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Industry not excited about forthcoming hike in cable TV rates

08-December-2004
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Industry not excited about forthcoming hike in cable TV rates

Broadcasters and cable operators are prepared for an increase in cable rates next month. However, the opinions on the move so far are unified on one front, even as the rate increase does imply positive action on part of the government, in isolation, this increase will restrict the growth of the industry. A probable solution could be bringing in place addressability platforms like CAS or digitisation.

In the tariff order passed last December, the Telecom Regulatory Authority of India (Trai) had frozen cable rates and the order in January 2004 indicated a seven per cent increase in cable rates. “This increase was already foreseen in the original tariff order-passed by Trai on January 15,” shared Jawahar Goel, CEO, Siticable, “In that sense, this was expected and so people are prepared. However, if we look at the increase alone, it is a restriction on the industry’s growth.”

Ashok Mansukhani, Executive Vice President, Corporate Services, Hinduja TMT, seemed more voluble. “The change in cable rates is very unreasonable and it is done primarily to help increase broadcasters’ subscription revenue. The inflation parameter is very random, and does not justify or reason the real method, as given in Trai’s three options for addressability in recommendations of October 1,” he said.

Drawing out a similar reaction, OneAlliance President, Shantonu Aditya argued, “What choice do we have? Price control means a restriction in any case. The broadcasters’ revenues haven’t grown in the past year and this will only further make any growth difficult.”

The basic problem stated by these players is that this increase wouldn’t make sense until it is supported by other factors like bringing CAS or digitisation in place. Goel advised that a price increase would make sense only when it is seen in conjunction with other relevant regulations, “However, these regulations are taking time in coming and this increase so far only serves as a pain-relief to the government,” he said.

Reasoning why the increase was not justified, Mansukhani explained, “Ideally without the Trai recommendations’ implementation, rates should not rise. The other industry stakeholders as well continue to suffer – especially MSOs, who don’t get paid fully from operators and broadcasters and continue to bully them for full payment.”

The core problem of under-declaration isn’t addressed here. Mansukhani expressed, “Under-declaration is a problem at the LCOs level and not MSOs. We equally face this problem and continue to be in loss.”

As to what does he see as a solution, he replies, “The only way to address this problem is by way of addressability – by any one of the three options (recommended by TRAI for the entire country), initially and gradually moving to complete mandatory addressability for pay channels (CAS).”

Sharing on how they see the increase affecting the industry, Aditya says, “In the quality of content eventually. When revenues will suffer, that is where we will see the problem coming in.”

“This will badly effect the entire industry – cable business will suffer and gradually with competition, most of today’s pay channels may go free to air,” voices Mansukhani, “Only new premium quality channels will be able to price and become pay channels. However, there can be turmoil in the industry, if the addressable recommendations are not immediately implemented.”

“I don’t see the on-ground practicality in this yet,” says Goel, “When the same content is available at Rs 50 and Rs 300, depending on the area, it doesn’t make sense.”

With this increase, the issues of CAS and digitisation have come to fore once again. On its part, the Trai has submitted recommendations to the government. All the eyes now are on the government’s decision.

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