New opportunities for India’s satellite & cable markets

MUMBAI: During two days of meetings in New Delhi hosted by CASBAA, new light was shed on India’s fast moving pay-TV and communications industries.

The meetings, held on 17 – 18 March, were attended by CASBAA members, government officials, selected industry executives with contributions from Ministry of Information & Broadcasting (MIB) secretary Asha Swarup, Zee Network head and Indian Broadcasting Foundation president Jawahar Goel, and Telecom Regulatory Authority of India advisor (Broadcast & Cable) RN Choubey.

The 200 participants debated the findings of CASBAA’s “India Digital Vision” report, which outlines regulatory issues holding back the further development of India’s pay-TV and satellite markets, including the deployment of digital cable and IPTV networks and the lack of improved ARPU for DTH and cable services.

In the CASBAA study, which benchmarks the regulatory effectiveness and sector value of 14 Asia Pacific countries, India ranks just above lowest-ranked territory, China. India’s regulatory obstacles have kept its 120 million TV households as an "underperforming pay TV market," says CASBAA.

Consultancy PricewaterhouseCoopers, meanwhile, says the Indian television market will grow at about 18 per cent a year through 2015.

"However, we reckon this figure could easily rise much higher if regulations are relaxed. Industry estimates show that investment of at least US$15 billion is required for Indian cable TV to upgrade to digital and the only way to attract that level of investment is through enlightened regulation," said CASBAA deputy CEO John Medeiros.

Indeed, according to CASBAA, if the Indian government does not adopt a new "digital vision," the projected digital TV penetration growth rate of about 6 per cent will pale relative to competing economies such as China’s, where 35 per cent of Chinese households could be watching digital TV by 2015.

“Without regulatory change, this cannot happen in India, which must adopt a lighter regulatory touch, if we are to see genuine growth," said Medeiros.

Thus CASBAA called for the administration to relax its freeze on pay TV rates, ceilings for channel pricing and the "must-provide" rule specifying that all channels have to be available to any pay service.

"This is forcing content providers to cater to mass audiences at the expense of potentially dynamic niche markets. Digitization needs the interest of significant domestic investors even more than foreign investment. But with current restrictive regulations, few players of any kind are attracted towards digital and broadband cable," said CASBAA CEO Simon Twiston Davies.

Meanwhile, according to Swarup, who keynoted the second day of CASBAA meetings, the Government of India is considering the rationalization of license fees for DTH platforms and examining a reduction of taxes on DTH platforms at a national level, which it will discuss the issue with state governments.

Swarup added that a Rs 5 per month price cap on pay-TV channels for consumers is not a permanent position and there could be a “sunset year” for such regulation, possibly before 2011. No changes are proposed in a 26 per cent foreign investment cap on news channels, with a 49 per cent foreign investment cap for cable TV operators.

However, on an upbeat note Swarup added that the government is considering upping total foreign investment levels to 74 per cent in sectors like DTH, teleports and satellite radio to bring them to par with the telecoms sector.

Meanwhile, according to Swarup, a recommendation from TRAI had been rejected by the government. As things stand, Headend In The Sky (HITS) services will not be permitted to uplink from overseas. “This has been done from a national security perspective,” said Swarup.

Swarup also added that the HITS policy could be amended if technological solutions can be found to address security concerns while up-linking from abroad.

Without providing significant detail, Swarup also said the government was worried about pay-TV piracy and Quality of Service for pay-TV, adding that the multi-system operators (MSOs) have been told to solve billing problems.

Swarup finally noted that the national government expected Delhi to be digitized by 2010, followed by all other areas at the latest by 2017.  These projections were in line with TRAI’s recommendations on digitization and have been continuously pushed by the Planning Commission, a government think-tank on economic policy.

During closing remarks to the CASBAA meetings, Choubey of TRAI admitted that regulation for the cable TV sector could appear to be "extremely heavy-handed", but said it is important for someone to look out for the consumer. He said the regulator is actually looking at "deregulating the environment at a date not far off".

Choubey made no further comment, beyond noting that TRAI has informed broadcasters that they must make their prices competitive to DTH operators. “We have found that prices offered to DTH players by the broadcasters are much higher than those given to cable operators. We have told them that they must deliver their content at competitive prices to DTH players.”

In the meantime, Choubey added, "We have a situation where 6,000 MSOs tie up with 60,000 Last Mile Cable Operators (LMCOs) across the country, resulting in a massively fragmented market, where the LMCO has a complete monopoly. This is not the case with the countries to which India has been compared.”

Earlier, Goel noted that India’s regulators were trying hard to improve the industry climate. TDSAT (the Telecoms Dispute Settlement and Appellate Tribunal) was doing a “tremendous job” when handling inter-industry disputes and TRAI was giving careful thought to structural issues.

Unfortunately, TRAI’s “limited role” meant that on many issues it could only make recommendations to the government, which Goel urged to take a more pro-active role.

“Priority issues of concern to Indian broadcasters include piracy, the high levels of entertainment tax imposed by some states and the continued prevalence of massively understated declaration levels,” said Goel.

At the same time, there would soon be additional challenges, he said, including the extension of CAS systems, continued demands for carriage fees caused by a lack of “shelf space” and the introduction of high-definition broadcasting.

During a “Q&A” discussion, participants called for greater efforts to establish a level playing field between DTH and cable operators, and sought a unified approach to the government by industry players.

Indusind Media’s Ravi Mansukhani said that as long as cable remained analogue and susceptible to under-declaration, DTH operators could never sustain price competition; the only hope for a balanced market and a level playing field is for cable TV to “go digital.”

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