From 'push' to 'pull' TV

BY Radhika sachdev| IN Media Business | 26/07/2012
The existing television set need not be changed to switch over to digital addressable cable TV.
N. Parameswaran tells RADHIKA SACHDEV that digitisation will spur demand for better quality content.
As India struggles to get digitisation of the metros under way, Radhika Sachdev interviews N. Parameswaran, Principal Adviser (Broadcasting & Cable Services) of the Telecom Regulatory Authority of India (TRAI) on the larger picture, including issues of conversion of terrestrial free to air broadcasting to the digital mode.  
 
Excerpts:
 
Q. Usually governments go in for TV digitisation to free up spectrum for telecom. But the Government of India has scheduled Doordarshan's digitisation for much later. Why?
 
A: You cannot compare the Indian scenario with other countries. DD is the only non-commercial terrestrial service and this sector has not been opened to private participation. However, we do have DD Direct, the digital direct-to-home (DTH) arm of the public broadcaster, with 20 million subscribers. Eighteen DD channels are mandated to be included in the 100 free-to-air (FTA) channels in the “plain vanilla” digital-cable subscription package that has been capped at Rs. 100/month. If anyone wants to add a few pay channels, there is another prescribed lower   benchmark of Rs. 150 per month, which should be affordable.  
 
 
Q. In other words, the switch from analog to digital should not have any impact on low income cable subscribers?
 
A: Look, it may not go down as much as some subscribers were paying (or rather not paying) for the analog service, but then, it definitely promises more value, in terms of the number of cable channels that they will now get to watch; better quality transmission; and access to all three services-–TV (broadcast), telecom (phone line), and internet (broadband)--on one cable connection.
 
TRAI has provided for Set Top Boxes (STB) on lease and rent that anybody regardless of his/her income can avail. We are encouraging local manufacturing of STBs – a few companies, including Videocon, have already set up units. The proposal to raise foreign direct investment (FDI) limit in the sector from 49% to 74% is under discussion. There has also been duty reduction from 7% to 4% over the past three years. 
 
The existing television set need not be changed to switch over to digital addressable cable TV. If a family can’t own a TV set, then certainly there is a problem. Any service, analog or digital is inaccessible for them, but these are really the best terms we could work out for them, while ensuring that they migrate to better technology that offers a whole plethora of services.
 
 
Q. Why isn’t the lease/rental scheme for STBs advertised? Urban poor fear they will have to pay an arm and leg for the digital cable service.  
 
A: I don’t know where this misinformation is coming from, but you are right; we need to clear these doubts and campaign more aggressively in a language that demystifies the drive for the layman. It’s a good suggestion; we will be rolling out those campaigns soon. 
 
Q. What will you do to pacify the local cable operator (LCO)? He is also worried that he will lose out on his old business?
 
A: I can’t deny that the cost of acquiring new customers may be higher for the local cable operator, but in the long run, I can guarantee that many of these same LCOs are going to emerge as fixed-line operators. That’s how it happened in the US. Some of their cable operators are now their biggest broadband providers. Something similar may happen in India a few years down the line.
 
Q. Where is the maximum resistance coming from? Is it from the LCOs or from the consumer?
 
A: From both, and it’s not surprising, because, as humans, we would always be resistant to change. Remember the hullaballoo over “computerization” two decades ago and the fear psychosis it kicked up in the government staff? They felt there would be mass retrenchments as a consequence. Today, the same staff demands a terminal at every desk. Likewise, there may be resistance as the basic business model is about to change in the cable industry, but ultimately, with the capacity constraint gone, they would all benefit from the transition. The consumer, of course, would benefit the most, as it would make the LCOs, and the MSOs (Multi-System Operator) more responsive to their needs for better content and service.  
  
 
Q. How much licence fee is the government hoping to rake in from the drive? 
 
A: Absolutely none. The licensing scenario does not change with digitisation. As before, MSOs will be registered by the Ministry of Information & Broadcasting (MIB) and LCOs by post offices. For the government, the additional revenue will come from better realization of entertainment and service tax.  
 
Q. Do you think three months is a realistic time-frame for cable digitization in the four metros?
 
A: I think it is; if we have the buy-in of all stakeholders, it can be achieved.
 
Q. Will digitization put an end to the carriage fee?
 
A: It may not end the practice, but it will certainly make it less relevant. Under digital addressable system (DAS), MSOs would be required to file their carriage fees with us. In analog scenario, channels had to block prime space with carriage fee. Under the DAS regime, there are no capacity constraints. However, if there is a channel that is so unpopular that nobody is subscribing to it, the broadcaster may for a while negotiate a carriage fee (and make a declaration to TRAI) but if, even after six months, it remains a channel that nobody likes to watch, it would get delisted from the channel bouquet. In any case, why would a dud channel stay in the business for so long? It would automatically get knocked out of the rat race.   
 
Q. What is TRAI's new proposed revenue-sharing model in the DAS regime?
 
A: DAS is a very transparent system with a computerized subscriber measurement system. The revenue-sharing is based on mutual negotiations. This is a B2B transaction. If and when mutual negotiations fail, TRAI has prescribed a revenue share of 55:45 (MSO:LCO) for FTA channels and 65:35 (MSO:LCO) for pay channels.
 
Q. Since MSOs don't enter into any service-level agreement (SLA) with LCOs, they often trade their stock with an interested MSO, even if this means changing four STBs in four months and losing a portion of their subscriber base in the interim. Can viewing card “portability” be an answer to this problem? 
 
A: This won’t happen under the DAS regime. MSOs would have to enter into proper agreements with broadcasters and LCOs. Cable industry will now be as clean as the DTH industry. The service portability that you refer to is being addressed through commercial inter-portability in the STB rental agreements. If the box is on rent, the subscriber is free to change his service provider if he is unhappy with the existing one. Since he hasn’t invested anything in the STB, the decision would be simple and straightforward.  
 
Q. There are complaints that the STBs being supplied are of extremely inferior quality. Do you accept that charge?
 
A: Again, I have no clue where is this one coming from. There are no quality issues with STBs used for DTH. Why should there be any doubts about these STBs? The former conforms to globally acceptable DVB-S norms and digital cable STBs conform to DVB-C norms. Technically both are at a par. Are you unhappy with your DTH box? Then why would you harbour any doubts over your cable STB?
 
Q. What market share can DTH operators gain in this transition?
 
A: I don’t think anybody is going to eat into anyone’s share. The digital pie is getting bigger and the Indian market is so huge that there is space for all services to co-exist.
 
Q. On a socio-political plane, will this throw up a clear picture of our media consumption habits? How will digitisation impact content production?  
 

A: Have you noticed a sudden spurt in channels, lately? Digitisation will decidedly spur demand for new channels and better quality content. Earlier, the market was run on the push factor: whatever the broadcasters were producing got pushed into analog homes and they had to accept it. Under the DAS regime, the pull factor will begin to operate. The subscriber will propose and the broadcaster will have to dispose, or get phased out of the market. Competition will intensify, and consumer will be the king.

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