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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    Indian textile exporters target fresh markets

    Following tough competition from China and South Korea as well as lack of incentives, many Indian textile exporters are unwinding their positions from traditional markets like the US and the EU. These exporters are now focussing on markets like Japan, the Latin American countries, New Zealand and Australia.

    “The US market is a comfortable zone and a better bet for all of us as it offers good quality and quantity potential for textile exporters. However, due to incentives withdrawn by the Indian government, our battle with countries like China and Korea has become even tougher,” said a senior official from Nahar Spinning Mills Ltd.

    According to the Apparel Export Promotion Council (AEPC), during the first half of the current financial year (April to September 2009), Indian garment exports tumbled 7.3% compared to last year. In October, the country's apparel exports were hit severely and declined by 17.6% to $603 million over the year-ago period.

    Indian apparel exports to the US, the world's largest market, declined by 6.5% to $2.27 billion during January to September this year compared to $3.1 billion in the same period a year ago. However, during the same period, China's exports to the US increased by 2% to $17.20 billion while Bangladesh's exports rose 2.4% to $2.70 billion.

    "The government must introduce fiscal relief measures to save garment exports out of India," said AEPC chairman Rakesh Vaid, adding that there are fears of the industry suffering collateral damage. "Stimulus packages and other steps announced so far have had negligible impact on the Indian apparel industry. These measures were either release of withheld benefits or the restoring of benefits withdrawn earlier."

    With weak US markets and despite marginally better recovery signs from EU countries, the Indian textile industry is not expecting higher margins, said an official from the Synthetic and Rayon Textiles Export Promotion Council (SRTEPC).

    Accordingly, the trend is likely to continue for another two to three years with a 2% drop in exports to these nations, the official from Nahar Spinning added.

    Textile exporters from India are not against the idea of exporting textiles to the newer markets like Japan, Latin American countries, New Zealand and Australia but would have preferred to  enjoy their earlier privileges which the government has withdrawn, he said.

    The government has provided better pricing for the newer markets and with less competition, the textile exports to these markets will increase, the official added.

    “We have just started (exports) and have not rigorously entered these markets as we are to still studying and understanding them,” the Nahar Spinning official said, adding that it would take at least another six months to a year to do well in these markets.

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    National Payment Corp plans to buy NFS

    The National Payment Corp of India (NPCI), an organisation set up by the Reserve Bank of India (RBI), is planning to acquire the National Financial Switch (NFS) from the Institute for Development and Research in Banking Technology (IDBRT), in a bid to create more resources for itself to facilitate retail payments.
    According to informed sources, the deal could be sealed by next month. Financial details, however, were not disclosed.

    NFS, which facilitates routing of ATM transactions through interconnectivity between bank switches, is also the largest network of shared ATMs in the country. The acquisition could prove to be a bonus for NPCI, which has been entrusted by the central bank to start a new domestic card payment system in the country that can handle both debit- and credit-card transactions.

    The idea of a domestic card payment system is meant to compete with Visa and MasterCard, who have a virtual duopoly in card transactions worldwide and charge Indian banks a hefty fee for associating with them. Domestic card companies, till date, do not have any other option but to affiliate or tie up with foreign card companies, especially the two mentioned above, so as to enable them to spread their services globally.

    “The idea is to route all the domestic transactions through the domestic switch only,” an official from a State-run financial institution told Moneylife.

    The bidding process for the payment gateway has already begun and the potential bidders for creating the technology would include Wipro and Infosys and other Indian IT companies and world switch operators, the source added.

    While declining to comment on the time-frame for completing the domestic payment system, the source said, “It will be very difficult at this point for us to comment on how long it would take. It would be planned as soon as possible.”

    However, according to sources from NPCI, setting up of a domestic payment system or gateway would take at least two to three years for implementation.

    “We have not yet decided on the transaction charges but it would be nominal compared to what Visa and MasterCard charge,” a government official said.

    Currently NFS charges two kinds of fees—one for cash withdrawal on which it charges Rs18 per transaction plus service tax and for balance inquiry banks pay Rs8 per transaction and service tax.

    Industry sources are very optimistic about the domestic card payment system and its ability; many believe that the transaction process would become much faster. —Aaron Rodrigues

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    1 decade ago

    While the countryfolk is struggling to keep pace with the rising food inflation and unaffordable property prices, our Central Bank thinks it fit to use resources to create a network which is useful only for the middle and upper middle class and above of the population segment. So what if VISA and MasterCard are the only two systems available, they are doing a good job all over the world. So why should the RBI or the banks be inimical towards these? There is a healthy competition between the two like there is one between Pepsi and Coca Cola. Banks charge a fee for every service they provide to the account holders, why should they crib about fees being charged to them by these companies. If they dont find value in these products, then stop distributing them!! Also, I suggest that Moneylife give a more balanced view of the reports instead of just relaying one side of the story. This is what yo do for most of your reports, so why not for this one.
    I have been following stories on the National Payments for some time. Do you know that the success of NFS (ATM switch) is because RBI has mandated it to be free of charge for the banks for sometime, and also RBI officials have threatened banks against using the multi national networks (who would regulate the regulator??) or have bilaterals?

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