NEW DELHI: Multi-system operators taking up digitisation with addressability will be permitted 74 per cent foreign direct investment as part of a move to bring about uniformity in FDI in broadcasting, Parliament was informed today.

Even as the views of different Ministries are awaited on the proposal to increase FDI in the media, Minister of State for Information and Broadcasting C M Jatua said his Ministry had worked out with the Telecom Regulatory Authority of India certain terms and conditions to take care of security related concerns.

The Department of Industrial Policy and Promotion cleared the proposal for uniform Foreign Direct Investment in broadcast carriage services providers, including cable TV and direct-to-home (DTH) around October last year.

The DIPP, which functions under the Industry Ministry, then circulated a draft cabinet note which also includes raising overseas investments limits according to suggestions given by Trai.

The note has been sent to different ministries, including Home Affairs, Information and Broadcasting, Law, Finance, and Department of Telecommunications. The note will have to be approved by these Ministries before it can be sent to the cabinet.

It is learnt that services sector received FDI worth $2.88 billion between April and August 2011.

The draft note wants the FDI limits in the broadcast carriage services providers such as cable TV, DTH, Headend-In-The-Sky (HITS), IPTV, mobile TV and teleport services to be made uniform at 74 per cent. The proposal includes 49 per cent FDI for local cable operators and 26 per cent for news and current affairs channels.

Under the proposal, there is also provision for putting 49 per cent FDI (out of the proposed 74 per cent) on automatic route. But there is no automatic route for content services like uplinking, downlinking and FM radio, Jatua said.

At present, FM radio and uplinking of news TV channels are allowed 26 per cent; cable TV, DTH and teleports are permitted 49 per cent; while it is 74 per cent in case of HITS. Uplinking of non-news and downlinking are both allowed 100 per cent FDI. For private FM radio, the FDI limit was raised from 20 per cent to 26 per cent last year.

In June 2010, Trai had made suggestions to raise FDI for broadcast carriage services like DTH to 74 per cent.

The move is expected to help the media which has been clamouring for more foreign investment, and for several foreign investors including expatriate Indians.

Source: Indiantelevision.com

The government has proposed a uniform Foreign Direct Investment cap of 74% across the digital cable TV sector.

“We are definitely looking at having a uniform FDI cap of 74% for the digital cable TV sector which at present has different caps. The cap for non-digital cable TV would continue at 49%,” Uday Kumar Varma, secretary, information and broadcasting ministry, told HT.

Explaining the rationale behind the move, Varma said: “Digitalisation would require huge investment. With raised FDI limits we are looking at greater capital flows into the sector.”

India is targeting complete digitalisation by 31 December, 2014 with the plan aiming at a transition from the prevalent analog system to a digital one is being seen as a game-changer.

Cable TV industry stakeholders had expressed apprehension over switching over to digital technologies because of the huge costs involved.

The enhanced cap would apply to the distribution and various carriage platforms like DTH, IPTV, mobile TV, HITS and cable companies.

The government ‘s proposal is now in the final process by the Department of Industrial Policy and Promotion (DIPP).

Sources said that 49% of the proposed 74% will be put under automatic route with the remaining to be routed through the Foreign Investment Promotion Board (FIPB).

At present, the current caps for FDI differ across platforms. FDI limit for mobile TV, HITS and IPTV is 74% while for cable distribution companies it is 49%.

Digitalisation, aiming at a transition from the prevalent analog system to a digital one, is being seen as a veritable game-changer. Broadcasters will increase their subscription revenues besides ushering in a regime of clearer subscription figures.

Consumers will also be able to select channels of their choice with digital broadcasts having sharper pictures, better sound quality and a much bigger number of channels.

The stage has been set for the dawn of the digital era in Indian broadcasting. Earlier this month, Parliament cleared a Bill to amend the Cable Television Networks (Regulation) Act for ushering in digitization. Cable digitization will be implemented in phases and will be completed by December 2014.

This is certainly a moment of triumph for broadcasters who had been lobbying with the government to allow the cable industry to convert from analog to digital. In the digital addressable systems (DAS), service providers can offer more options to consumers, who will be able to select the channels of their choice.

We already have new addressable digital TV platforms such as direct-to-home (DTH) and Internet protocol television (IPTV), but this new drive will pave the way for bringing about digitization in the cable television sector. The cable industry has grown from 400,000 cable-linked homes in January 1992 to an estimated 94 million in 2011. The total number of TV households in India is estimated to be around 147 million.

It is hoped that with digitization, there will be more transparency in the business model, resulting in increased revenue. Also, the DAS makes possible for service providers to tap additional business opportunities in the form of value-added and interactive services.

It will enable the provision of broadband and triple-play (voice, video and data) services through the network. For the next breakthrough in Indian broadcasting, this was a necessary upgrade.

In recent times, the media in India has been criticized for poor standards of content and unchecked growth. Union minister of information and broadcasting Ambika Soni has been fielding numerous attacks on the media from both within and outside Parliament. Unlike Kapil Sibal, the Union minister of communications and information technology, who wants to control content on the Internet, Soni realized quite early on that the issue needs to be addressed.

By making digitization a reality, Soni’s ministry has been able to appease broadcasters and also bring in more addressability to this sector.

This is, however, an enormous task and also a complicated endeavour. The nodal monitoring and execution mechanism is yet to be specified. The sheer scale and roll-out of this initiative needs large-scale planning and coordination among all stakeholders, training and orientation to more than 200,000 cable operators in the country, and also communicating to consumers what going digital means for them in terms of choice, access and quality.

There are a number of unresolved issues and also challenges that are yet to be addressed. The Telecom Regulatory Authority of India (Trai), in a recently released consultation paper, lists issues dealing with tariffs, interconnection and quality of service. Similarly, the cable industry has flagged its own concerns on revenue sharing and the availability of set-top boxes, among issues concerning options available to consumers. Issues are also being raised to facilitate financial concessions and tax sops for meeting the 2014 deadline.

Besides, the larger issue of the role of broadcasting remains unaddressed. This is important as broadcasting utilizes a public resource—the airwaves. It clearly has a larger mandate than just contributing to the economy of the country.

So what role will broadcasting play in a developing country like ours is an important question that needs to be answered. The vision for this sector is also critical because of its crucial role as the fourth pillar of democracy.

The second issue needing attention is the regulator for this sector.

The long-overdue proposal to have an independent authority to oversee the broadcasting sector—one that has been under consideration on the request of Parliament, the Supreme Court and various civil society groups for nearly two decades now—must be revived. We have no independent body looking into content implications for our society.

Linked to these questions are critical issues that digitization will throw up, for example, issues of cross-media ownership, public service broadcasting and consumer redressal. The convergence opportunity will further amplify such dormant issues—for instance, the ambiguity in ownership rules has provided a gateway for telecom companies into the broadcasting sector. The resulting conflict of interest, and issues related to content standards, platforms or even competition laws, will be tricky to resolve.

Until now, the ministry of information and broadcasting and Trai have been taking care of issues in this sector. Not addressing crucial issues confronting this sector and the absence of an independent authority to oversee it could force digitization off track.

P.N. Vasanti is director of New Delhi-based multidisciplinary research organization Centre for Media Studies (CMS). She also heads the CMS Academy of Communication and Convergence Studies.

Source: Livemint.com

New Delhi: With the ministry of finance giving its nod, the decks have been cleared for the implementation of a simplified, two-tier policy on foreign direct investment (FDI) cap in media.

Now, a 74% uniform cap for non-news media (carriage services) and a 26% cap for news media (content) shall apply. Also, up to 49% FDI in the carriage service providers (like multi-system operators or MSOs, DTH broadcasters, headend-in-the sky or HITS operators, and providers of mobile TV, satellite teleport and IPTV services) will be automatically allowed. But any FDI above 49% will need Foreign Investment Promotion Board’s nod. FE was the first to report this in February.

So far, the FDI caps in media range from 26% to 100% with variable caps of 49% to 74% for carriage service providers. Also, currently there are FDI caps within the permissible foreign investment norms for cable and DTH companies.

The inter-ministerial consultation process on this proposal concluded last week and now the department of industrial policy and promotion (DIPP), the nodal body for FDI caps across sectors, expected to present the matter to the Cabinet shortly, government sources told FE.

“The finance ministry supports the DIPP proposal for allowing 74% FDI in broadcast carriage services and 26% in content services,” a senior DIPP official said.

The move is aimed at getting the required funding. According to the information and broadcasting ministry, DTH, IPTV, mobile TV, HITS and teleport require substantial infrastructure augmentation. “Foreign investment needs to be encouraged to fill the investment gap for infrastructure being built up. Further, in view of convergence of technologies, broadcast carriage services need to be treated at par with the telecom sector where 74% foreign investment is permissible with the provision that foreign investment beyond 49% would require FIPB approval,” the I&B ministry is said to have told DIPP.

The move is in line with the proposed mandatory digitisation of 100-million-plus analogue cable homes in the country. According to a recent report by Media Partners Asia, digitisation will require around $6 billion worth of investment with $300 million alone required to meet the capex and other financial needs for digitisation of 3.5 million analogue cable homes in the four metros.

The hike in FDI cap will be crucial for the cash-strapped six-player DTH market, which is scouting for funds to meet respective expansion needs. Currently, the foreign investment cap for DTH is 49% but within that, FDI cannot be more than 20%. A similar cap is also applicable for MSOs and cable operators. However, there is no FDI policy for mobile TV. Now, all these platforms will attract up to 74% foreign investments.

However, for private FM radio, the DIPP has supported a 26% foreign investment cap for the third-phase expansion where news and current affairs content will be allowed. The FM-III policy envisages the setting up of 839 FM stations across 280 towns. For non-news content services like general entertainment, movies and other such genres, the foreign investment cap will remain untouched at 100% with no FIPB approval, sources said.

Source: The Financial Express

Analogue cable will soon become history in India. The government has approved full digitization of cable services. Although the implementation will be in a phased manner, by 2012, all metro cities will be completely digitized. This will be followed by the cities with a population of more than 1 m which will be covered by March 2013. By September 2014 all urban areas would be covered and by the end of year 2014, the entire country will be fully digitized. This digitization will bring in a whole new dynamic environment for companies in the TV media space.

Analogue cable will have to be completely abandoned. Thus, there will be three options available for digitization. 1. Digital cable 2. Direct to Home services 3. Internet Protocol Television (IPTV).

Digital Cable- Digital cable services are provided by cable operators themselves using set top boxes. The companies that provide these services are segmented into the Local Cable Operators and Multi System Operators. Local cable operators normally operate independently. Multi system operators like Hathway Cable and Den Networks are associated with a number of LCOs.

Dish TV is the biggest DTH provider in India. Other players like Airtel, Videocon, Sun TV, Tata Sky and Reliance Big TV (Reliance Communications) are also vying for increasing pie of the direct to home segment.

IPTV is the least preferred form of digitization. MTNL provides IPTV services in India.

Although the biggest beneficiary of digitization among these would most likely be the DTH companies and MSOs, all the companies that provide digital services are likely to be positively impacted. Their revenues are expected to go up over the next couple of years till India is completely digitized.

Win-win for all

Digitization will not only benefit the distributors but the industry at large. Cable industry in India is plagued with the problems of under reporting of subscription numbers. The local cable operators more often than not under report actual subscription numbers to broadcasters who end up losing revenue because of this. With digitization, things will become transparent and the broadcasters (Zee and Sun TV are the broadcasters) will receive actual subscription revenues from cable operators. The cable service providers will also be able to provide other value added services like movie on demand, internet, high definition channels etc. It will also help in organizing the existing fragmented industry. This would also facilitate investment into the TV media space.

Why are Local Cable Operators (LCOs) opposing?

A few LCOs are opposing this stating that it would imply a financial burden for them. Digitization would require transmitters, encoders, decoders etc which require huge investments. As per the local operators, most of these equipments will have to be imported as these are not available in India. Also, the LCOs had near monopoly in their regions and with digitization they fear loss of revenues.

To conclude

While there is no denying the fact that the growth opportunities for media companies in the DTH space are immense, the returns will not be immediate. Further competition is intense and digitization requires huge investment. Thus, one should look at investing in companies that have strong balance sheets and can manage to finance their growth needs.

Source: Equitymaster.com

The IPTV (Internet Protocol Television) service offered by BSNL is being wound up following poor subscriber offtake.

BSNL was providing IPTV services under a partnership with MyWay, a digital entertainment enterprise owned by Smart TV Group.

The group had entered into long-term contracts with MTNL and BSNL for providing co-branded interactive video services to customers in 54 cities across India.In Tamil Nadu, the services were on offer in Chennai and select towns such as Coimbatore, Tiruchi, Madurai and Puducherry.

When contacted, a MyWay spokesman confirmed that the group’s Indian operations were being discontinued as they had turned highly unviable.

Company representatives have started collecting back the Set Top Boxes issued to customers across Chennai even though no official communication about the decision to suspend operations has been conveyed to subscribers. Neither has a notice been posted on MyWay’s portal on the web.

Chennai Telephones sources said BSNL’s corporate office in Delhi was taking up with MyWay its failure to follow the due process in terminating the service.

The abruptness of the decision has also taken the few loyal fans of IPTV by surprise. For them, IPTV’s primary attraction had been the movie-on-demand feature that allowed users to download movies onto the computer and watch them at a convenient time later. Users could also pre-set the record facility for a favourite programme and watch it later even pausing or rewinding as they would with a DVD movie. In fact, users could also pause or rewind a movie or a programme.

BSNL had launched IPTV services on a commercial basis in Chennai in October 2009 after a three-month trial period by offering about 140 popular channels free of cost and rolling out various packages (inclusive of pay channels) in the Rs.100-to-Rs.300 pricing band.

However, the subscriber base was only about 3,000 in the State. An official at MyWay put the number of active subscriptions much fewer – at around 500.

IPTV, which delivers video or TV broadcasts over the broadband network instead of the conventional method of tapping signals over the cable lines (Cable Operator) or via satellite (DTH), was touted to provide a superior customer experience.

It was initially positioned to compete with the DTH services, especially by virtue of the movie-on-demand facility, higher degree of interactivity, e-mail, chat and SMS features on television.

Source: The Hindu

Till now it has been a no-brainer what you need to have for home entertainment. On the one hand, there is the Direct-to-home (DTH) service ensuring sharp picture and voice quality, giving you the power to choose the channels you want and even offering interactive elements such as video-on-demand and gaming. On the other hand, you have the analogue cable television with poor reception and a whole bundle of channels you never want but have to pay for.

Indeed, there is another technology called IPTV where your broadband Internet service provider allows you to access television channels. But then, they never hard-sell and a large section of consumers don’t even know what it is all about.

But all that is about to change. Well, at least a part of it.

With the cable television digitisation ordinance for amending Section 4A of the Cable Network (Regulation) Act getting approved by the President, it will be soon ‘bye bye analogue cable TV.’

As far as the industry is concerned, the digitisation process will make the local cable operators toe the line instead of the current practice of under-declaring the number of subscribers and thus profiting at the broadcasters’ expense. It will also lead (and is already leading) to consolidation in the industry as small-bit cable operators may not have the finance to purchase the equipment required to beam digital cable signals. In other words, it is not only another choice for Indian consumers, but also leads to the cable operators becoming more of an organised business. Already multi-system operators (MSOs) – large cable operators such as DEN Networks and Hathway – have brought many of the smaller operators under their fold, thereby leading to business consolidation. A more organised cable industry means more tax collections for the government too, which currently leaks out as no one can make out what the small cable operator in a distant town is earning.

The digitisation process will be carried out in four phases, starting with the digitisation of four key metros – Mumbai, Delhi, Kolkata and Chennai – by March 2012. The rest of the country will be covered by December 31, 2014. This means in five months from now, you would have some form of set-top box (STB) sitting along with your television for you to access channels as the existing analogue cable networks will be banned starting with the top four metro cities. This would be either an STB linked to the dish antenna of a DTH operator or an STB linked to existing cable wires that comes to your house.

If you already have a DTH service, it may not interest you much. But there are millions who still have the age-old cable network at home and they need to decide soon whether to switch to DTH or upgrade to digital cable. So let us have a close look at both the options.

Direct-to-home (DTH) Wins Hearts?

DTH service provides ensure superior picture quality in the first place and with the introduction of high definition (HD) channels, viewers have a lot to gain from this service. Plus, you have the freedom to select the channels you want to watch and pay only for those. For instance, a typical North Indian may not like to subscribe to watch regional channels from the South (because of the language barrier) and similarly a South Indian may not be keen on subscribing to Hindi language channels.

However, there is more to it, in terms of consumer freedom. As a subscriber, you have complete control over your profile and you can easily exercise the power of your choice. In other words, you can add more channels to your list (for a fee, of course), modify them or even delete them from the list without calling up the operator every time. Additionally, the interactive features provided by DTH operators in the form of video-on-demand, games, quizzes, puzzles, paid shows, etc., are also a big attraction. All these make DTH a formidable opponent of the existing cable TV.

Salil Kapoor, chief operating officer (COO) at Dish TV India Ltd. believes that although the digitisation process will definitely help improve the quality of content offered by MSOs and local cable operators, DTH operators already have a substantial lead over them in that department. Add to the fact that the back end work required on the part of the cable operators for implementing the process is huge and will take a lot of time.

“DTH operators have a large customer base and are well established and positioned in the Indian market. In terms of services, we are already providing high definition (HD) channels to our viewers. We also offer additional services like a Job portal (in tie up with Monster.com) and a financial portal (in tie-up with ICICI bank),” said Kapoor.

Another advantage of DTH is that customers have the convenience of selecting their mode of payments. They have the option of buying a recharge coupon, getting a recharge done from a local dealer or they can simply make online payments. While in the case of cable operators, the payment mode is mostly limited to cash payments made to the operator directly. So in the case of DTH, the power of selecting the mode of payment rests in the hands of the consumers.

But the DTH service is not without its fair share of woes. Consumers often complain that the dish antennas frequently malfunction during the rainy season and consequently, the transmission suffers. Otherwise, too, those antennas cause a lot of headache as they have to be placed outside the houses/flats and that may not be an easy proposition. There are societies in Mumbai that do not allow members to take DTH connections as the antennas spoil the overall look of the buildings. Other metros are more lenient but the quality of transmission remains an issue when the weather is bad.

Then, there is the service issue that plagues all and sundry. Sometimes large DTH companies may take up to a week to fix a complaint you have lodged. Also, once the due date for the monthly renewal passes, DTH operators shut down the service until the payment is made. This means keeping a tab on the billing date and paying on time, every time, if you are not fond of TV blackouts.

There are presently seven DTH operators in the country including Dish TV, TataSky, Airtel Digital, BIG TV, Sun Direct, Videocon D2H and Doordarshan Direct Plus.

A Close Peek At Digital Cable TV

So what changes with digitisation? Unlike the traditional analogue TV, digital cable TV can actually beam similar superior picture quality provided by DTH operators. Moreover, it can also bring home the HD channels (just like DTH). Therefore, even in terms of premium picture quality, they happen to be equals.

Digital cable TV will also bring interactive elements. “We can provide all interactive services that a DTH operator offers. Moreover, you get to see local events like Satsang sessions or exhibitions or even festival coverage including Ganesh Chaturthi and Janmashtami in Mumbai,” said Ravi Singh, vice-president of Cable Operators & Distributors Association of Mumbai. “In addition, local operators can provide up to 1,000 channels if required but as of now, DTH operators are nowhere close to that number.” However, since the availability of channels depends on the amount of bandwidth the operator has, DTH operators can very well match that number.

Singh has also pointed out that local cable operators can provide Internet services and if you have a Smart TV, you can access the Net directly from your television set. But even if you don’t have one, you can still make use of the Net connection for your desktop or laptops. Since local cable operator can provide both (digital cable TV and Internet services), that will save consumers the trouble of getting a separate Internet connection.

According to Rajnish Dixit, general secretary and spokesperson of Bihar Cable Operators Association, digital cable TV definitely has the upper hand. “Local cable operators can also tie up with local retailers and offer additional facilities like shopping-via-television. For example, if a viewer in Patna wants to buy products from a local retail outlet (like Big Bazaar); he/she can view the retailer’s catalogue on TV and order the goods accordingly. The product/s will be delivered at the doorstep and the customer can pay cash on delivery (COD),” explained Dixit.

Also, those opting for DTH service are often plagued by the billing timeframe. Once the due date for monthly renewal passes, the service is automatically discontinued and it does take some and effort to get it back. But when it comes to local cable operators, viewers mostly pay as per their convenience (quite possible if you have a good rapport with your operator). But this practise can also lead to a number of defaulters which in turn affects the revenues of the operators.

As consumers are directly in touch with their cable operators, complaints are quickly dealt with and the problem of time lag is extremely rare. Finally, there is no need to install a dish antenna and your home can still retain the quaint charm, unspoilt by metal sticking out of balconies and rooftops.

Here’s a table comparing the two services:

Our Take

Although the deadline is set for March 2012, many of the local cable operators are already offering digital cable TV (in fact some consumers also have digital cable as the project had once started but failed a little less than a decade ago). A local cable operator in Malad (Mumbai) offers a set-top box (a necessity for digital cable TV) for Rs 1,100 plus a monthly membership charge of Rs 350. A total of 160 channels are available if you opt for the membership.

As of now, you don’t get that much-touted pay-for-only-what-you-want facility in this case, which essentially means viewers must subscribe to a minimum number of channels. But this is likely to change with digitisation and that would bring channel packages to digital cable, just like it is with DTH.

Although both services have their good and bad points, we reckon digital cable TV has the potential to overtake DTH in the long run, but we can only give a verdict once we have tested both the services first hand (after all, it finally boils down to the price and quality of service). Also, let us not forget that the digitisation process will require a lot of backend work (such as importing large quantities of set-top boxes and their distribution) on the part of local cable operators and one would have to wait and see how digital cable operators match up to DTH firms in terms of after-sales services.

Add to that the disheartening fact that the earlier attempts at digitisation (made by the government in 2002 and 2007) had failed, leaving the consumers disappointed. Let us just hope that it will be third time lucky and we will not fail to arrive this time.

Source: techcircle.vccircle.com

Sudhir Agarwal, CEO , WWIL, in an interview with ET Now talks about company’s overall condition and prospect. Excerpts:

ET Now: This is a good news for the industry as a whole, FDI in DTH being raised from 49% to 74%, give us a sense of what kind of an impact this could potentially have on WWIL?

Sudhir Agarwal: It is a very good and encouraging initiative from the government to raise the current FDI limit across platforms in our industry from 49% to 74% across DTH, IPTV, MSO platforms. As you would know, government recently announced an initiative to digitise the whole country and they came out with a sunset date of December 2014 when the entire nation would be digitised and that’s a huge announcement and industry game changing announcement as far as I am concerned. This would require a substantial amount of investment as well. My belief is the current announcement of raising the FDI would encourage a lot of foreign players who till now were kind of waiting and watching before investing into India because of the very nature of the business here, the distribution business was essentially very unstructured and analogue in nature. So this announcement coupled with the announcement, which happened a couple of weeks back for digitising the country would mean a lot for this industry going forward.

ET Now: Given that your FII limit is currently quite low around 4%, will this move? Will you look at more foreign institutional participation as well?

Sudhir Agarwal: I am sure and I am confident about it. You are right, current foreign investment into our company is low but with the announcement of digitisation, not only WWIL but companies across platforms would benefit. This would help us fructify our plans going forward.

ET Now: Earlier you had been saying that you are open to the idea of a strategic sale as well and getting in a strategic investor to raise capital for your company. What is your view right now? Do you maintain that position?

Sudhir Agarwal: We are open to foreign investors having a dialogue with us. We will examine proposals based on the exact norms that government comes out with, so we will see as we come to the bridge, we will cross the bridge when we reach it.

ET Now: How much of a capital do you think you would require to completely digitise your analogue cable business?

Sudhir Agarwal: If you ask me as an industry, the investment required would be quite substantial. In the next three years, my guess is the investment could range up to US$3 billion and that’s a huge amount. So across platforms in this industry for digitisation, the requirement would be anywhere between $2.5-3 billion.

Source: The Economic Times

NEW DELHI: The information and broadcasting ministry has proposed to increase foreign direct investment limit across media platforms — in direct-to home, internet protocol TV (IPTV), multi-system operators and FM radio — to bring in consistency, according to sources.

The FDI in DTH, IPTV and MSO is likely to be raised from 49% to 74%, while the investment in FM radio will be increased from 20% to 26%. The proposal based on broadcast regulator Trai’s recommendations has been sent to the department of industrial policy and promotion (DIPP) under the ministry of commerce.

Sources said that foreign investment up to 26% was allowed through the automatic route earlier but now any FDI above 26% will be allowed after it is approved by the foreign investment promotion board (FIPB). Investment cap of general entertainment channels (100%) and news and current affairs channels (26%) will remain the same. The I&B ministry has rejected Trai’s proposal to reduce FDI in GEC and in local cable operators.

Sources in the ministry said that DTH, IPTV, Mobile TV and HITS require substantial infrastructure augmentation, which needs huge investment. There was also need for convergence of technologies in the broadcast and telecom sector where 74% foreign investment is allowed.

Source: Business Standard

In a move that will ensure that the cost of cable channels will continue to remain affordable for consumers even after shifting from analogue to digital services, the Supreme Court last week ordered a new tariff formula for all digital addressable platforms.

The apex court has fixed 42 per cent of non-CAS tariffs as the new benchmark for all future commercial agreements between broadcasters, direct-to-home (DTH) firms and MSOs offering digital cable services. This formula will now replace the earlier tariff orders (35 per cent by Trai in July 2010 and 50 per cent by TDSAT in July 2006).

Simply put, this means that DTH, digital cable, and IPTV operators will only pay the broadcasters up to 42 per cent of the tariff fixed in the analogue cable market (non-addressable and un-regulated). This is important because the government has recently oulined December 31, 2014 as the cut-off date for shifting to digital and addressable cable services.

Experts said the new order will not have much impact on the DTH operators as most of them have signed long-term commercial deals with the broadcasters. However, this will help the MSOs get into agreements with broadcasters under a well-defined commercial formula.

The apex court gave the interim-order while hearing a plea of the Telecom Regulatory Authority of India (Trai). The broadcast regulator had gone to SC challenging a TDSAT judgement of December 2010 which had set aside its 35 per cent tariff order for DTH platform. The Trai’s 35 per cent tariff formula was opposed by most broadcasters.

A bench comprising justices RV Raveendran and AK Patnaik stayed the order of the Telecom Disputes Settlement & Appellate Tribunal (TDSAT), which had set aside Trai’s notification of July 21.

While most MSOs and DTH operators have welcomed the move, the new formula will impact the margins of broadcasters and DTH operators as they will realise lower revenue from digitally addressable homes, experts said.

“The court’s order has removed the tariff-hurdles in the path of digitalisation. As we move towards the complete digitalisation of the cable services, the 42 per cent tariff formula will help all stakeholders in coming years,” said Ashok Mansukhani, president, MSO Alliance, the apex body of leading Multi-Service Operators (MSO).

A top executive of a leading MSO firm said the 42 per cent tariff order will drastically reduce the litigations between broadcasters and cable distributing firms. “Also, there will be a five to six fold jump in the subscription declaration as a result of digitalisation and the clear tariff formula on digital platforms,” the MSO said.

The Shares of Dish TV tumbled as much as 6.5 per cent after the news of SC’s new tariff formula came out. At the close of trading hours on Monday, Dish TV’s stocks were down 2.49 per cent. In contrast, the scrips of MSOs like DEN (5.63 per cent), Hathways (9.87 per cent) and WWIL (4.44 per cent) saw upward movement.

Before the Trai’s 35 per cent tariff order proposal, all commercial deals between broadcasters and DTH operators materialised at 50 per cent of non-CAS rates (a formula given by a 2006 TDSAT judgement). However, in July last year, Trai, after consultation with the stakeholders, had came out with a new tariff order fixing the tariffs on DTH at 35 per cent of the non-CAS rates. This was challenged by most cable distribution firms and broadcasters. In December 2010, TDSAT set aside the Trai’s 35 per cent tariff order.

According to the earlier (50 per cent of non-CAS rates) formula, a channel costing Rs 50/subscriber in non-CAS areas (most of India) was to be priced upto Rs 25/subscriber on the DTH/digital cable platform (50 per cent formula). Now the same channel will can not be priced beyond Rs 21 (42 per cent formula as per SC’s interim order).

Source: Indian Express