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Introduction THE cable TV industry in India started off without any legitimacy, when the Gulf War was

at its peak. fter that, it e!panded rapidly, when businesses realised the huge earnings potential of a ser"ice # entertainment #, which rarely gets affected by economic factors. With time, the go"ernment stepped in to regularise the industry and enacted the $able TV %etworks &egulation ct in '((). The $able TV %etworks &egulation ct in '(() was a hurriedly drafted *ill and lacked se"eral important elements. The $able TV consumer rates ha"e gone up +,-., per cent whereas the inflation is only about / per cent. The mendment *ill, called the $onditional ccess 0ystem *ill, was introduced to keep some check on the regularly escalating cable subscription rates. Though this solution could hardly be called effecti"e, at least it ga"e the go"ernment a means to keep tabs on the premium tier. Though the $ 0 would mean that the households pay more than what they are now paying and the go"ernment would prescribe from time to time as to which and how many channels would form a part of the basic tier, it would at least gi"e the consumer the choice to pay for only the channels he1she wishes to watch. The $ 0 *ill is a beginning to bring about some sort of regulation to the cable TV industry # a step in the right direction. The $able Tele"ision %etwork mendment *ill /,,/ was unanimously passed in the &a2ya 0abha on Tuesday, to enable introduction of the conditional access system 3$ 04 in the country. $ 0 or the addressability system is all about making set-top bo! mandatory for "iewing pay channels. $ 0, which stands for $onditional ccess 0ystem, is a technology that allows the cable operator to pro"ide selected channels to a subscriber. 5r, looked from another angle, $ 0 allows the "iewer to select the channel3s4 of his choice. $ 0 is also referred to as an 6addressable system6. The purposes of introducing $ 0 are many, but the chief purpose is, or should be to set the direction of the future of the Indian Tele"ision Industry. $ 0 has been implemented in most de"eloped countries, with more or less similar results. The implementation of $ 0 being in phases demands new e7uipment1cabling. This gi"es "iewers a choice of retaining their e!isting subscriptions 3without pay channels of course4 till they choose to in"est in set-top-bo!es. 5r till the cable operator enforces $ 0. It has been found that in the long run, more than ),8 of "iewers defer set-top-bo!es because of

the cost. This delay along with other "iewer beha"iour, leads to substantial segmentation in "iewership.

$ 0 would pro"ide protection to the consumers. They would be re7uired to pay for only those channels that they want to "iew and not for the arbitrarily prepared bou7uet by the broadcasters. This would also put to rest the contro"ersy of actual subscriber numbers, which had all along been a contention between the broadcasters and cable operators. The system of pro"iding 9bou7uets of channels: poses great difficulties for cable operators. The problems e!ist at almost all the le"els of operation. The feasible way out is to create a regulatory body to monitor the industry. The $ommunications $on"ergence *ill under consideration proposes the setting up of a $ommunications $ommission of India 3$$I4, which would replace the regulators in telecommunications, broadcasting and multimedia. It may help if the $$I becomes the regulatory authority for the industry, and the Go"ernment has little role in its functioning. The $ommission should be completely independent and not another 9department:. Though the $$I will not necessarily be set up at the same time as the *ill comes into effect, it will be able to take care of many problems once it is in place.

What is CAS (Conditional Access System)? Through $able TV %etworks 3&egulation4 mendment *ill, :,/, the go"ernment has decided to usher in a conditional access system 3$ 04 for distribution of satellite channels. Essentially, it in"ol"es placing on or near the TV a set-top-bo! - akin to a meter - which will enable "iewers to pay only for channels that they watch. $urrently, cable operators show you channels of their choice and charge a flat rate that "aries widely from area to area. 5nce this *ill becomes an ct, channels will be treated as two categories; pay channels and free-to-air channels. Pay channels will need a set-top bo! to recei"e and you will pay for only those channels that you choose to watch. The free-to-air channels will not need any set-top bo! to recei"e and you can watch them like you watch cable channels now. The free-to-air channels will be included in a basic ser"ices package, and charged a fi!ed rate by cable operators. The go"ernment will, decide a ma!imum rate for the basic ser"ices package. It will also specify the number of free-to-air channels in the basic ser"ices package and the mi! of channel types in the package. It is still unclear how and under what rates cable operators can show free-to-air channels which are not included in the basic ser"ices package. The free-to-air channels will consist mainly of << channels - /' in all on last count, 0 *e TV, sianet, the 0un and Eenadu bou7uets, the Tara channels bou7uet, &a2 TV, =ain TV, **$, $%%I, 0ahara, etc . The following table gi"es an idea of the range of e!pectations from the stakeholders; Suggestions for Basic Tier C%ANN&'S <oordarshan E0>% CAB'& !P&$AT!$S Hathway 3&ahe2as4 Indusind @edia 3Hindu2a:s4 0un $able Vision 30un TV4 $able %etwork ssociation 3Independant4 No !f Channels .) +, /, .A +, +) "onthly #ee ($s ) ',, /) ?) ',, ',, '),

While the basic and pay tiers are yet to be fi!ed along with their cost, the set-top bo!es are e!pected to be a"ailable in the range of &s +,,,, onwards.

Globally, it:s the broadcasters and cable distribution companies who foot the bill for set-top bo!es, but in India, there is as yet no agreement among either the cable distribution companies or the TV channels on what the strategy for distribution of set-top bo!es will be. In the initial phase, only four cities - <elhi, @umbai, Bolkata and $hennai will be co"ered by the $ 0. 5nce the $ 0 comes into force, it will be a legal offence for cable operators to show pay channels without the use of set-top bo!es. The salient features of $able Tele"ision %etworks 3 mendment4 *ill, /,,/ are as under; Introduction of ddressable 0ystems to be mandatory. >ay $hannels to be deli"ered only to addressable systems. ll Cree to ir $hannels to be deli"ered as part of the *asic >ackage.

Go"ernment to specify rates and minimum number of channels for the *asic >ackage. @onthly reporting by cable operators on subscriber base for free-to-air and pay channels. period of D months for operators to introduce $ 0.

Benefits of CAS to the customers Creedom of $hoice of $hannels. >ayments for channels they actually watch. Escape for fre7uent hike in tariffs, channel switch offs. >ossible reduction in tariffs for customers opting for Cree to ir $hannels. @ore choice of programming as new, subscription based, niche channels would be encouraged to enter into Indian market. E"en *EW TV sets can recei"e (( channels using 0et Top *o!es. 0et Top *o!es can result in new ser"ices such as; >ay >er View, Internet on TV, $ommerce- Home 0hopping, Home *anking

Events leading to CAS


The cable industry began in @umbai with small-time entrepreneurs putting their own money into hooking cable o"er treetops E buildings. 0atellite broadcasters like $%% E Fee entered the picture post '(('. Howe"er there werenGt too many cable homes so there was no money to be made from pay. 0oon channels like 0tar, 0ony E Fee began fuelling the demand for cable TV. @any operators could not cope with the growing numbers of subscribers E channels. In mid-(,s, @05s like &>G %etcom, Hathway $able entered the picture. @05Gs are like wholesalers. They in"ested the money for upgradation and large control rooms and sold the signals to the operator for a cut in the re"enue. <ue to the @05Gs E *roadcasters there was a huge 2ump in cable homes. Crom './ million in '((/, cable TV entered a mouth-watering ),8 of IndiaGs A, million TV homes. s cable TV began penetrating more and more homes, broadcasters realiHed that they were not getting paid for the numbers they saw on %&0 chart or in press inter"iews. Either the @05Gs or the cable operators were Iunder-declaringG. @05Gs blame the cable operators for Iunder-declaringG, who in turn claim that they declare more than D,-?,8 to the @05Gs who re"eal only /,8 of that number to broadcasters. The resulting war of words and money has meant blackouts, bandhs E court cases. @any of the @05Gs E cable operators ha"e links with influential politicians E criminals. Jndercutting, taking o"er the other guyGs territory, stabbings and shoot-outs are common in the cable business. nd what is the truthK That depends on the "ersion you wish to belie"e. *ut here are some facts '4 5perators in small towns declare D,-?,8 of the numbers, usually direct to broadcasters. /4 *roadcasters arm-twist small operators. +4 @any operators charge two-TV households an e!tra sum that they ne"er re"eal. .4 Jnder declaring depends on the strength of the channel. Cor e.g., in @umbai one @05 paid E0>% for '.?) lakh homes and 0ony for D),,,, homes in the same year. The bad blood between these three players ha"e resulted in harassed consumers and a tattered, fragmented industry with falling margins. The clod

fact is that none of the three players can stand each other. They cannot do without the other.

The steps taken by broadcasters, @05Gs E cable operators to ensure that the push for pay happens are; '. %o poaching - in large markets across the country @05Gs, operators E broadcasters ha"e agreed not to muscle in on each otherGs areas. /. *roadcasters E @05Gs ha"e taken steps to build bridges with cable operators - friendly cricket matchesL lunches with Bapil <e" sponsored by 0ony are crucial as they help in Mbreaking down barriersN. 0imilarly Fee-Turner has organised four workshops o"er the last to months for operators in small towns O to make the understand what the $onditional ccess 0ystem 3$ 04 is all about. <oing this earns it goodwill of operators, something that will translate into better declarations and therefore re"enues in the long term. +. >ushing >enetration O of the ., million cable homes, about ',-') million do not take pay channels. These people 2ust subscribe to the basic ser"ice. Cor e!ample Fee-Turner reaches +, million of the ., million cable homes. 5"er /,,+ E /,,., it will spend &s / crore to create and increase the demand for Fee-Turner. Fee-Turner has gone for e!tensi"e promotions in rural E semi-urban areas O with $<Gs and point of purchase materials. The result is that Fee-Turner has added ),,, non-pay channel operators in /,,/. ssuming each of these has atleast ',,,,, homes paying &s. ', e!tra per month for FEE - an additional income of D, crores will be generated. .. >laying it straight O many broadcasters now sell the idea of a rate hike or cut months before it is actually push through upon the operator. 0tar had e!tensi"e talks with @05Gs E cable operators before announcing rate hike1cut. ll the three are learning to li"e harmoniously. 0o much so that when E0>%-0tar 0ports hiked its price from &s./. to &s.+/ in <ecember, cable operators E @05Gs hardly battled an eyelid. lmost ?,8 of the trade agree to the hike without any protest.

The conditional access system is said to effect the follo(ing '. /. +. .. ). D. ?. A. *roadcasters Go"ernment d"ertisers @arket &esearch gency d gency1@edia >lanner1*uyer TV 0et1Hardware stuff udience 3"iewer4 $able 5perator

The catch is that, for the first time in India, cable operators will ha"e to detail their number of subscribers, subscription rates, and the number of subscribers recei"ing free-to-air programs, and pay TV programs. This means that it will become clear how many consumers watch what channel and what programs. The implications are that it will immediately impact ad"ertisers, who may yank a TV ad or place more ads on the channel. Therefore, for the first time, real figures of subscribers, similar to most parts of the world will become a"ailable to the industry and consumers.

The small cable operators are worried that they will be gobbled up by the big operators 3Hathways, 0iticable, Incablenet and &>G %etcom4, as they will be unable to pay for the system upgrade. The go"ernment is looking forward to recei"e legitimate ta!es from the new rich cable operators, who ha"e notoriously under reported the number of subscribers who recei"e the channels they distribute. 0et-top manufacturers see a huge boost in sales in the near future. %iche channels are scared that they will not be able to sur"i"e as pay channels, as the real "iewership numbers will be made a"ailable for all and sundry.

The Conditional Access System - What it means for broadcasters


*roadcasters under the Indian *roadcasting Coundation 3I*C4 fold including top officials of 0tar, 0ony Entertainment Tele"ision, Fee, <isco"ery and E0>%-0tar 0ports, met in %ew <elhi on @ay ',th to thrash out issues related to the $onditional ccess 0ystem 3$ 04, an enabling pro"ision which is set to be incorporated into the $able TV %etwork 3&egulation4 ct '((). The meeting was to ensure that their subscription income does not diminish in the $ 0 regime. It is widely felt that after $ 0, which would enable the "iewers to pay for the channels he watches, is introduced, many subscribers would like to take only a few select pay-channels, instead of the full bou7uets that are in "ogue currently. s a result, most broadcasters run the risk of losing subscribers and therefore subscription money for 7uite a few channels. The members, howe"er, are of the "iew that there should be a planned and phased transition to the $ 0, according to the I*C statement. *ut broadcasters did not discuss steps to achie"e the planned transition. 0tating the ob"ious, the I*C release, said that technology, funding, a"ailability of set top bo!es and regulation are among the issues which need to be analysed before introducing the $ 0. t present, the 0tar bou7uet costs &s +,. 0onyGs 5ne lliance bou7uet 30ony, 0et @a!, H*5, <isco"ery, %<TV4 is currently priced in the region of &s D,. 5nce $ 0 comes into play, consumers will ha"e the option to pick, watch and pay for indi"idual channels from different bou7uets. Howe"er, the cable TV industry e!pects consumers to pick one or two bou7uets, along with the free-to-air channels 3like <<, a2 Tak, @TV, **$4.

The go"ernment has not yet fi!ed the ma!imum price band for the free-toair TV channels. There are indications that these channels will be priced in the region of &s .) plus ta!es. $able federations ha"e threatened to go on strike if this happens. ThatGs because they get to keep earnings from free-toair channels. They ha"e demanded a minimum price of &s 'A, for such channels.

!))ortunities %ew $hannel for direct marketing. 5pportunity to address the ultimate "iewer. @ore transparency in distribution. 0elected 3niche4 channels may hike tariff. Threats Increased in"estment in content to meet increased competition. %ew international InicheG channel may enter the market. %ew distribution strategies will be re7uired for $ 0. 0ur"i"al of the fittest O weak channels will face problems. $able operator still likely to retain control on subscribers.

Why Broadcasters thin* )ay

Broadcasters Total $e+enue E0>%0T & 0tar TV 0ony Fee 0un TV .,, ',,,, ),, ',?D +?)

Pay $e+enue /,, /,, ?) (A %il

, to Total ), /, ') ( ,

0ur"i"al is one of the key reasons why broadcasters are now pushing for pay. Three bad years of ad"ertising ha"e left TV companies gasping for margins. d"ertisement re"enue also depend upon hits and flops. Cor e!ample 0ony bought the World $up rights for P /)) million. *lockbuster shows like ByunkiQ cost between &s D lakhs E &s ( lakhs an episode. @ost international broadcasters make half their money from pay re"enues. t about P?' billion, subscription in a typical market like Jnited 0tates is roughly double that of ad"ertising.

The Conditional Access System - What it means for the Government


!))ortunities &egulate the industry to certain e!tent. 0et the Indian TV Industry on path to the future

dditional &e"enue.

Threats Hea"y cost of subsidiHing initial in"estment for set-top-bo!es E IconditionalityG e7uipment for head-end. Hea"y cost of regulating implementation of $ 0.

The Conditional Access System - What it means for the Advertisers


!))ortunities $ 0 will lead to digital TV E Interacti"e TV O leading to target ad"ertising, infomercials E commercials. $ 0 will also pro"ide new direct marketing channels for product manufacturers.

The Conditional Access System - What it means for the Market Research Agencies
!))ortunity as (ell as threat # Increased comple!ities with new segments of "iewership E "iewer beha"iour patterns - will result in "astly increased sample siHe E cost. This comple! scenario could be a threat because of increased costs as

well as an opportunity as the comple!ity will lead more people to rely on research data. The Indian "iewer will be split into multiple segments, because of $ 0 E %on-$ 0 homes, made comple! by "olatile subscribers who change their channels fre7uently. nd as if this were not enough, the number of $ 0 homes will be constantly changing as the implementation of $ 0 progresses.

The Conditional Access System - What it means for the Advertising Agencies
!))ortunities Targeted ad"ertising. Interacti"e ad"ertising.

The Conditional Access System - What it means for TV Set/ ard!are st"ff man"fact"rers
!))ortunities %ew opportunities E birth of new markets for 0T*s E related e7uipment in India. Influ! of foreign technology12oint "entures.

The Conditional Access System - What it means for a"dience #vie!er$


!))ortunities >ay only for what he "iews. Viewer:s choice plays the important roleL he can "iew the content of his choice. *enefit from the introduction of new ad"ertising options. Threats

ddition in"estment for the 0T* %uisance "alue of targeted ad"ertising

-&& T. The first to take the lead is Fee Telefilms, which aims to car"e a niche in the fiercely competiti"e TV channel subscription market, estimated at &s A,, crore. The information and broadcasting 3 I E *4 ministry has set a =uly '. deadline for implementation of $ 0 in the four metros. Fee will offer its bou7uet of channels at &s )) per month, in the post $onditional ccess 0ystem 3$ 04 regime. *esides, the company has offered incenti"es in the form of re"enue sharing out of its subscription income. Fee will share up to ), per cent of the total consumer price re"enues with @ultiple 0ystem 5perators 3@054 and cable operators. part from announcing the pricing structure, FeeGs wholly-owned subsidiary 0iticable %etwork, has recei"ed appro"al from IE* @inistry to launch <igital Head-end In The 0ky 3HIT04. HIT0 is a mode of deli"ering pay TV signals at low in"estments and would enable @05s and cable operators to recei"e all channels using a single dish antenna and with a single 0et Top *o! for users. <igital set top bo!es are priced at around &s D,,,, and analogue set top bo!es cost around &s +,,,,. 0iticable plans to commence HIT0 operations from @ay /,,+ and has signed an agreement with Indian 0pace &esearch 5rganisation 3I0&54 for using its satellites. 0iticable will operate HIT0 in its capacity as a @05.

Conclusion $ 0 will certainly benefit the go"ernment as it will lead to an increase in their monthly re"enue but will add to consumerGs monthly e!penditure. 5n one hand our go"ernment is talking about pro"iding the benefits of Information Technology to the weaker sections of society. *ut by implementing this policy they are robbing the poor of their right to information. TV is largely a medium for entertainment but it is also an important source of information. Cor instance slumdwellers are not in the habit of regularly reading the newspaper and tele"ision is the cheapest medium a"ailable to them. This bill will also pinch the middle-class. >resently $hembur residents are paying &s '), to &s /), for "iewing D, to ?, channels per month. @ost of the channels are unwanted but one does ha"e a wide choice # from cartoon network to sports and business news # this was unimaginable a decade ago. @ost women are addicted to the daily soaps that are aired on the "arious channels. @any families also begin their day by watching the aartis and the pra"achans that are telecast in the morning. ll these will come to an end once the $ 0 is implemented. $onsidering the immense popularity of these programmes I don:t think they will fall in the free channel category. lso a lot of subscribers are not satisfied with the ser"ices pro"ided by their cable operators. 5nce the $ 0 is implemented the cable charge will also go up, to co"er e!tra e!pense like maintenance and ta!. fter paying these charges can the consumer be assured that there will be any impro"ement in the ser"ices pro"ided by the cable operatorsK nother irritating fact that needs attention are the ad"ertisements.

In a +,-minute slot "iewers watch serials only for /+ minutes, the rest is meant for meaningless ad"ertisement. @any a times important scenes or songs are cut short to accommodate these ad"ertisements. lthough the option of picking a few select channels is attracti"e it will be 7uite e!pensi"e. To add to all these woes, there are many 7uestions that remain unanswered %o( e/)ensi+e (ill the 0asic ser+ices )ac*age 0e and ho( many channels (ill it include? What a0out those1 (hich are not? Who (ill )ay for the set-to) 0o/es? 2o most local ca0le o)erators ha+e the $s 3-45 la*h in+estment in infrastructure this ne( regime (ill re6uire?

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