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Beam into the crystal ball

As the conditional access system looks set for implementation, confusion reigns at the ground level. Subhro Saha sets out to clear the cable air

in a few months, you should be able to choose your TV fare from an a la carte menu and pay for only those, instead of the present scenario where the cable operator beams a slew of pay channels into your room, many of which you could happily do without.

But even after the conditional access system (CAS) Bill is passed in Parliament, chances are it will continue to be termed ‘confusion access system’ by a trade groping to comprehend its implications and ascertain its implementations. There is a growing uncertainty in Calcutta’s cable industry, as roadblocks pave the satellite path to addressability. Some of the smaller operators have started voicing fears of being “wiped out” in the sweep of new technology.

As the entire industry braces for a complete shake-up in the post-CAS scenario, one of the questions doing the rounds is whether the perennial strife between broadcasters and operators will end once the viewer gets to pick the channels of his choice. The simple answer is ‘No’, as the “in-built conflict of interests” in the addressability model will continue to keep them at loggerheads.

Three primary points are of immediate concern to all the players — a) which platform to choose between analogue and digital; b) what the price and composition of the free-to-air (FTA) package will be; c) what will the pricing policy followed for pay channels by broadcasters be'

Of these three key questions, the government can (or will) answer only one. Even though this is the first official move to regulate the hitherto totally unorganised sector, the information and broadcasting ministry has limited its role to simply specifying the content and fixing the price of the FTA package, which will vary from zone to zone. This will only specify the broad genres, the number of channels and the cost of the entire FTA bouquet, which can be accessed without a set-top box (STB). Task forces have been formed to work out the modalities of this complicated arithmetic. Everything else, however, has been left to “the market forces” to resolve.

Operators are, understandably, losing sleep over the FTA package rate, which will be their lifeline once STBs (for decryption of encrypted base signals) come into play. The higher the FTA rate, the better it will be for the cable operator, since that means “clean, legislated, white money”. The FTA rate in Calcutta shouldn’t be pegged lower than that of Mumbai or Delhi, argue city operators, since neither last-mile investment nor maintenance cost is any less here.

The broadcasters, on their part, would like the FTA package rate to be pegged as low as possible, so that the viewer is left with a sizeable chunk of his monthly cable TV budget to buy the pay channels. It will be interesting to note what kind of pricing policy is followed by the broadcasters in the post-CAS scenario. For one, bundling of channels will have to go and each channel will have to stand on its own menu merit and be marketed like an FMCG product. Content will be king and the weaker channels can’t piggyback ride on the popular ones anymore.

A number of mass-appeal channels could become free-to-air initially, to achieve penetration and protect ad revenue. Gradually, as the seeding of boxes grows, they might switch back to pay mode. Some of the broadcasters might even think of dual programming. For instance, STAR Plus could have one FTA and the other (say, STAR Double Plus) a premium product beamed on the encrypted platform and carrying all the winning shows like the K-soaps. The possibility of niche channels like CNBC and National Geographic becoming ‘pay’ is high.

Different genres could drive seeding of boxes in different regions, like sports channels are expected to be a major driver in Calcutta. Likewise, regional faves could rule South and Bollywood become more prominent in the North and West. For ease of delivery and subscriber management, there will be different tiers of product-mix. For instance, basic (to carry only FTA channels) to bronze, silver, gold… with the most premium category carrying all the pay channels.

The availability of set-top boxes could be the main hurdle to the implementation of CAS on the ground, since the manufacturing infrastructure is yet to be put in place. Conversely, the magic box is likely to throw up the next great Indian business opportunity — even if 50 per cent of the 40 million cable homes in the country make the switch to CAS, it will translate into a demand for 20 million STBs.

Assuming the average cost to be Rs 4,000 per box, we are looking at a Rs 8,000-crore market. Obviously, all the big players like STAR, Zee and Sony would like to sink their teeth into the pie to meet the initial pent-up demand, after which prices are expected to fall and the growth only organic.

Which brings us to the biggest technology dilemma in CAS rollout — whether to go for the analogue or the digital platform. The cost factor is the huge plus going for the analogue model. An analogue STB will cost around Rs 1,500-2,000, as opposed to its digital counterpart, which will start at around Rs 6,000. Even at the MSO’s end — in Calcutta’s case RPG Netcom and SitiCable, principally — the analogue model entails a much lower investment, of around Rs 20 lakh, as against Rs 2.5 crore for a digital network. Again, while the analogue system is “robust”, a digital signal is “highly sensitive” to even minor disturbances, and will require significant upgradation of the operators’ last-mile network.

The biggest drawback of the analogue system, however, is that it is much more prone to hacking than a digital one, where “the algorithm is very complex and difficult to crack”. If the system gets hacked, the boxes get duplicated in no time and the basic purpose of CAS — “to uniquely identify each subscriber” — is defeated. Besides, there will be a public uproar if a viewer is asked to invest in an STB all over again, just because his cableman’s system has been hacked.

There is a school of thought among operators, though, which is keen on a digital platform from the word go, to tap its potential to carry a host of broadband services on the network. Market watchers feel, eventually, most operators will opt for the digital box, since many will get into part-funding to ensure customer loyalty, and would therefore prefer to invest in a more secure chip.

With broadcasters trying to reach a quasi-DTH (direct to home) scenario to keep the reins with them, concepts like HITS (head-end in the sky) are also gaining currency. Promoted by Zee Telefilms and SitiCable, the model has a centralised subscriber management system and head-end which will scramble all pay channels and send them back to the sky to be retransmitted back to the ground via satellite.

Clearly, the star wars have just begun.

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