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Television set-top box puzzle made easy

Answers to 20 most frequently asked questions about the proposed cable television regime follow.

Q: Is the government going ahead with the Conditional Access System'

A: Yes, by most indications. The joint secretary in the information and broadcasting ministry, Sudhir Sharma, who chaired a task force meeting on Wednesday, told broadcasters, operators and consumers that CAS would be implemented as decided — from July 14. BJP spokesman Mukhtar Abbas Naqvi said on Thursday that the party supports the government decision. However, BJP president M. Venkaiah Naidu has been less than enthusiastic.

Q: Does that mean there will be no rollback, deferral, shelving'

A: A powerful section of the cable television industry is actively lobbying to either defer, delay or drop CAS altogether. BJP’s Naqvi categorically stated that “there will be no review or rollback”. Sources in the BJP , however, said on Wednesday that the party was asking the government for a review.

Q: Why'

A: The BJP sources say cable viewers will have to fork out more and pay huge amounts for the set-top boxes. This will impact harshly on political fortunes. Election in Delhi — one of the four cities where CAS will be implemented from July 14 — is on the party’s radar.

Q: Is it true the viewer will have to pay more'

A: Yes and no. Cable television rates are not uniform across the country. In south Delhi, for example, operators charge Rs 300 and more per month per subscriber. In east Delhi, the rate is between Rs 150 and Rs 250. There are places in Calcutta where it costs much less.

Q: What will the cost of a set-top box be'

A: I&B officials have carried out a study after a survey of the market. They say that on July 14, the cost of an analog set-top box should not be more than Rs 3,000 and a digital STB around Rs 4,800, both prices inclusive of taxes. The study further says that the more the demand, the lower will the price be.

Q: Is a set-top box absolutely necessary'

A: No.

Q: Then why buy it'

A: Because CAS affects only pay channels. You need a set-top box to watch pay channels. Pay channels are encrypted. A set-top box will decode pay channel signals and allow for viewing.

Q: What if I do not buy a set-top box but still want to watch cable television'

A: You will not have to pay more than Rs 72 (plus local taxes) to the cable operator per month for at least 30 free-to-air channels. Actually, the cable operator should be able to give all free-to-air channels and the number exceeds 30. The I&B ministry study on costing that fixed the ceiling rate of Rs 72 estimated that it was possible for the cable operator to show up to 60 channels at that rate.

Q: How do I know the price of each pay channel'

A: As of now, you cannot.

Q: When will I know'

A: The ministry says by June 15, a month before CAS goes into implementation.

Q: How'

A: The ministry has decided to take two measures. First, it will mandate that broadcasters publicly declare the price of each pay channel. Second, it will mandate that channels are not bundled and viewers are given the freedom to choose channels from separate bouquets. The measures will be announced either as a notification or a set of rules.

Q: What does bundling mean' Can I take channels from separate bundles'

A: Bundles or bouquets are channels sold by broadcasters to multi-system operators (like RPG Netcom and Siticable and Incable or Wincable) as packages. For example, Sony Entertainment Television and Discovery Networks have a bouquet marketed under the brandname, The One Alliance. The One Alliance includes, apart from Sony’s and Discovery’s own channels, NDTV 24X7 and NDTV India. Similarly, Zee-Turner has its own package of channels. The CAS rules ideally should allow the viewer to pick and choose individual channels from The One Alliance or the Zee-Turner bouquet and pay for those channels only and not for the entire bouquet.

Q: But will the price of all channels in a bouquet be uniform'

A: Unlikely. The rules that the government is in the process of issuing will stipulate that prices of channels bought individually should not be over a certain limit.

Q: Too complicated. Please simplify.

A: For example, let us say a package of 12 channels marketed under one brand costs Rs 60. Averaging, the price of each channel will come to Rs 5. But the marketer will price strong (popular) channels higher and the other channels will piggyback on it. Therefore, the government rules will say the price of an individual channel cannot be more than 5 or 10 per cent of the average price. Meaning, if a pay channel is sold at Rs 5 in a package, it should not cost more than Rs 6 or Rs 7 if sold individually.

Q: Why is it important for pay channels to publicly declare prices beforehand'

A: Two reasons. First, to give the viewer freedom of choice. Second, operators want to place orders for set-top boxes. Unless the demand for set-top boxes can be estimated, multi-system operators say their pricing and supply will be affected.

Q: That means a lot of money…

A: Precisely. The whole CAS issue has gathered so much importance because of big money being involved.

Q: Can we talk figures'

A: Yes.

First, for the broadcasters. CAS and set-top boxes will expose their real viewership. The cable television industry in India is dependent on advertisement revenues. Channels are driven by advertisement revenues. The television advertisement revenue pie is estimated to be about Rs 6,000 crore. Channels mop up revenues based on viewership measured in TRPs (television rating points). The higher the TRPs for a channel or a programme, the more the advertisement tariffs.

The TRP system, though accepted by the industry, is still not foolproof. In the CAS regime, advertisers will know how much their buck travels. Suspecting that CAS could impact on their revenues, broadcasters are known to have told content providers that they should be prepared to take cuts in fees from July.

Second, for the operators. Multi-system operators will seek to turn into importers and suppliers of set-top boxes and the para cable television operator has ambitions of turning into the primary deliverer of set-top boxes.

Rakesh Datta of the Cable Networks Federation told the task force meeting that cable operators would be able to penetrate 20 per cent of viewership with set-top boxes within a week of CAS. That means about 1 million set-top boxes, a market of Rs 400 crore. Operators will also look to open up another revenue stream by charging carriage fees.

Third, a whole new business opens up for manufacturers, suppliers and importers of set-top boxes. Among possible set-top box makers in India are HFCL and Bharat Electronics. Multinational companies like Samsung and Philips can import and/or assemble set-top boxes for the Indian market.

Q: Can broadcasters convert their pay channels into free-to-air'

A: Yes. They have time till June 15 to announce their intentions. Peter Mukerjea of STAR said his channel would remain pay. Lakshmi Goel of Zee and Manu Sawhney of ESPN-STAR Sports also told the task force meeting that they will remain pay. The government is still undecided how to factor in pay channels that turn free-to-air or vice versa after CAS is implemented.

Q: What if all channels turn free-to-air'

A: An implausible scenario because some premium channels like HBO are pay channels worldwide. But if broadcasters want to hurt cable operators where it hurts, that’s precisely what they might end up doing. It will affect their own revenues but bleed cable operators. That is the reason why cable operators want a commitment from the broadcasters that they will not go free-to-air with their popular channels.

Q: So should I prepare to buy a set-top box'

A: The representative of consumers on the task force who came from Mumbai said she will actively campaign against investment in set-top boxes. Mrinal Chatterjee, a representative of the cable operators from Calcutta, claimed that viewers were already placing orders for set-top boxes.

The CAS game is still not over.

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