The Lok Sabha on December 13, 2011 passed the second Bill to amend the Cable TV Networks (Regulation) Act 1995, which aims to replace the Ordinance promulgated in October 2011. The Bill is aimed at digitising the cable TV sector by December 31, 2014.
The Cable Television Networks (Regulation) Amendment Bill 2011 will usher in a host of changes, which include systematic registration of cable operators, inspection of cable network services, use of standard equipment in the cable TV network, mandatory transmission of channels such as Doordarshan, prescription of interference standards by the Central Government and empowering the Telecom Regulatory Authority of India (TRAI) to specify basic service tier and its tariff.
Digitisation of cable TV is expected to boost the subscription revenues for broadcasters as it will end the hefty carriage fee paid to cable TV operators. At the same time, the Government has assured the cable operators that digitisation would not hurt them.
Reacting to the development, Devendra Parulekar, Partner & Segment Champion - TV Distribution Ernst & Young, said, “The development seems positive as this will lead to transparency in the entire system while creating a win-win situation for every stakeholder. Fundamentally, this will provide customers with wider choices, better signal quality, HD content and niche content tailored to suit niche audiences.”
At the same time, he felt that there might not be noticeable effect on pricing, “as with the given hyper competitive market, we do not foresee price points going up significantly; they will more so be determined by the market forces. The move is primarily a shift for MSOs, from being a B2B business to a B2C one. Given the short implementation time-frame, MSOs are not fully geared to capitalise on this opportunity and hence, may lose round 1 of this battle to DTH players, who have already invested in mature back-end systems (CRM, call centers, billing systems, subscriber management systems, processes, etc.)”.
He added, “The jury is still out on how the sector would fare in the medium to long term, as digital cable+broadband has some inherent technological advantages over DTH, as well as the advantage of personalised service that cable offers to end-subscribers. These service enhancements will need infusion of large funds and hence, the sector may see some transactions (M&A activity). With increased transparency in collection of subscription fees as well as tax collection, broadcasters can de-risk their revenue streams versus advertising revenue that they are presently overly dependent upon.”
The digitisation process will be carried out in four phases starting with the metros. Cable operators will have to digitise their services in the four metros by March 31, 2012. Cities with a population of one million will be covered by March 31, 2013. All urban areas would be covered by September 30, 2014, while the entire country will be covered by December 31, 2014, completing the digitisation process.