Reconstructing Cable TV

The Telecom Regulatory Authority of India, on July 15, issued a draft
recommendation on “Reconstruction of Cable TV Services in India”. The sector has
been in a growing process for the last two decades. However, due to the absence
of any licensing and regulatory framework the growth so far might not be
sustainable or might even slow down in the near future.

The recommendation put forward prescribes that the license will be given for
five years with well defined renewal procedures and also adequate penalty
provisions which include suspension and even termination. The present situation
could further aggravate the ever-growing competition between conventional cable
operators and those who use advanced distribution technologies like DTH (direct
to home), HITS (head end in the sky), and IPTV used by Dish TV and Tata Sky as
they are turning out to be big investors in the market. Dish TV, a DTH player,
plans to invest Rs 1,100 crore to increase its subscriber base from the existing
2.3 mn to a target of 8 mn users by 2011. Apart from Dish TV, two other DTH
players in the market are the Prasar Bharti owned DD Direct with a subscriber
base of 2 mn users and Tata Sky with 1 mn users. However, a lot more competition
in the DTH market is expected with the entry of Bharti, Reliance, and Videocon
in the near future.

A recent survey by Trai shows the number of cable homes in India having gone
up from 410,000 in 1992 to 78 mn by the end of 2007. Though, the DTH
distributors hardly constitute 6.7% of the entire subscribers, their growth is
enormous in terms of technology and also their subscriber base as compared to
the LCOs. The recommendation also encourages the LCOs to use advance
transmission technology. The introduction of NGN will require high-speed
broadband access to subscribers. It will not only increase broadband penetration
but also improve the model of the business. This will require cable TV networks
to upgrade themselves to a two-way digital cable network.

To avoid the ongoing clash between the two divisions of the cable service
providers, Trai has recommended a separate licensing framework for local
operators and MSOs keeping in view that existing cable operators do not have
huge funds. So the emphasis has been laid on a long-term stable, organized, and
supportive licensing framework to encourage investments in the sector.

As the cable television industry faces a lot of challenges in terms of
technology, resources, and fragmented distribution, a lot of emphasis has been
laid on network digitization and addressability. Interestingly, the draft also
takes into account the expense the viewers have to bear as it also encourages
voluntary CAS (conditional access system), which allows viewers to select the
number of pay channels.

An overview of the entire recommendation shows that the draft will not only
restrict unfair practices in the cable industry but would also improve the
quality of viewership and take technology to a higher level-where both the LCOs
and the MSOs will be able to survive at ease in their respective places.

Sunny Sen

sunnys@cybermedia.co.in