What will digitization achieve?

BY Padmaja Shaw| IN Media Business | 26/04/2012

The digitization deadline for cable is nearing. Big changes are anticipated in the television market. But, is the cable industry setting the roadmap for future or consolidating its past strategies? Is tweaking technology going to be enough to regulate the industry?

Let’s look at the cable scene in Hyderabad as a microcosm of the all-India market. There are two major MSOs (Multi-System Operators): Hathway and DigiCable, in Hyderabad. The cable business has always operated as a monopoly in local areas. Wherever one MSO is dominant, the other players are kept out of the area. There are street wars of stealing each other’s equipment and cutting each other’s lines that are practised to ensure that only one player operates in a given area of the city. Currently, the tussle appears to be between the two major players in most areas of the city. DigiCable, with about 25% of the market and growing, is believed to be under the control of the Andhra Pradesh Congress Committee chief, Botsa Satyanarayana. Several politicians such as Botsa (Hyderabad, Vijayanagaram and other cities) and Ambati Rambabu (Guntur and other cities) have entered the cable market with DigiCable franchises. Hathway controls the rest of the market.

Of the 116 million cable and satellite homes in India, there appear to be just about 38 million direct-to-home (DTH) subscribers. The rest of them are cable subscribers, mostly in analog, non-addressable mode. However, there is a growing trend of rural subscribers going for DTH connections.

Unlike DTH, the LCOs (local cable operators), who take the signal from MSOs and distribute in local areas, do not send out a signal of uniform quality to all the consumers in an area. If some consumers get full signal strength for all the 200 or so channels, some get about 30 to 60 channels of watchable quality (perhaps, supplied to low-income or low-paying localities). This is a technology issue. Ironically, the unwillingness of the cable service provider to spend on technology to provide uniform quality signal to all subscribers is also enabling them to collect huge carrier fees from channels in the scramble for prime-band placement. The problem of carrier fee arises as broadcast channels want to be placed on prime band and therefore can be arm-twisted to pay hefty amounts to be placed among the first 30 channels of the bandwidth.

In fact, senior executives of the two major channels have asserted that it is placement of the channels that is important, quality of content is a matter of secondary concern! Especially in TAM (metres for measuring viewership) areas, some of the channels are rumoured to pay as much as a crore of rupees by way of unrecorded money to the providers to ensure prime placement. A senior executive of the channel also explained that this was one of the reasons for unethical practices such as giving 10 minute advertising slots to rudraksha and lucky stone vendors and some forms of paid news where half hour current affairs slots are sold.

The MSOs, in turn, wield complete control over a larger area with LCOs taking signal from them and redistributing it. The MSOs also exercise monopoly power over the consumers and the channels as they control the placement of channels piped to the local operators. The ability of the MSOs to control which channels are provided and which ones blocked seriously affects the consumers’ right to access the channels that they wish to see. While industry watchers admit that blocking of channels is not widespread, there have been instances when the owner of an MSO blocked a channel that was airing negative stories about his wife who was contesting an election in north coastal Andhra Pradesh and another MSO in a central coastal district blocking a channel for airing negative stories about its owners. This is possible because there is no legislation to prevent monopoly control of a single MSO over local markets that makes censorship by denial of access to channels possible. If multiple rival MSOs operate in a single area, such information control can be reduced.

In parts of old Hyderabad, several new players are emerging. According to reports, there are some 10 cable channels in just the old city. Prominent among them are 4TV, Ruby TV, Jai Sriram TV. One of the channels is owned but Majlis MLA and another owned by a corporator who has bigger political ambitions. Jagruti TV is owned by G Pulla Reddy’s family, which runs many educational institutions apart from its original mithai business and has been allied to Vishwa Hindu Parishad. Several of the channels also run their own highly localised news services. The nature of coverage of events by some of the channels during the recent communal trouble in old city was criticised by several observers.

One reason for the inability of the governments to change the ground rules for cable operations appear to be the ownership of the business, which is in the hands of politicians who may also be doubling up as liquor barons or right-wing toughies. It is one thing to own a channel and quite another to control access to a whole lot of channels across a particular pocket of a city. In an environment of political and communal muscle, even if the ownership of MSOs cannot be regulated, is it not essential to prevent such monopoly conditions from existing?

The manner in which the cable industry is working shows that interests of ordinary consumers of television programmes is nowhere in the reckoning. The channels that are being bled by the bottlenecks created in distribution purely for the political/economic benefit of a few may benefit from digitization. But it is not clear how digitization is expected to solve the problem of local monopoly control without a set of specific ground rules that mandate more players in each market. Digitization certainly improves quality of transmission. It will make the connections addressable, eliminate prime band as a tool for extortion, earn the government taxes, but the monopoly power in the supply of channels, it appears, will be beset with the same problems as before, unless it is opened up for more competitive environment that ensures diversity and choice for the consumers.