Get ready for higher cable TV bills from next year

Cable TV bills across the country, except for some select areas from Mumbai, Delhi and Kolkata and entire Chennai, are set to go up from January next year. Telecom and broadcasting regulator, Telecom Regulatory Authority of India (TRAI), has asked all broadcasters, aggregators (the authorised distributors of broadcasters), direct-to-home (DTH) operators, multi-system operators (MSOs), local cable operators (LCOs) and consumer advocacy groups to submit tariff related data by 30 November 2009.

The regulator would use the data while revising the cable TV tariff, which was last fixed in October 2007. According to media reports, cable TV tariffs are set to be revised upwards, especially to offset inflation and rates would be applicable from as early as January 2010. This revised tariff would be applicable in all non-conditional access system (CAS) areas across the country.

Earlier, in August, the Supreme Court, while accepting TRAI's plea for more time to work out a fresh tariff regime for cable services in non-CAS areas, allowed the regulator time till 31st December to complete the exercise.

At present, the monthly bill for cable TV in non-CAS areas is between Rs77 to Rs260 which is likely to go upwards by about 15% to 30%. This move may prove to be beneficial for digital broadcasters and DTH operators, as there would be a reduced difference in the monthly charges between LCOs and DTH players.
In its upcoming consultation process, TRAI may also seek to retain the current structure where the tariff caps are fixed as per status of the city, which depends on its population and paying power. At present, all cities across the country are categorized into A-1, A, B-1, B-2 and ‘others’.

"We expect this to be a positive move for the broadcasters and digitalisation players because this significant increase in cable bills will lead the consumers to shift from analogue channel to digital platform. Due to above shifting the broadcasting subscription revenue will improve as currently there is a gross under-reporting of subscriber base by the cable service providers leading to loss of revenues for broadcasters," said Rohit Maheshwari, research analyst, KR Choksey Shares and Securities Pvt Ltd, in a report.

In mid-November, the Union government had approved the much-awaited Headend in the Sky (HITS) policy which would enable a digital delivery platform for cable operators and with increased competition, it may also result in reduction in subscription rates.

Speaking about the HITS policy, Jawahar Goel, additional vice chairman, Essel group, had said that the policy will help in achieving the government's target of digitising the country by 2012. "The HITS policy is another (source of) competition for DTH operators but good for the country as under-declaration by LCOs will be take care of, but there should have been a tariff order in the policy,” he said.

The government has been thinking about digitisation of the entire cable TV services network and may not even approve new licences for cable operation for analogue services after the next five years.

"Beyond the five-year period, no new licence for cable operation will be given for analogue services. This could be done through an amendment to the Cable Act," Sushma Singh, the then secretary at the ministry of information and broadcasting, had said in February 2009.

These measures are required to get rid of problems like under-declaration of subscribers and the practice of carriage fee being charged by cable operators, Ms Singh had said.

The broadcasting industry in India is plagued by two most significant issues, taxation and a non-level playing field. DTH operators which are adding about a million subscribers every month feel if the government can rationalise the taxes, currently at around 50%, then they might be able to double their monthly subscriber figures.

For example, in Uttar Pradesh, there is an entertainment tax of 30%; if you add other taxes, then it goes up to 70%. No industry can survive with a model with 70% tax, said an industry expert.

Then there is the question of a non-level playing field. While the entire cable industry is under-declared with possible declaration levels at 10%-15%, DTH operators on the other hand cannot under-declare their subscriber base.

According to industry sources, DTH contributes almost 50% of the broadcaster's subscriptions when its size is just 15% of the total market.

Following the tariff revision, your monthly subscription bill is going to be almost same irrespective of whether you receive it through digital mode (DTH or HITS) or analogue mode (MSOs, LCOs). But since digital mode provides good quality picture and sound compared to analogue cable, for common TV subscribers, it would be better to shift to DTH or HITS.

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