Broadbandindia Magazine

T he Indian government has approved the proposal of the Ministry of Information & Broadcasting on policy guidelines issued for Headend In The Sky (HITS) operators. This decision comes after 2 years of receiving TRAI’s recommendations on the digital transmission in cable TV.

HITS is a digital delivery mode of distribution of TV channel and it would speed up the process of digitalization of cable services located in Non-CAS areas of the country. HITS would not only help increase the penetration of cable market further into rural areas where it has been absent because of unviability but will also help in further reduction of prices of set top boxes and will also lead to further consolidation of the cable market. HITS would help a subscriber with a wide choice of digital channels, better picture quality and value added services at affordable price. HITS would provide greater channel capacity from the present limited capacity of channels placed in prime/non prime band.

The policy guidelines provides for a framework within which the HITS Service providers has to provide services in the country.

The policy does not mandate for either the cable operators or subscribers to necessarily obtain signals from a HITS platform/network. The subscribers and cable operators can continue with the existing system. Hence the cable operators have liberty to switch over to HITS provider network if so desired.

Salient features of the HITS policy approved now are:-

• It provides for an enabling regulatory environment for HITS operators. The guidelines are exhaustive and provide for complete procedure for obtaining permission and conditions thereto.
• HITS services are allowed in both ‘C-Band’ and ‘Ku-Band’.
• HITS operators can uplink from Indian soil only and will have to install SMS and encryption system.
• They are not permitted to provide signals directly to the subscribes. However, if HITS operator is also MSO/Cable Operator, he can do so through his distribution network.
• Total direct and indirect foreign investment including FDI is allowed up to 74%. Prior FIPB approval will be required if the FDI in beyond 49%.
• The cross media holding restriction of 20% of total paid up equity has been prescribed for various segment of broadcasting services. These restrictions have been provided to avoid vertical integration and to promote competition.
• There is no restriction on number of permissions. All those found to be eligible and fulfill the terms and conditions can apply for license to the Government in the Ministry of Information & Broadcasting.
• Existing permission holders of HITS will have to comply and migrate to new policy regime within three months failing which their permission shall be cancelled.
• Sufficient provisions exist under the guidelines for monitoring of content, inspection and national security related issues etc.

What is HITS?

Headend In The Sky, HITS, is a digital distribution platform that, when installed by cable TV providers, will allow them to offer more channels in higher quality (digital signals downlinked via satellite transmission) over their existing cable network.At a traditional cable television headend, multitudes of satellite dishes and antennas are used to grab cable stations from dozens of communication satellites. In contrast, HITS combines cable stations into multiplex signals on just a few satellites; cable television companies can then pull in hundreds of channels at the local headend with relatively little equipment; the HITS feed effectively replaces the more complex traditional headend operations. Unlike DTH, HITS is allowed to operate in both the traditional ‘C-Band’ as well as the DTH operators’ ‘Ku-Band’. The quality may be better on HITS transmitted channels as the Ku Band is vulnerable to rain which causes deterioration in signal strength. Headend in the Sky (HITS) is a satellite multiplex service that provides cable channels to cable television operations.

HITS were founded in 1994 and its namesake product is commonly recognized as the pioneer of digital television in the United States. HITS was formerly owned by the old AT&T, but became part of Comcast in 2002 as part of the AT&T Broadband purchase. The HITS headquarters, formerly known as the National Digital Television Center, is now called the Comcast Media Center. As of 2009 in US, HITS offers 6 standard-definition multiplexes on SES Americom’s AMC-4, 12 standard-definition multiplexes and 8 HD multiplexes on AMC-18, and 2 standard-definition multiplexes on AMC-10. As of 2007, HITS delivers more than 170 digitally compressed video and audio television programming signals to more than 3000 cable operation sites across the US; more than 16 million viewers receive digital cable programming from HITS. HITS operators will be able to uplink from India only, so broadcasters will also have to change their licenses to ensure their channels are received.

HITS affect CAS

It appears that the ministry has changed its decision of ordering complete digitization of analogue cable TV operations. Unlike Conditional Access System (CAS), the guidelines do not make it compulsory for cable operators and MSOs to switch to HITS and they can continue with their existing system. HIT is being  encouraged to lower the operational costs of operators: all the channels would be bundled up in one digital signal, reducing capital investment for operators. The ministry has attempted to ease their pains by eliminating carriage fees for HITS operators and maintaining the entry fee at Rs 10 crore as entry fee along with spectrum fee, according to press release.

CAS, a digital cable delivery system for broadcasting services through set top boxes, was rolled out in Chennai in 2003, but it was mandatory implemented in some parts of Delhi, Mumbai and Kolkata on January 1, 2007. This was done through a notification after a Delhi High Court order. However, if official sources are to be believed, the ministry of Information and Broadcasting does not seem to be in a mood of enforcing its implementation in rest of the country. “There is no strict deadline to CAS roll-out and we are not looking at making it mandatory,” a senior minister official said. This apparent shift in the ministry’s stance is in line with its focus on digitalization, as I&B minister Ambika Soni has been laying a lot of emphasis on it and was instrumental in getting the Union Cabinet’s nod for HITS policy, which incidentally is also not mandatory for cable operators to adopt. “Digitalization is our priority and as HITS will ensure digital transmission, once this is done, we will go for CAS roll-out,” she had said, though she did not say whether there would be a specific time frame to it. While the minister seemed guarded in her response, it is learnt that the ministry is having deliberations with broadcasters and cable operators to discuss as to how CAS roll-out can be done voluntarily. Telecom Regulatory Authority of India (TRAI) had last year recommended to the ministry that CAS should be rolled out in the remaining parts of the country, but at that time it had informed TRAI that it was still discussing the issue with stakeholders.

Effectiveness of HITS

The HITS policy would enable a digital delivery platform for cable operators and with increased competition it may also result in reduction in subscription rates. HITS will serve the whole country providing its signals through satellite to many Multi System Operators (MSOs) and cable operators who can further send the signals to customers using their local network. MSOs also do the same but they use cable to send television signals to end-users, whereas HITS transmits a bundle of channels to cable operators using a satellite. Under the HITS policy, the operator uplinks signals of TV channels of different broadcasters to their satellite, enabling cable operators to downlink these signals for further distribution to subscribers through their cable network in a digital form. Though the policy is ‘not mandatory’, it would enable existing cable network operators to switch to HITS technology and go digital to transmit TV signals to their subscribers, said minister for information and broadcasting Ambika Soni.

According to the estimates of the TRAI, the cost for conversion of around 6,000 existing analogue cable headends to one-way digital cable network from one-way analogue network is about Rs15,000 crore. But with HITS the same can be done with just Rs1, 200 crore. Currently, digital headend costs about Rs10-Rs15 crore, but after the implementation of HITS it would decline to just Rs4-Rs5 lakh for unlimited channels. This will increase competition in the broadcasting sector as HITS provides same quality of picture, sound that is available with direct-to-home (DTH) platform. At present, analogue cable operators cater to about 83 million subscribers in the country.

“HITS with lower set-up cost as compared to DTH but having similar quality would further increase competition between analogue and digital platforms in the subscription market. This will force analogue cable operators to shift to HITS, leading to reduction in under-reporting of subscriber base by the operator which will eventually improve the earnings of big broadcasting players like ZEEL and IBN18 through subscription revenue,” said Rohit Maheshwari, research analyst, KR Choksey Shares and Securities Pvt Ltd, in a report.

Industry concerns

However, there are some concerns in the broadcasting industry, like infrastructure. Even if the cable operator receives HITS signals, he needs to have a digitised  network, instead of analogue cable, to send the signals to end-users. Even today, many cable operators get digital signals from the satellites but distribute them in analogue form. President of Cable Operators Federation of India (COFI) said the HITS policy will further create problems for the last-mile cable operators and jeopardise the livelihood of more than 20 lakh people employed in the industry. “All the incentives have been given to HITS owners to help them take their services to cable operators whereas there are no incentives announced for local cable operators (LCOs) for upgrading their networks to take the HITS signal to consumers in the best manner,” president of COFI told. She said, “For the LCOs, HITS has no meaning unless they spend Rs3-Rs4 lakh to get the HITS Headends installed and upgrade their networks. There is no revenue-sharing policy or tariff regulations for pay-channels in the non-conditional access system (CAS) areas.” However, as the cost of setting up of one HITS station is cheaper than that of an analogue station, the subscription segment would be able to expand into the 139 million untapped households or about 58% of total households in the country, which are still using the traditional antenna mode.

Jawahar Goel, additional vice chairman, Essel group, told that the HITS policy will help in achieving the government’s target of digitizing the country by 2012. “The  HITS policy is another (source of) competition for DTH operators but good for the country as under-declaration by LCOs will be take care of, but there should have been a tariff order in the policy,” he said. HITS will also benefit subscribers with an offering of a wider choice of digital channels, better picture quality and value-added services at affordable prices. HITS would be able to provide greater channel capacity from the present capacity of channels placed in the prime and  nonprime band. Currently, there is only one player—Dish TV—in the HITS services arena and many players would queue up, following the Cabinet nod. Earlier, companies like DEN, Sea TV and Digicable had shown interest in HITS licences, but that time the policy was not approved. “We believe the major beneficiary would be the broadcasting players as first, it would reduce the underreporting by cable reporters and second, subscription market will increase its presence. This would increase competition in the digital subscription market, and prompt distributors to come up with attractive price offerings,” added Mr Maheshwari.