A television viewer has no say in this world of shoddy cable television service rendered to him. Infact, the exponential and unregulated growth of the cable TV penetration in the Country has heightened the need for balancing the interests of all stakeholders involved. The sordid scenario of cable operators blacking out channels, whenever dissatisfied with the rate hikes effected by the broadcasters, with least concern for the hapless consumer has been played too often. Broadcasters accuse cable TV operators of under declaring their customer base while the latter charge TV channels with increasing their rates every now and then, especially before major sports events. The customer is at the receiving and from both. His pleas for the better services at reasonable rates so far went unheeded. The passing of the Conditional Access System by the Government has kindled hopes of a better deal in the future.
However, the passing of the Television Networks Amendment Bill 2002, which authorized the government to mandate installation of an addressable system for accessing pay channels-better known as Conditional Access System (CAS), has kindled hopes of consumer, which soon extinguished because of the lethargy of the Government in implementing the Act. However, the recent Delhi High Court judgment ordering the implementation of the Conditional Access System (CAS) with in four weeks in Mumbai, New Delhi and Kolkata, the consumer will now be able to watch all channels that he chooses to watch. This judgment has shaken woke the Government from its long slumber which in our perception could prove to be a better deal in the future.
The penetration Cable TV Business in Indian householdsThe Cable TV Business industry has evolved into a pyramidal structure with the broadcasters-Zee, Star, Sony at the top. Below the broadcasters are the multiple system providers (MSOs) who receive the signals beamed to them by the broadcasters and distribute them to their franchisees. At the retail level are the franchisees, the neighborhood cable operators-who distribute a bouquet of free and pay channels for an all-inclusive subscription to the end consumer.
This exponential and unregulated growth of the cable TV penetration in the Country has exposed the flaws in the current system. Some of the major flaws run as:
# The subscribers have practically no choice in selecting their channels or choosing their cable operators.
# The cable operators are accused under-reporting, deliberately documenting a much lower number of subscribers than they actually. Hence there is a consequent revenue loss for the \MSOs and the broadcasters as well as the Government.
# Inaccurate data has made the revenue sharing in a fair manner difficult. According to estimates the cable operators reports just a fifth of their subscribers list to the MSO.
The Cable Television Networks Amendment Bill 2002The Rajya Sabha has passed the Cable Television Networks Amendment Bill 2002. The Bill seeks to regulate cable operations and authorized the government to mandate installation of an addressable system for accessing pay channels-better known as Conditional Access System (CAS). The Bill had already been passed by the Lok Sabha.
# The Conditional Access System (CAS) comes into force on July 14.
# Cable operators would have to offer a minimum of 30 free-to-air television channels in the basic tier package and charge a fee of Rs 72.
# CAS would first be rolled out in the four metros of Delhi, Mumbai, Kolkata and Chennai.
# The basic tier must carry three channels of Doordarshan besides other genres such as entertainment, news, sports, children’s programme and music.
Highlights of the Amendment:
# The Amendment seeks to regulate the operation of cable television networks in the country so as to bring uniformity in their operations.
# The amendment empowers the Union Government to issue a notification making it obligatory for every cable operator to show any pay channel through an addressable system only. The addressable system is mandatory only for those subscribing to pay channels, and not for viewers opting for free-to-air channels.
# The Government will fix the maximum amount, which a cable operator may charge a subscriber for receiving free free-to-air channels included in the basic service tier. This could vary from stet to state and city-to-city.
# The amendments makes it mandatory for every cable operator to submit to the central Government information on the number of total subscribers, subscription rates, and the number of subscribers receiving programmers transmitted in the basic service tier or particular programme/set of programmers transmitted on the pay channel.
The latest Delhi High Court judgment brings to the forefront the debate of voluntary or mandatory adoption of the Conditional Access System (CAS) in India? But, before analyzing whether this technology should be mandated, it is necessary to lay down a brief outline of the working of this system.
What Is Conditional Access System?Conditional Access System (CAS) is a technology that enables television signals to be accessed by consumers through an addressable system hereby allowing the consumer to choose channels that she wishes to watch and pay for.
With the implementation of CAS, all pay channels will be routed through a set top box, which will have individual or bouquet pricing. Free-to-air channels will be delivered as a part of the basic cable TV fee, for which no STB is required. More than 65 FTA channels will be provided at a basic cable TV fee, which are Rs. 72 plus entertainment taxes. With a fixed basic service charge, consumers will then have the option to choose between different cable distribution channels, or choose between different cable distribution channels, or bouquets. The best-case scenario, from the consumer point of view, he would be paying roughly the same amount, say Rs. 200 per month now, but fewer channels of his choice with better service and hopefully- no blackouts.
Working of System - CAS is composed of a combination of scrambling and encryption technology that is designed to prevent unauthorized reception. Encryption is the process of protecting the secret keys that are transmitted with a scrambled signal that, in turn, enable the descrambler to work. The scrambler key, called the control word must, of course, be sent to the receiver in an encrypted form as an entitlement control message (ECM). The Conditional Access subsystem in the receiver will then decrypt the control word only when authorized to do so. The authority to decrypt is sent to the receiver in the form of an entitlement management message or EMM.
The layered approach is fundamental to all proprietary CA systems in use today. Typically the control word is changed at intervals of 10 seconds. The entitlement control message, sometimes also referred to as the multi-session key, is also changed, typically at monthly intervals to avoid hackers gaining access. Thus both mechanisms assure the continuous security of the CA system.
The Question of Voluntary V. Mandatory Adoption of CAS?To analyze whether this technology should be mandated by the government or should be left open to the market players to be voluntarily opted for, let us start with highlighting the key problems that are required addressed for the effective implementation of the CAS.
1. Voluntary Adoption of CAS is difficult
The cable operators/ MSOs will need a set of equipment through which such television signals can be monitored for each subscriber to account for appropriate collection from them and subsequent payments to broadcasters. The cable operators/MSOs will also need to procure set-up boxes (STB) to be able to provide them to consumers for a defined price. This will require large investments from the cable operators, which the small players may not be able to afford. The consumers will need to procure a STB from their cable operator if they choose to watch pay channels that they watch today.
2. Affordability for the Average Consumer
# The consumers will have to pay a much higher fee for receiving pay channels and its choice will be restricted to only those channels made available by the cable network. The consumer will also not have the choice of watching the free-to-air channel of his choice.
# The bill also proposes to "legalize" consumers being charged differently in different areas to receive the basic service which may contain different channels as may be determined by the government.
3. Expected Consumer Response
# Consumers opting for set up boxes to access pay channels would depend on the affordability and choice factor. Pay channels would find few-takers if majority of consumers perceive them as exorbitantly priced. The problem of major broadcasters like Star, Zee, Sony not pricing channels individually and making them available in bouquet form still exists.
# A subscriber wanting Zee TV only ha to pay for the entire networking bouquet consisting of ZEE English, ZEE Cinema, ZEE MGM, etc.
II. Positives of CASIt is important to clear the misunderstanding that it is mandatory to purchase a set-top box with the introduction of CAS. The customer can view all the free-to-air channels (60 channels) at Rs 72 plus taxes. However if he wishes to watch pay channels, then he will have to install the STB which will be available for a refundable deposit of Rs 999 and rental at the rate of Re 1 per day. Also some installment schemes are being worked out by the MSOs. A STB is even required for pay channels in DTH.
# There are many pay channels entering the foray every single day and each consumer has to pay even for all channels that he does not view. But with CAS, the consumer can easily budget is entertaining expenses and also view programme in the order of his preference, genre, favourites, etc. He will also have the option of value-added services.
# The Government has the power to fix the maximum that cable operator’s can charge for viewing the free-to-air channels in what is called a basic tier.
# CAS will put place a more accurate system of date collection, the actual viewreship and its distribution over the different channels. This is of immense utility to the advisers, their clients as well as the telecasters.
# Broadcasters of so-called premium channels often claim huge popularity and viewership as a justification for charging huge rates from the advertisers for their programmes. With the installation of set-up-boxes their true viewership figures will come into the open, which would be helpful in assessing the actual popularity of pay channels. This is important for them while negotiating rates for advertising slots.
# With CAS Consumers can hope for a better deal- Leading MSOs -- Hathway, In Cable and Siticable -- said CAS is useful for all stakeholders, including broadcasters, cable operators and end consumers. Multi-System Operators [MSOs] said that they are ready to roll out Conditional access system for cable broadcasting in the four metros. CAS would also bring in addressability, solving the never ending feud between cable operators and broadcasters on under-declaration of subscribers and provide a clear indication of numbers for pay channels chosen and viewed by customers.
The LCOs, being the front-end dealer with the consumer, face the flak for television blackouts and are also at the receiving end from the broadcasters. CAS will eliminate all this. CAS would also enable the cable industry to become more organized, healthy, and uniform and hence less fragmented. Thus increasing transparency in the distribution and exposing certain myths in the viewer ship patterns. CAS also brings in numerous technological benefits such as capacity up to 1000 channels, MSOPS like Hathway and SCV have already rolled out CAS in Chennai very successfully and also promoted their digital cable TV services in other markets.
III. Media Generated Myths Creating Uncertainty about CAS
The government notification issued on 15 Jan 2003 mandated use of CAS by MSOs and cable operators within six months by 14 July 2003. This has triggered misinformation, myths and negative press stories that have the potential to derail the process. The main myths and misinformation about CAS are:
# CAS is a crackpot scheme by the government - 90 per cent of the world cable market where it is deployed agrees that CAS is essential and is the only solution to an organized cable industry.
# Operator’s resort to massive under- reporting- In the absence of CAS is required to curb ‘under-reporting' their subscriber base; and broadcasters demanding payment from all homes resulting in a stand off.
# 6.7 million Boxes will be required- The reliance should not be on exaggerated estimates rather experiences in other countries might prove to be useful in this regard. It took other developed markets like the US and Europe over a decade to achieve one third of this level. They did not have the problems of low purchasing power. Further there would be no need for all homes to buy a box if the free to air/basic tier gets more attractive with many more channels and perhaps some 'pay' channels may also become free.
# Boxes will cost Rs 7000; cheaper boxes are easily hackable- The box manufacturers out here are the same top companies, which cater to the world market. Nearly 77 per cent of homes in leading cable markets like the US still rely on low-cost analogue technology. It's again a myth that all analog systems are easy to pirate. Box costs vary from Rs 2750 (analogue) to Rs 5000 (digital).
# The subscribers’ monthly bills will not go down- Competition took average cable rates from Rs 100 to a just Rs 157 over a decade- a 57% increase when pay channel costs shot up over 500 per cent in the same period. Post CAS, there is no reason why the pay channel rates as well as the basic tier rates will not go down too because of competition. Thus if a channel's product and rate are not in line with competition and market realities, it will not survive. CAS brings in a market mechanism, which did not exist earlier.
# Even broadcasters are not keen on CAS- The broadcasters will now have a system paid for by operators and subscribers that better controls their revenues and can reduce piracy ('under reporting') by over 90 per cent.
# Nowhere in the world has CAS rolled out so quickly- Neither had many parts of the world started without regulations and exclusive operating licenses. If cable had started like cellular phones or basic telecom, CAS would have come in long before a government mandate. The government is on the right track and any delay will only postpone the inevitable.
The Worst Case Scenario- When both operators and broadcasters see that there is no roll back and yet there is a shortage of boxes, they will be forced to work together and cut deals to ensure a faster roll out. Broadcasters will provide their signals on the free to air tier for a limited period against the operator/MSOs assurance to order more boxes. They would then work together to meet subscription targets within a specified period after which the channels would revert back to the pay mode. This would be a win-win situation for both of them, and would help manage the interim shortage.
as IV. The DTH Angle The debate on CAS has overshadowed the introduction of direct to home television service. In the long run consumers will have to make a choice between CAS and DTH. A comparative analysis of the two systems may prove to be helpful in assessing the advantages and disadvantages of the two:
Though DTH does not require the services of the LOC’s who remain indispensable in case of CAS, however DTH is costlier in terms of installation costs for the subscriber and companies have to pay 10% revenue share to the government unlike CAS. Further the technology for DTH has been stipulated which would ensure the working of DTH set-top box as before in case of shifting from one city to another unlike CAS. Instead of taking this technology neutrality as a disadvantage of CAS, the brighter side of CAS should be seen because the government, in accordance with the technological advancements, may always prescribe the technology for decoding and subscription management system for CAS. This flexibility would also offer more choices to the consumer also.
Conclusion And Suggestions:
We would like to conclude this article by saying that the mandatory implementation of CAS is certainly going to cause an initial discomfort to each of the players in the value chain and accordingly the likelihood of this system to work voluntarily seems difficult. The fact that a couple of years have already passed since the last time CAS was introduced, bears testimony to this reality. However, it is by no means easy to either rationalize or satisfy the concerns of all segments. This is an inevitable task and the government’s demand to ask for more time to find a solution for smooth transition seems justified. What remains to be seen is how within a limited time the government deals with this complex issue in a manner, which is fair to all.
Findings and Suggestions:
# The government should decide to manufacture Set-Top-Boxes locally rather than their imports-This issue also arose after the passing of the Cable Television Networks Amendment Bill 2002 was whether the Set Top Box (STB) should be imported to meet the immediate demand after the mandatory implementation of CAS or they should be manufactured locally. The Minister for consumer affairs Naren De also brought up this issue earlier in 2003. It was urged that local manufacture of STB’s would encourage domestic manufacturers as well as generate jobs.
# Variable pricing of the channels- Channels could be priced differently across cities, as per the local demands. The government’s decision to allow channels to opt for variable pricing had also caused some initial uneasiness among various consumer groups. But from the legal standpoint, variable pricing is not illegal. However the same channel should not be priced differently within a city.
# Refrain from amendment-The Government should abstain from amending the law in order to by pass the judgment.
The author can be reached at: [email protected]
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