Another New Cable TV Bill: Why And For Whom
Raghu
O
NCE again, another piece of legislation to regulate cable television has been tabled in parliament but could not be debated or voted upon partly due to divided opinions among legislators and partly due to being overshadowed by the furore in parliament over the petrol pumps allotments scandal. The Cable Television Networks (Regulation) Amendment Bill 2002 basically provides for introduction of the Conditional Access System (CAS) whereby the Cable Operators could control which channels are distributed to viewers depending on their choice and related payment, as against the present system where all channels are supplied to every viewer at a flat rate. Since the Bill had been piloted by the information minister Sushma Swaraj of the BJP, the NDA as a whole appeared to have lined up behind her while much of the Opposition, especially the Congress, had serious reservations about the Bill for a variety of reasons.
The country witnessed unprecedented collective action by Cable Distributors who went on strike action, first black-outs for an hour each day and then for a whole day, with warnings to commence indefinite stoppage of Cable TV distribution unless the Bill was passed. The mounting threats assumed the dimensions of blackmail, with Cable TV distributors even threatening to target individual legislators opposing the legislation by cutting off Cable TV to their homes and also threatening to raise cable subscriptions to Rs 400 per month if the Bill is not passed. This was not the first time Cable TV operators had resorted to such tactics which are based on the assumption that viewers, denied TV shows, would turn their anger against the government or parliament which would thus be pressured to act in the Cable Operators' favour! The BJP-led government, instead of taking firm action against such blackmail, took secret pleasure at the prospect of the TV viewing public turning their anger against the Opposition, and tried to placate the Cable TV operators by promising to get the Bill passed before the parliament session ended but failed to do so.
Why is everybody so worked up about this Bill? What are the various technical, commercial and consumer issues involved in the CAS method of distributing cable TV signals? Who stands to gain and why? What are the other short and long-term implications? This article tries to address these and other related questions.
DISTRIBUTION
METHODS
Satellite television is itself a relatively new phenomenon and methods of reaching the signals to the viewer vary widely depending upon the choice of the content providers, the regulatory framework in each country, the economics of distribution and the ability or willingness of the consumer to pay for different systems.
Different content providers, that is those TV companies making programmes and broadcasting them through satellite, have adopted different means of collecting revenues. Some simply beam their signals down from satellites allowing anybody who wants to pick up the signal either by individual viewers in their own home through a small satellite dish or by Cable Operators who then distribute the signal to various houses in the neighbourhood for a fee. Such "free-to-air" broadcasters collect all their revenues from advertisers who are able to reach their commercial messages to a wide audience.
In the US and most of Europe, however, such free-to-air distribution especially through neighbourhood networks has long yielded way to other forms of distribution. Many TV channels are now pay channels, that is, they can be received only upon payment in one form or another and some channels offer "pay-per-view" services where viewers pay only for the actual time the programme is watched. In recent times in India too many channels have shifted from free-to-air to pay services, believing that advertising revenues are inadequate and that they need to collect subscriptions too. Zee TV, for instance, now obtains about 40 per cent of its revenues from subscriptions.
Pay channel signals are "scrambled" or encoded, that is they are electronically mixed up, and require to be unscrambled or decoded in order to be properly received. Homes having their own satellite dishes must have decoders or set-top boxes which do this job, with viewers either buying or hiring these decoders and paying a subscription to the channel provider. Neighbourhood cable operators also require decoders to be able to send out unscrambled signals to viewers' homes as happens in India now. With the advent of pay services, cable operators started charging viewers extra although still on a lumpsum basis since there was no way of knowing who was receiving or watching these channels.
A major problem in India has been that the pay TV channel has no authentic information regarding how many viewers homes are being supplied their signals by cable operators. The latter, while merrily collecting increased monthly charges from viewers, have habitually under-stated the number of viewers leading to endless disputes between cable operators and pay channels.
The introduction of CAS is one method of overcoming this impasse. With CAS, cable operators will continue to receive scrambled signals from pay channels, decode them and distribute them as usual, but viewers who want to watch those channels must have set-top decoders which they will have to buy besides having to pay subscription fees for those channels. Viewers who so pay will then be given a smart card or a password for each pay channel to enable them to view the unscrambled signal. Both cable operators and pay channels will then, at least theoretically, know exactly how many viewers there are and can properly share revenues.
The way this has been portrayed by Ms Sushma Swaraj and the cable operators, this is a win-win for everybody. But is it? What are the technical and cost implications? And, since such a service could have been introduced by the cable operators themselves, why was a Legislation required at all?
LOSERS AND
GAINERS
With CAS, cable operators will be able to recover higher charges from viewers than they are able to do now. Viewers have been resisting the rising monthly charges which have gone up from Rs 50 to Rs 200 in some cities partly because of pay channels' charges and partly because individual viewers did not see why they should pay extra for channels they may not watch (even if they actually did so). The under-statement of coverage by operators in turn prompted the pay channels to demand higher fees to compensate for the perceived loss, further pushing up prices in a highly competitive environment where cable operators proliferated.
Although the new Bill proposes a 2-tier system comprising free-to-air channels and pay channels, charges for which would at least to some extent be regulated, viewers will find their monthly bills going up after introduction of CAS.
One of the reasons for this is that while, on the face of it, viewers can choose to receive this channel but not that, most satellite TV companies nowadays offer several channels bundled together in a package deal or a "bouquet" in the jargon. Thus, while a viewer may not want to watch Star World or Star News (both relatively lower rated channels), she would have to if she chooses to receive and pay for Star Sports. Such a person would also perhaps wish to receive and pay for Zee News but would also receive Zee English and Zee MGM, and in effect pay for them in the Zee bundle, whether they are wanted or not.
It is not certain whether the pay channels will gain substantially since the gap between the under-quoted audience-based payments made by operators and the actual recovery from CAS users is yet an unknown. Pay channels are hoping that revenues will go up and that, while advertising revenues may drop in the short term as discussed below, they would rise in the long run from being better directed. At the least, they expect CAS to lift the non-transparency which presently surrounds the entire cable TV distribution business. Content providers, with significant cross-ownership both in satellite TV and cable distribution services, are also looking to the CAS system to give them access to homes for other infotainment services such as internet-based services, telephony, video-on-demand etc.
Of course, nobody is really sure of one aspect. One can expect attempts to undermine this system by people making and selling grey-market set-top boxes which could be supplied clandestinely by cable operators benefiting them and viewers at the cost of the pay channels. The issue of standards for set-top boxes is also vexing, with the CAS Bill having completely dodged the issue. If proper standards are not prescribed, viewers may find themselves having to acquire new boxes for different channels or even in different cities if they shift residence. Further, whereas standard set-top boxes would provide a window enabling use of other cable-based services such as internet and telephony, this may not be possible with grey-market boxes. With all these obstacles, viewers may soon wonder why they should not go for individual DTH systems especially if prices for these fall in years to come.
The silent players in this game have been the corporate advertisers who believe they will be big gainers from introduction of CAS. TV channels have been asking for, and receiving, huge advertising rates based on highly inflated viewership figures. In the prevalent environment where all viewers receive all channels whether they watch them or not, actual viewership has been very difficult to estimate. Rating companies had been attempting this daunting task through various sampling and interview techniques, but the lid was blown off a major scandal last year when it was discovered that the estimates were dubious to say the least, with figures often being cooked up to satisfy one channel or programme or the other. With CAS, advertisers will have a more accurate picture of audiences watching particular channels (though programme viewership will still not be possible to estimate) and can better plan and channelise their advertisement expenses which are likely to come down in the short term. The pressure exerted by major corporates in favour of CAS is one of the big untold stories of this whole CAS drama and they are among the potential gainers.
USING PARLIAMENT
FOR VESTED INTEREST
Viewers are likely to be among the biggest losers certainly in the short term. They are likely to pay more monthly, although they may perceive some gains in being protected from arbitrary price rises. They would also have to pay for the set-top boxes, which could cost anywhere from Rs 4000 to Rs 10,000 each, often more than the price of the TV they own!
This is the biggest reason why everybody has been crowding the government to get the CAS legislation passed. Nobody, especially the cable operators, wants to face the consumer directly and tell them they will have to pay substantially more from now on. They would much prefer to lay the entire blame on the government or indeed parliament and claim they too, like the viewers, are merely following the law of the land! Everyone is firing bullets over the viewers' shoulders. The minister for information does not seem to have asked the cable operators why they simply did not introduce CAS if they wanted to. Why was a legislation necessary at all?
It is ironic indeed that votaries of a free market and giving free reign to market forces are now all demanding regulation through legislation and a standing body or Task Force created by it. Fact of the matter is that laissez faire is hurting all the different sections of vested interests, some more than others, so all of them want the government to bail them out by a legislation which at least seemingly brings them all together which they would have been unable to do otherwise. Business seems to need big brother after all, both to protect from one another and to protect them collectively from the consumer, a throw-back to the "bad old days" of protectionism and cronyism. For satellite TV and cable operators, it is simply business as usual! Everything at the expense of the consumer with Parliament as scapegoat. The BJP has been adopting a pro-business, pro-corporate and pro-foreign media from the outset of its attempts to "regulate" satellite and cable TV, and ignoring all suggestions for more technologically and socially sound and effective regulation. They might as well now also carry this CAS ball alone!