging Rs1,000-Rs1,500 per STB, whereas in Delhi and Kolkata the price is lower at Rs800-Rs1,000. Earlier in August, the MSO Alliance of four major operators like Siti Cable, In Cable, Digicable, Hathway, and DEN Networks came out with an offer to provide STBs at a standard price of Rs799 each. But the scheme was only for a month.

The information and broadcasting (I&B) ministry has said that as per the stipulation by the Telecom Regulatory Authority of India (TRAI), the basic service tier (BST) consisting of at least 100 channels should be offered for Rs100 and MSOs were expected to uphold this direction.

 

However, none of the four major national level MSOs, except WWIL have come out with the basic package of Rs100. . WWIL offers a ‘Janata’ package of 118 channels at Rs100 per month. At present monthly pricing in the analog environment varies from Rs130 in Dharavi (Mumbai) to Rs300 in Kalkaji (Delhi).

 

“While the subscribers will be able to exercise their choice post digitization, many of them are still likely to subscribe to ‘packages’ as they would be more cost effective as compared to the a la carte pricing. In addition, price increases are likely to be taken to offset higher tax incidence like service tax, entertainment tax and content cost post digitization. Our interactions with MSOs and LCOs indicate that price hike post digitization is likely to be blamed on the government policy action,” said Motilal Oswal Securities in a research note.

 

The Cable Television Networks (Regulation) Amendment Bill, 2011, was passed for the complete digitisation of cable TV in the country by the end of 2014, in four phases. The first phase involves the metros of Delhi, Chennai, Mumbai and Kolkata and makes it mandatory for customers to install the STBs in order to receive encrypted digital signals from the broadcaster through cable operators.

 

LCOs have also been crying foul about revenue sharing; interconnect agreements between them and MSOs. West Delhi Cable Operators Association, in a letter to Ambika Soni, I&B minister, has complained about opaqueness in revenue sharing and other issues. According to the association, MSOs are not giving the copy of the agreement between them, which does not have details of revenues sharing, carriage fees and no pricing for consumer is mentioned in the agreement.

 

“All MSOs are taking advance payments from LCOs but giving STBs on instalments or at ‘no ownership’ basis to subscribers. Even after giving lakhs of rupees neither the LCO nor the subscriber owns the STBs. The subscriber activation forms mention the amount (paid toward STB) as activation charges,” the association said in the letter.

 

While the government had earlier fixed a deadline of third week of August for contracts with MSOs to be in place, many of them are still likely to be in the negotiation stage. Distributors continue to sign fixed-fee deals with MSOs (similar contracts are prevalent with DTH operators as well) even in a digitised environment. The Cable Operators Federation of India (COFI) said it believes that fixed-fee contracts undermine the broadcasters’ argument of “under declaration” as there will be no per subscriber payment even in a digitised environment.

 

COFI also mentioned that transition from analog to digital took almost a decade in the US even after a subsidy was provided by the government. Still, about 15% of the subscribers in the US continue to receive signals in the analog mode. As compared to this, India has undertaken a humungous task of converting about 80 million analog subscribers to digital within a span of three years.

 

“While we agree that deadlines are challenging, we also note that most of the industry participants are already building in delays in the digitization progress, especially beyond phase I,” said the brokerage.

 

According to data from the I&B ministry, overall 77% cable TV digitisation has already been achieved in the four metros. City-wise data shows that the achievement of cable digitisation in Mumbai is 99%, followed by Kolkata (73%), Delhi (66%) and Chennai (59%). Taking into consideration, the progress made by DTH in this sector, the level of digitisation goes up to 84% in four metros, the ministry said.

City wise data for metro cities can be seen in the Table below.

 

 

 

Meanwhile, as per media reports, following pressure from various broadcasting and advertising associations, TAM will cease releasing its pan-India TV ratings data for nine weeks from 7th October to 8th December. Possible disruption in TV signals in analog cable households, which form a bulk of TAM’s sample size, close to the Phase 1 digitisation deadline has led to the data suspension.

 

Looking at the preparations by the government and MSOs for launching digital cable TV services in the four metros, this time there may not be any extension for the 31st October deadline. However, with the chaos regarding STB pricing and channel packages, several customers expect the government, MSOs and LCOs to provide some clarity in these issues before stopping the analog TV signals across four metros.

 


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4 Comments
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V K Verma

V K Verma 2 years ago

Delhi LCOs tell Soni info on STBs is false

Indiantelevision.com Team

(16 October 2012 8:29 pm)


NEW DELHI: Cable TV operators in Delhi have told Information and Broadcasting (I&B) Minister Ambika Soni that the ministry’s figures on deployment of set top boxes (STBs) in the four metros are way off the mark.

The cable operators said the ministry had failed to take into account homes with more than one television connection.

In a meeting called by Soni on Monday, the operators said homes with multi TV connections generally had only one set top box which served all the TV sets under the analogue system, but this would not be possible after 31 October when the digital addressable system comes into place.
Analogue delivery of cable television will be shut from 1 November as the government has mandated compulsory switchover to digital delivery.

Although LCOs from all the metros were invited for the meeting with the minister, only some operators from Delhi attended it.

The LCOs told the minister that they wanted police protection as they feared law and order problems after 31 October. The cable operators also informed the minister that all black and white TV sets, and many colour TV sets were not enabled to support DAS.

The operators also said many far-flung areas in the capital still did not have the digital feed, and could only take analogue feed.

The cable operators led by A S Kohli of West Delhi Cable Operators Association said there was a scheme under which direct to home (DTH) operators charged less for every additional connection in the same home, and said such a scheme should also be made applicable in cable homes to encourage people to take STBs for multi-TV homes.

Meanwhile, the Cable Operators Federation of India President Roop Sharma, who is a member of the ministry’s Task Force on DAS, has told the Chairman of the Task Force in a letter that many MSOs do not have channels from all the broadcasters in their packages and therefore, consumers will face problems in getting their favourite channels even after paying for digital STBs.

For example, she said DEN does not have any channel from Indiacast (Viacom 18 and Sun), while Digicable has no Star, Zee or Sports channels. Incablenet has not specified the channels it is offering. Only Hathway has all the popular channels in its packages.

She has also pointed out that none of the MSOs have given the a la carte rates of channels to enable selection of individual channels.


http://www.indiantelevision.com/headline...

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Dr Paresh Vaidya

Dr Paresh Vaidya 2 years ago

If the price does not comedown after the new rule, common man is not interested in technology. I realized this when our servant maid enquired about what the "Set Top Box" is supposed to be. That is the reach of television today, where it is included in the list of 'must have' but not at exorbitant cost. Is there no technical way to ensure the accountability in analog transmission?

This case is similar to Iodide salt, which merits being a recommended item but not enforced by a law, raising the price to Rs 14 a kg from mere Rs 2 just 5 years ago.

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Gunda

Gunda 2 years ago

I am sure the last mile operators have resisted the advent of set top boxes to the bitter end. This cuts into their illicit revenues. The MSO will now have complete clarity on how many subscribers a last mile operator (your local cable operator) has. The MSO did not have that clarity earlier, neither did the MSO have much bargaining power. Except for the subscriber and the list mile operator, everyone including the MSO, the Govt and the television channels benefit.

The government will now benefit because it will demand lists of subscribers for each last mile operator from the MSO and demand entertainment tax from the last mile operator for each subscriber. The entertainment tax needs to be abolished simply because the government collects the money for doing nothing. There is no enforcement of service quality levels and standards, no signal quality standards, no recourse in case of disputes with operators, no ensuring of proper competition in the local area - the last mile operators carve up areas amongst themselves and fleece subscribers. This is a story idea for you Sucheta ;-).

Nevertheless, set top boxes also might put an end to a good source of black money income for the local gundas. Much of their income was not tracked properly until now.

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