Lok Sabha passed the second Bill to amend the Cable TV Networks (Regulation) Act 1995 that aims to replace the Ordinance promulgated. Also Rajya  Sabha has passed the Cable TV Networks (Regulation) Second Amendment Bill which has already been approved by the Lok Sabha. Information and Broadcasting Minister Ambika Soni, while talking on the discussion on the Bill, assured the cable operators that they would not be “put out of business” contrary to fears expressed by some quarters with digitisation of cable services, and capacity building programmes would be held to apprise them with new technologies. Soni said that an enabling provision had put in place to the effect that only Rs 200,000 to Rs 300,000 would be needed by cable operators to move to digitisation. She said digitisation would give a true assessment of the subscriber base of the broadcasters and reduce dependence on advertisements. In turn, this may also lead to reduction in the vulgar content on television channels as there would be lesser dependence on TRPs.

Apart from improving the quality of reception, digitization would also empower the viewers and the cable operators. It will enable cable operators to give larger number of channels to the consumers. There will be no prime band after digitisation, she said. She said the Bill would plug revenue leakage and enable regulatory agencies to check illegal content. Soni said that with the passing of this Bill, the Headend-in-the-sky (HITS), which had so far failed, would take off with greater investments. While most members supported the Bill, they cautioned the government against exploitation of the common viewer in the form of unjustifiable hikes in  the cable rates and vulgar and misleading advertisements.

The Bill aims to digitise the cable sector in the country by 31 December, 2014. The Government had earlier announced a timetable for complete digitisation of  cable television in the four metros by 31 March, 2012, but this was put off to June 2012 in a notification issued subsequently. The target date for completely digitising cable sector in cities with population of more than one million was 30 March 2013, all urban areas by 30 September 2014, and the whole country by 31 December 2014. This will also mean an end to the analogue era and customers of cable networks must have a digital addressable set-top-box irrespective of whether they wish to receive free-to-air or encrypted (pay) channels.

The delay for two months is because the Government had laid down in the Ordinance that promulgated earlier this month that six months notice will be given to the cable TV operators to enable them to install the necessary equipment for transmitting encrypted channels through a digital addressable system, in keeping with the deadlines set for this purpose for various states and cities. A clause has been inserted in the Act to make a digital addressable system mandatory in the cable sector. The amending Bill also has provisions for right of way and systemisation for registration of cable operators, inspection of cable services, compulsory transmission of certain channels, prescription of interference standards by the government and an enabling provision for the Telecom Regulatory Authority of India to lay down the basic service tier and its tariff. After digitisation, all cable operators carry encrypted signals only through digital set top boxes in accordance with the deadlines that have been notified.

Financial support

The ministry of Information and Broadcasting (I&B) plans to push for financial incentives to ease the import of equipment, including set-top boxes, to help speed up the process of converting India’s cable TV distribution system from analogue to digital. The steps being considered include raising the foreign direct investment (FDI) limit for cable companies to 74% from 49% and launching awareness campaigns on the merits of digital cable. The ministry will help the industry make a smooth transition to digital cable, Uday Kumar Varma, secretary at the I&B ministry, said at the second CEOs Roundtable on Broadcast, organized by the Confederation of Indian Industry (CII). Varma’s remarks followed the Lok Sabha passing the Cable Television Networks (Regulation) Amendment Bill, 2011.“The likely passage of the Bill in Parliament will show the commitment of government to the change,” Varma said. “Digitizing will be beneficial for all stakeholders… (and) play an important role in the economy, particularly the broadcasting industry.” An investment of $8 billion will be required for digitizing Indian cable TV networks in the next three years, Varma said, citing a report by Media Partners Asia Ltd, a leading independent provider of information focusing on the media, communications and entertainment industries.

The ministry has already written to the Department of Industrial Policy and Promotion (DIPP) seeking an increase in FDI in the cable industry. The ministry is also in discussions with the finance ministry to provide financial incentives, give tax holidays and customs concessions, given that most of the equipment— including set-top boxes—is usually imported. In the first phase, by June 2012, roughly 8-10 million set-top boxes will be required for all four metros. The ministry has already moved a cabinet proposal to set up a committee of secretaries in a bid to communicate the views of all stakeholders. Through this committee, the ministry will help organize discussions by stakeholders to convey their concerns directly. “This is essential so all viewpoints can emerge and discussed properly,” said Varma.

Besides, the ministry is already working on a public awareness campaign. Though he declined to share how much will be required for the campaign, Varma said “certain allocation for the same will be provided in the 12th National Plan”.Nearly 230,000 people will have to be trained in various departments in several Indian cities to ensure that the migration from analogue to digital takes place, the ministry has said. A capacity building programme has already been launched by state-run Broadcast Engineering Consultants India Ltd. The first phase of the training programme will be launched by next week in some of the metros, said Varma.

Boost small screen content

A bill aimed at digitalization of cable TV with the government assuring that the move would be beneficial for viewers and lead to better and more meaningful content. Information and broadcasting minister Ambika Soni, who had earlier introduced the Cable Television Networks (Regulation) Second Amendment Bill, said it was a major step towards reform that would enable digitalization of the analog TV network and bring India on a par with other countries like the US, the UK, Korea and Taiwan.

On the issue of regulating content on TV, Soni told the House that she was open to the idea of holding an all-party meeting to discuss the ministry’s broadcast regulation bill. A draft Broadcasting Services Regulation Bill has been posted on the website and a final bill could be brought for consideration of Parliament after the stipulated time to get feedback from various stakeholders is over, Soni said during Question Hour in the Lok Sabha.

The minister said a Group of Ministers on media has been set up and some of her Cabinet colleagues have started an open debate on it. “We are getting views. After collating the views, we want to bring a law which is beyond the self-regulatory body that has been set up…I have no objections if a law is made after an all-party meeting is convened by the Prime Minister in which views of everyone are taken in writing,” she said. Speaking on the amendment bill later, Soni said that concerns that cable operators would become jobless were misplaced and insisted that the main concern of the government was the viewers’ interest. “The prices of settop boxes will fall. These will be available on both installments and on rent. Also, viewers do not have to take a whole bouquet of channels. TRAI will impose a tariff capping for subscribing to channels,” she said.

The most important aspect of this legislation is that it would end the fight for more TRPs among channels. The bill also gives the government the right to cancel licences of cable operators who flout rules. “But this bill is not anti-poor and not against small operators. This is not for big players. It is for India,” Soni said. The minister justified the government decision to bring an ordinance earlier, saying this was done to meet the deadline set for full digitalization by December 31, 2014. The government will complete the process in four phases, starting with the metros. She said it would benefit the customer by providing a la carte selection of channels and video-on-demand, and for broadcasters and cable operators by ensuring transparency, reducing their dependency on TRP and ad revenues and raising subscription revenues. The government would also stand to benefit as it would ensure proper tax collection, she added.

Wrapping up

It was a joyful matter for the digitization drive when Parliament gave its clearance for the initiating the digitization step in the country. But the Bill is not just about shifting from analogue to digital. From the industry perspective, aren’t you worried about the controls digitisation will bring about? Why would digitisation be about control? The entire broadcasting chain in India has been broken for some time. Broadcasters have always got either no subscription money or very little—only 18% of the total income. Broadcasters were always paying very high carriage fees. Consequently, subscription or distribution, which anywhere in the world would have been a major distribution source for a broadcaster, has become a major cost centre for them. That’s the way this thing has been there for a long time.

I&B Minister Ambika Soni says that the Bill will end Television Raring Points (TRP). Broadcasters have been entirely banking upon advertising and, therefore, entirely depended on rating—that’s why there is the mad race for TRP, which everyone keeps complaining about. Now, for the first time, the distribution environment has changed. Hopefully, carriage fees will come down and subscription revenues will go up so that there are alternative viable business models for broadcasters.

This is not directly affecting TRPs but certainly indirectly. People will now start looking for a slightly different business model. The economic pressure on broadcasters, who are dependent on TRPs, will hopefully go down a little bit. But we do feel that, in general, we have to look at the rating measuring system. We do think this is to some extent flawed. The sample is not large enough; it doesn’t always reflect what people are watching. There are also questions whether it is completely tamperproof. There are lots of complaints. The rating system itself needs a lot of work. After the Cable Bill, TRP should be next. Broadcasters and Television Audience Measurement, not the government, should figure out how to improve the rating system and make it slightly more robust to find out what people are watching.

The Telecom Regulatory Authority of India (TRAI) has to decide on the fine print regarding the cap. Lot of things have to be sorted out like how it is actually going to work and what will be the requirements for cable operators in terms of payment. Obviously, there is a long way to go, but, at least, the Bill has set into place enabling conditions for a modern, mature, organized and systematic broadcasting sector, which is a very positive development.

So, are you happy with the Bill? TRAI has lot of work to do on this. It will obviously take some time. The Bill still doesn’t cover the rating system and that has to be separately addressed. This is an important step towards professionalisation of the entire broadcasting value chain from the broadcaster to the distributor and to the customer.

Government has issued a notification listing out the specific cities and areas and the deadlines by which it would be ‘obligatory’ for the cable operators to transmit or re-transmit in encrypted form, all the channels through a digital addressable system. Under the Ordinance circulated earlier this month, the Government had specified that a period of at least six months will be given to the cable TV operators to enable them to install the necessary equipment for transmitting encrypted channels through a digital addressable system, in keeping with the deadlines set for this purpose for various states and cities.

The Cable TV Networks (Regulation) Amendment Ordinance 2011, an amendment of the Cable TV Networks (Regulation) Act 1995, is aimed at putting in place the infrastructure to meet the deadlines set by the Government for digitisation of cable TV networks.

The Government has earlier announced a timetable for complete digitisation of cable television in the four metros by 31 March, 2012. The target date for completely digitising cable sector in cities with population of more than one million was 30 March 2013, all urban areas by 30 September 2014, and the whole country by 31 December 2014. This will also mean an end to the analogue era and customers of cable networks must have a digital addressable set-top-box irrespective of whether they wish to receive free-to-air or encrypted (pay) channels.

Notification

The digitization drive will step its mark with the completion of Phase I, under which four metros of New Delhi, Mumbai, Kolkata and Chennai will switchover from analogue to digital by 31 March 2012. Following this, 38 other cities with a population of over one million will be digitized 31 March 2013 under the Phase II of the digitization drive.  The 38 specific cities and areas which have been listed in the notification are – Bangalore, Hyderabad, Ahmedabad, Pune, Surat, Kanpur, Jaipur, Lucknow, Nagpur, Patna, Indore, Bhopal, Thane, Ludhiana, Agra, Pimpri-Chinchwad, Nashik, Vadodara, Faridabad, Ghaziabad, Rajkot, meerut, Kalyan-Dombivali, Varanasi, amrtisar, Navi Mumbai, Aurangabad, Solapur, Allahabad, Jabalpur, Srinagar, Visakhapatnam, Ranchi, Howrah, Chandigarh, Coimbatore, Maysore and Jodhpur.All the other urban areas (Municipal corporations/municipalities) except cities or towns or areas specified for the Phase I & II will be digitized under Phase III by 30th September, 2014. The digitization drive will cover rest of India, under Phase IV by 31st Decmber, 2014.  

Encourage technology industry

This is encouraging cable television technology companies. NDS India country head, GM Jayant Changrani said that the company which offers solutions for the secure delivery of pay TV services is investing $450 million in the country over the next four years. It has already invested $250 million so far. “We will close three more deals shortly with medium and small sized cable operators. Our solution is scalable. Operators can start with VideoGuard. But what we are seeing is that they also want Media highway as they have to compete with the DTH players.” The investment in India will look to enhance resources, skill sets. The company does road shows to educate operators on its products. These will held more frequently now. He notes that education on components like digital headends will become important.

Conax head of product marketing Tryggve Arveschoug says that the company is looking at a robust growth this year and is aiming to double the client base. Its biggest client globally is Dish TV. He expects mergers and JVs to happen in the cable market. He noted the price sensitivity of this market but adds that Conax’s USP is that its price performance is good. Clients can choose from 200 STBs. For him what has been seen in India is that operators are finding new ways to do business.

New players are also entering India sensing a big opportunity. One of them is Swedish company Cryptoguard which offers conditional access solutions. Earlier the company was in India through test equipment. The conditional access solution was brought in this year. The company’s sales manager Asia Patrick Lagerstadt though notes that at the moment many cable operators are waiting and watching. “They are not ready to invest. There is however a lot of interest given that they will have to switch. Our solution has low start-up costs which makes it a viable option even for small service providers.” He says that the solution that his company gives is more flexible for the smaller operators compared to what the larger technology companies have. The solution offers both content protection and a subscriber management system.

Rudraksha Technology offers system integration solutions for digital technology. The company’s VP sales Samrat Mitra says that the company is targeting operators looking for a stable and a cheap solution. Since it is made in India the solution is less expensive compared to competition. The aim is to have a 70% growth over the next four to five years. This fiscal it is looking to sell 15 headends compared to 10 in the previous fiscal. It works with large networks like Sun Direct as well as with smaller operators like 7Star.

Cable operators challenge notification        

A cable operators’ body moved the Delhi High Court  challenging an ordinance promulgated last month for achieving complete digitalisation of cable television networks in the country by 2015. Cable Operators United Front (COUF), in its petition to a division bench of Acting Chief Justice A K Sikri, sought the court’s direction, restraining the government from enforcing the Cable TV Networks (Reg) Amendment Ordinance 2011. COUF challenged the ordinance, promulgated on October 25 on the basis of a recommendation by Telecom Regulatory Authority of India (TRAI), terming it as “unconstitutional” and contending it violated the cable operators’ fundamental right to carry on their business and profession.

It also termed the ordinance as “arbitrary and illegal”, contending it had been promulgated in a haste to avoid the scrutiny by Parliament. COUF pointed out to the court that a huge investment to the tune of Rs 10,000 crore is required for complete digitalisation of the cable TV network, which the cable operators are not capable of doing. They said the ordinance cast a financial burden not only on them but on consumer and TV viewers as well as digitalisation of TV networks would require an initial investment of Rs 2,500 to install a digital signals’ decoding box, besides a hefty monthly bill. It further said digitalisation of the cable TV requires transmitters, encoders, decoders, modulators, servers and huge space which need huge investments.It also said there was no facility in India to produce these equipment and hence it would also lead to huge outgo of foreign exchange.

Wrapping up

India’s existing – mostly DTH – digital broadcasters are said to be looking forward enthusiastically to the nation’s implementation of digital transmission by the country’s cable TV operators. India’s four largest cities have to have converted from analogue to digital TV by March or June in next year

The digitisation of India’s vast cable television network, now due to begin two months after originally planned, is predicted to require investment of up to INR 40,000 crore. “So we’re having to change it from 31 March, which was the time the metros had to [do it], to 1 June. But it doesn’t disturb the rest of the schedule,” Information and Broadcasting Minister Ambika Soni told. “It’s generally a very big reform of the broadcasting industry,” she added, reportedly saying the government expects to earn INR 30,000 each year following digitisation through subscriptions and other means.

In order to help facilitate the large amount of investment necessary to realise the ambitious digitisation plan, India’s Department for Industrial Policy and Promotion is preparing a Cabinet note to increase the foreign direct investment (FDI) limits in the broadcasting industry. The government is expected to enable foreign companies to own up to 74% of direct to home (DTH), cable TV, and head-end in the sky (HITS) companies, while retaining an FDI cap for news media at 26%.

The whole nation must be converted by December 2014. Most observers expect the dates to be missed, and the cost of implementing the government’s decision will be huge. But with most experts saying that under-reporting of cable TV can be as high as 85 %, there’s everything to play for.

Anil Uniyal, CEO, CNBC-TV 18 and CNBC Awaaz, commented: “[Digitisation] is a proactive step and when implemented, will be a win-win for all stakeholders. It will get TV broadcasters better transparency in subscriber numbers and more earnings from more varied content; cable operators higher subscriber revenues due to better rates and added earnings from value added services (VAS) which will enable higher average revenue per user (ARPU); and consumers more variety and better quality of content,” says a report.

Meenakshi Menon (Madhwani), founder and chairperson, Spatial Access, a media analytics company, said, “since subscription earnings will go up, broadcasters will no longer be solely dependent on advertising revenues, so viewership ratings will no longer be as critical. This will enable more non-mass programming. Moreover, there will be rationalisation of ads which are in oversupply currently, sending pricing haywire. Fighting clutter has become a vicious cycle and viewers are getting put off,” he told the newspaper. “This is great news for us since addressability will get forced. For DTH companies, there will be a level playing field on pricing and costs. Till now, cost structures for DTH and cable have been vastly different,” said Vikram Mehra, CMO,Tata Sky.

NDS supplies TataSky, as well as cable operators DEN and Hathway with encryption technology. Jayant Changrani, country head and GM, NDS India, is confident that cable digitisation can happen within the deadlines. “Why do people assume that cable operators are not already doing something about going digital? Larger operators such as Hathway and Den are already into the digitisation process. Our large cable operator clients have digitised in good numbers in the phase 2 cities already.”

The four companies, or multi-system operators (MSOs) as they are called, appointed Ernst and Young and Deutsche Bank AG to come up with a feasibility report on the proposal. Together these MSOs control an estimated 40 million cable TV subscribers out of a universe of 116 million cable homes, according to December  data from TAM Media Research.

At least four people closely involved in the process confirmed that the mandate for a merger of these companies had been given to these firms. Deutsche Bank declined to comment. However, an executive involved with the deal said the structure of the proposed company was still not final. The executive requested anonymity as the matter was confidential.

However, the head of a cable firm, who is a part of the exercise, said that since a consensus on a formal structure may take time, as a precursor to the merger “we plan to enter into a business alliance. One of the names being considered for the alliance is Megamedia”, he said, adding that the effort is to get regional MSOs on  board as well. Another person close to the development said the companies’ lawyers are looking at the regulatory issues concerning the alliance.

The move to consolidate their businesses comes at a time when two leading broadcasters— Star India Pvt. Ltd and Zee Entertainment Enterprises Ltd ( ZEEL) — have merged their distribution arms to form a joint venture called Media Pro Enterprise India Pvt. Ltd. The new company will jointly distribute more than 70 channels.

Top executives at two cable companies in the mega alliance claim that their partnership is not a reaction to Media Pro, which gives broadcasters the power to negotiate subscription rates and placement fees with cable operators and directto- home (DTH) companies.

The alliance has been expected as MSOs “would try and keep up with consolidation on the broadcaster’s side” to be able to negotiate subscription and placement rates better, said Nikhil Vora, managing director of IDFC Securities Ltd.

WWIL plans huge investments

In other side, the multi system operator (MSO) Wire and Wireless (India) Ltd (WWIL) is planning to invest up to INR 1 billion this tax year, in expectation of the government’s roadmap to digitisation for India’s cable TV infrastructure. With a target 25-30% revenue growth rate this year, WWIL is planning to install 400,000 set top boxes, as well as adding digital head ends in its network and fund acquisitions. “We are focusing on strategic acquisition of primary subscribers and also on partnership models. We have planned and are committed to increase our footprint across the country especially in [the] west and south,” Mr Agarwal is quoted as saying by press.

The company is also reportedly focussing on fixed line broadband in eastern and northern India, while concentrated on wireless broadband elsewhere in the south Asian nation. WWIL’s consolidated operating revenue for the 2010-2011 financial year reached INR 3.06 billion – an increase of 12% on the previous year – while net loss fell to INR 659.2 million.

The fragmented feel Cable TV Industry

The Indian Cable TV industry now comprises of 500 MSOs, around 60,000 Local Cable Operators (LCOs), 7 DTH/ satellite TV operators and several IPTV service providers. The business model is under going a change in India. At one point of time, India had nearly 100,000 cable operators. The industry was run by small operators. The emergence of large operators from Hinduja group (incablenet), Zee group (Siticable), Asianet, Hathway (Raheja group) etc, who are now known as MSO (Multi System Operators) changed the way in which the industry is run. But the MSOs are concentrated on the metros and major cities only so far. The industry is in the hands of local cable TV operators in the rural areas and small towns.

The entry of big players from corporate led to the consolidation of small operators. This is because of the better quality of services offered by MSOs. While the local operators are able to offer around 30 channels, the MSOs are offering more than 200 channels to the customers. Besides, the MSOs are offering local channels which show films, local events, religious discourses, regional news etc. But all these MSOs operate on the model of franchising their cable TV feeds to the small operators.

The viewers are increasingly demanding more features and better content from the TV channels and cable operators. These new technologies like PVR, video on demand, IPTV are revolutionizing the viewing experience.

The current TV transmission in India is predominantly analog which does not allow any technological upgradation. Besides it results in huge revenue leakage for the Indian cable operators as the household gets more than one TV connected to cable and pays only for one connection. Besides the quality of analog transmission is very poor. In the case of analog transmission, the operator cannot restrict the choice of channels to the customer. As a result, the cable operators pay for pay channels even if they are not required by the user. Digitalization leads to triple play where the customers get TV, broadband connection and telephone services from the same source. This will facilitate the cable operator to effectively compete with DTH and IPTV technologies.

Last mile connectivity, technological up gradation and digitalization requires huge investments. The cable industry is moving towards consolidation in favour of triple play operators or Multi service operators. Competition in the cable TV segment has intensified as the corporates battle for acquiring the last mile connectivity.

Time to act together

With nearly 500 MSOs and 60,000 cable operators—The fragmented cable industry needs to get its act together in view of the intense competition from DTH as well as Internet Protocol television, said a cable industry veteran who is close to the development. The companies could get better rates on bulk deals for set-top boxes and combine their marketing budgets if they were united, he added. “For instance, we could have a common call centre to assist customers,” the cable expert said, and added that the immediate task of the combined entity would be to push for amendment of the Cable Act that allows only 49% foreign direct investment (FDI) in the business. “The Telecom Regulatory Authority of India has cleared the decks for 74% FDI for MSOs,” he added.

The consolidation, IDFC Securities’ Vora said, will lead to profitability and to a more equitable model. “Many MSOs don’t operate on balance sheets and a lot of local cable operator (LCO) revenues are under-declared,” he said.

Rajesh Jain, head of media and entertainment at KPMG India Pvt. Ltd, agreed that 90% of the subscription revenue goes to the LCOs alone. “And a lot of it is undeclared,” he said. Television subscription revenue is expected to grow at 17% a year and reach Rs.41,600 crore by 2015 from Rs.19,400 crore in 2010, according to KPMG.

Jain expects the development to hasten the process of digitization. The union of MSOs will benefit all stakeholders in the business, said Gurjeev Singh, chief operating officer of Media Pro. “I hope that digitization will be one of their key priorities,” he said.

Commenting on the new alliances, Yogesh Radhakrishnan, former chief executive and managing director of Real Media, the West Asia-based flagship company of ZEEL, said: “It’s getting extremely confrontational. Post the Star-Zee distribution alliance, people started panicking. This is unnecessary because digitization is round the corner and the bouquet will lose its relevance. No one can have a monopoly in a digital environment.” Radhakrishnan formed his own channel distribution company earlier this year.

LCOs, which have last-mile access to the cable customer and are affiliated to different MSOs, are concerned about the proposed alliance.

LCOs will be squeezed between large broadcasters and the MSO combines, said Roop Sharma, president of the Cable Operators Federation of India. “The only ones caught in the middle of this power struggle are last-mile operators and, as a result, the consumer,” she said. Such MSO alliances could be detrimental to the interests of cable operators considering there are frequent clashes between cable operators and MSOs over revenue, Sharma said.

Arun Kapoor from the Zee group and Gurjeev Singh Kapoor from Star-DEN are appointed as the CEO and COO respectively of the venture. The new JV will together distribute all the Star and Zee group channels across India and collect the subscription revenue of the combined entity. Currently, Star India collects around R1,000 crore in subscription revenue annually while the Zee collects around R800 crore in subscription revenues. The rest is divided between ESPN, Sony-One Alliance, Sun18 and others.

The JV will be governed by an 8-10 member board with equal participation from both parties. Riding on the JV, both entities will also fund the digitalization drive initiated by the government and will jointly pitch for foreign investments. Boards of both entities are likely to clear the venture before June 1 when the new merger and acquisition (M&A) regulations take effect.

Both Star India and Zee groups have been rivals in the cable business in India after their initial association over a decade ago. Experts said the new JV is expected to emerge as the dominant force in the cable distribution business with a lion’s share in the R2,500-3,000 crore annual subscription revenue market.

“ No one could have expected the two biggest media firms, one home-grown and another from Rupert Murdoch’s stable to come together in a business venture. It will certainly be challenging to see how things unfold between the two in coming months and year,” a top cable industry executive said.

The cable industry sees this uniting of rivals as a major move by the broadcasters to form a cartel to increase their share of subscription revenue. According to a report by Media Partners Asia (MPA), India’s pay-TV subscription revenue is expected to touch Rs. 38,000 crore by 2015 at a compounded annual growth rate of 12%.

Another MPA report suggests that local cable operators and multi-system operators (MSOs, or large cable networks) corner 83% of pay-TV revenue while broadcasters get the remaining 17%. According to audit and consulting firm KPMG India, in 2010, subscription revenue in India totalled Rs. 19,400 crore, of which 20% went to broadcasters. The firm estimates that by 2015, broadcasters such as Zee and Star will get 30% of the subscription revenue of Rs. 41,600 crore.

The proposed alliance between the two broadcasters will help. “As a single company selling all the channels, broadcasters will have more muscle power over cable networks to generate subscription revenue. More so, because cable operators cannot do without Star Plus and Zee TV at the same time,” said the former chief executive of an entertainment channel.

Mr Punit Goenka, MD and CEO, ZEEL, noted that the intent is to “address various anomalies” of the current analog market. Curbing piracy and introducing transparency by accelerating digitisation, is part of the vision.

Competition Commission of India

Two leading broadcasters joining hands for distribution has also been brought to the notice of the Competition Commission of India, which will examine the impact of the deal on the distribution ecosystem, including MSOs and cable operators. Mr Dhanendra Kumar, Chairman, Competition Commission of India, said, “The facts are not before us yet. But we are looking into it.”

Commenting on the impending launch of the new distribution conglomerate, the head of a large cable network headquartered in Mumbai said: “The matter should be examined by the Competition Commission of India (CCI). Broadcasters are forming a cartel to wipe out competition. It will also hurt the independent direct-to-home operators as well as independent MSOs that are not part of these broadcasting companies.”

CCI should mandate that joint ventures fall under the ambit of rules governing mergers or push for an amendment to the Competition Act to this effect, said M.M. Sharma, head of competition law practice at Vaish Associates Advocates. Justifying the effort to form a joint venture in this case, the Zee group executive said the move should be seen in view of the growing piracy of broadcasters’ signals as well as the monopoly of large cable networks in some markets such as Punjab and Tamil Nadu. “Some states are monopolized by a single operator and we find it hard to collect subscription fees,” he said.

A Monopolising Move

The one word that most industry observers said while commenting off-the-record on the JV was monopoly. Some say ‘monopoly’ may be exaggeration, but there was no denying that the coming together of these two media giants would corner a sizeable share of the market. If more players are added to this bouquet, it would form a strong voice that will change the current cable industry dynamics.

Between the two bouquets, if the channels are not competing with each other fiercely like in the Hindi GEC or movies or regional languages space, they complement each other like STAR’s lifestyle and infotainment channels or Zee Turner’s kids’ channels.

Between the two, the bouquet will have over 90 channels in its command and the combined might of the bouquet is seen to be around 40-45% of the industry. A senior distribution industry leader said, “Imagine the terms they can command in the marketplace. No cable operator would be able to do without this company.”

The monies involved itself raises the stakes of the game significantly. To give an indicator, total revenues for STAR DEN’s Financial Year 2011 were over Rs 1000 crore, and the bulk of this was coming STAR channels. If Zee and STAR combine forces, the proverbial sky would indeed be the limit to what the companies can make from subscription revenues.

Changing Nature of the Game

As the broadcast industry evolves, industry leaders are clear that the future of the business lies in subscription revenues. The more mature companies such as Zee and STAR are already making 35-40% of their overall revenues from subscription.

And the industry is headed in that direction aggressively. This was evident when last year a similar move was seen from Network18 and Sun Network to create Sun18 North and Sun18 South. The partnership there was comparatively simpler, as the conflict between the two companies – SUN and Viacom18 was far lesser than the conflict between STAR and Zee. Haresh Chawla, CEO, Viacom18 had said that in 2011, distribution, and hence subscription revenues, would be one of the strongest areas of focus for the company.

Another move came in January 2011, when Bennett, Coleman and Company Ltd formed a joint venture with Yogesh Radhakrishnan, a veteran in the Indian Cable and Satellite industry, called Media Network & Distribution India Ltd (MNDIL). MNDIL launched Prime Connect, an independent distribution platform. MNDIL will organise and distribute channels in India through various platforms such as MSOs, DTH, IPTV and emerging digital platforms that connect homes and commercial establishments. While MNDIL is an exclusive distributor for The Times Group Channels such as Times Now, ET NOW, Movies Now and Zoom, it also intends to expand its bouquet by including more third party channels for distribution.

Alliances are not new to distribution domain – after all Zee- Turner or even STAR DEN are collaborations, in some cases, collaboration despite competing channels. If the distribution domain in India was not seeing enough action, the STAR-Zee JV will take the stakes to another level altogether.

OneAlliance in talks to join ZEE-Star distribution JV

OneAlliance, the distribution venture of Multi-Screen Media (MSM) and Discovery Communications, is in talks to join the ZEE-Star distribution joint venture. A top source in OneAlliance confirmed they were looking to join the JV. He did not give details. The MSM Discovery alliance distributes 19 channels, including Sony, SET Max, Discovery, Animal Planet and Aaj Tak. If OneAlliance joins, the JV will distribute more than 100 channels, giving it the power to negotiate with pan-India multi-system operators (MSOs), who run cable networks, and independent cable players. MSOs have been increasing carriage charges every year, hitting broadcasters. Broadcasters pay MSOs to get space on premium bands. This ensures more viewers.

According to a study by Chrome Design & Media — which studies media trends — broadcasters pay over Rs 1,600 crore annually to ensure their channels are available on premium bands. With the number of channels growing (India has over 626) and the government giving permission for 75 more, the carriage charges are expected to increase further. Chrome says the increase has been over 25% per annum. Industry experts say for most general entertainment broadcasters, the carriage fee accounts for 30% cost — the secondbiggest after programming.

MSOs and cable operators see this as a clear case of cartelisation. “This will lead to monopoly of broadcasters, as a result of which they will be able to get more subscription revenue and negotiate carriage fee. Independent and local cable operators will be hurt the most,” says a senior executive of a leading cable company.

“We are watching the development. Remember that even MSOs can form a venture and negotiate prices. No channel can afford to be blacked out from any MSO network as it will lose audience and advertising. It’s a bold move to get some order in carriage fee increases. Whether it will work or not is difficult to answer,” says a senior executive of a leading infotainment channel.

Sleeping tiger to be awakened

For over a decade now, members of the media and entertainment fraternity have gathered at FICCI Frames to exchange notes on the changes in the industry and what the way forward should be to ensure growth for the sector in India. James Murdoch, Chairman and CEO (Europe and Asia) at News Corp, set the tone when he urged the ‘sleeping tiger (India media industry) to be awakened’ and industry leaders added to that, by not just tracing the journey of the sector, but pointing out hurdles that are holding the industry back. According to the latest FICCI-KPMG report, advertising spends amounted to Rs 266 billion, registering a growth of 17 %, and accounted for 41 % of the overall industry size. Television saw a tremendous increase in the net DTH subscriber base, totaling 28 million at the end of 2010. Backed by growth in advertising and subscription revenues, the television industry (then pegged at Rs 257 billion) grew by 15.5 % in 2010, wherein the growth in television advertising was 17%. The television advertising market in 2010 stood at approximately Rs 88 billion. The overall television industry is expected to grow at a CAGR of 16 %, to touch Rs 630 billion by 2015.

TV expected to account for major share

Television households are expected to surge to 156 million by 2015, while digitisation and addressability will go mainstream. Advertising and subscription revenues are expected to touch Rs 214 billion and Rs 416 billion, respectively. Television is expected to account for almost half of the Indian M&E industry revenues, and more than twice the size of print, the second largest media sector. Contrary to most other markets globally that continue to witness an erosion of the print media industry, the sector in India witnessed a growth of 10% in 2010, and is expected to continue to grow at a similar pace over the next five years and touch Rs 310 billion. Regional print is expected to grow at a higher rate of 12%. The study further notes that with increase in scale, expected changes in regulation from Phase III, and the music royalty structure, the radio industry is expected to grow at 20% per annum, and become profitable. The industry, which stood at Rs 8 billion, saw a 24% growth in 2010.

As far as the film industry is concerned, 2010 was a challenging year for the trade. However, with better content, increase in multiplexes, investment in research, and continued cost corrections, the industry is estimated to grow from Rs 83 billion, to Rs 132 billion by 2015. With economic resurgence, the out-of-home industry advertising bounced back with a growth of 21% in 2010, and is expected to reach a size of Rs 29.6 billion in 2015.

The growth in digital advertising, pegged at Rs 8 billion in 2009, was 33% in 2010. Overall, the industry is estimated to achieve a growth rate of 13 % in 2011, backed primarily by a positive industry sentiment and growing media consumption. The overall industry is expected to witness a 14% CAGR growth, thereby touching Rs 1,275 billion by 2015.

Journey of the Industry

Drawing a map of the journey of the industry, Aroon Purie, Chairman & E d i t o r – i n – Chief, India Today Group, traced how the talking points have moved from e merging trends and opportunities in 2004 to the peak of the economic boom and g l o b a l euphoria in 2008, to later that year in September when the global financial meltdown hit.

At present, speaking on what the future holds, he termed it as the “Mess in Broadcasting”, reasoning that the grim viewpoint was due to the fundamental problems not changing, but the industry since then has continued to grow. In terms of pure numbers, he stated that in the two years, the number of C&S households had Increased from 90 million to 116 million, while the number of channels had i n c r e a s e d from 461 to around 550 in two years, which was “good news and bad news”. Speaking on the need to address profitability, he said, “The days of spreadsheet capitalism are over. There is no doubt that we are an undervalued industry and on top of that, you put a perverse business model, and profitability becomes a huge challenge.”

Four key issues

In order to “unlock profitability”, Purie listed four key issues pointing at the choked distribution scenario with a skewed demand-supply equation that benefited MSOs. The second key is the current distorted business model, where broadcasters are cheated as they fail to avail of their subscription fees as a portion is lost in the form of ever increasing carriage expenditure. The third lock is the Government, which should have been a facilitator but has acted as the biggest stumbling  block in the growth of the broadcast industry. Offering digitization as a solution, he said, “Digitization will not only help increase bandwidth and eliminate carriage costs, but also bring addressable platforms, which means transparency and accountability for subscriptions.

A fair share of what the consumer pays will flow to the broadcaster as subscription. It will be viable for new channels to be launched. Content will be king again, not distribution. I believe, the government should not listen to all the lobbies which descend on it and do what is right for the industry. And this, to my mind, is a no brainer.” The last lock on profitability, as Purie observed, was the industry itself as broadcasters had not presented a unified front to the Government. “A progressive unified industry would have set up a digitization fund and encouraged the cable operators to digitise,” he noted.

Lack of competent talent and piracy issues

Uday Shankar, CEO, STAR India, spoke about the rampant dearth of talent apparent in the quality content generation today. Taking a critic’s approach to the industry, he spoke of the state of news broadcasting and the criticisms it faced, and said, “In most cases, people make fun of the content, dubbing it to be another mad race for TRPs, which is not true. In most cases, it can just be the lack of competent talent.” He explained that the root cause was the lack of media companies’ ability to invest in quality talent and training. He cited that due to the current structure and perverse business models that were operational, only few companies had a small chunk of profits available to invest in nurturing talent, over and above basic sustenance and survival in a competitive environment.

Shankar went on to say that the impact of this lack of talent was evident in a lot of content seen today. He said, “There is repetition of the same kind of content.  One example of that is ‘KBC’. STAR brought the format to audiences in India in 2000, and even today is being hawked by other players. And audiences are watching it, not as a choice, but due to the lack of it.”

Shankar spoke on the piracy of television content by players in small markets and the absolute lack of a system that could address and correct such problems. He said, “We are probably the only example, where our content is pirated and we pay for it to be carried!” Turner General Entertainment Network’s CEO, Sameer Nair, echoed Shankar’s views on not just the visible lack of talent attracted by the broadcast industry, but also the fact that ground realities such as carriage fees made it difficult for broadcasters to invest in content. Nair explained, “What started as under-declaration from cable operators, coupled with a price cap at the retail level, led to a situation where broadcasters had to pay carriage fee to MSOs. The carriage fee has been growing over the years, but there are no other substantial revenue forms that came in play for broadcasters.”

Advertising revenues and regional markets.

Broadcasters’ dependence on advertising revenues was discussed substantially once again at the forum. TV Today Group’s CEO G Krishnan said, “In any media market, there are advertising revenues and subscription revenues, but in India, we have not been able to get anything from the latter, and there is lack of vision from the regulator on the subject. In fact, the presence of a regulator has only worsened the problem between the broadcaster, MSO and cable operator.” The Discussions through the day on the subjects related to broadcasting industry hurdles reiterated that the India market needs a very strong and drastic measure from  bodies such as the Ministry of Information and Broadcasting and even the TRAI to take the correct and progressive steps that can awaken the “sleeping tiger”.

Says Dr. Amit Mitra, Secretary General, “The key industry highlights are the growing potential of the regional markets, increasing media penetration and per capita consumption and increasing importance of New Media driven by changing media consumption patterns.” According to Rajesh Jain, Head of Media and Entertainment, KPMG, “The resurgence in advertising, growth in subscription revenues, thrust on digitization, and emerging avenues for content monetization were the key growth drivers for the Indian Media & Entertainment industry in 2010. However, going forward, it will become imperative for media companies to reset their business models and build greater focus on profitability and changing consumer preferences.”

In 2010, social media gained significant popularity as a marketing and gaming platform. Commenting on the power of social media, Jehil Thakkar, Executive Director, Media & Entertainment, said, “Social media offers advertisers and content owners the ability to directly connect with their consumers/audiences. Businesses are now beginning to understand the power of this tool and integrating it into their core marketing plan to reach out to their target audience.”

Sectoral Impacts

1. Media & Entertainment

The impact of the Union Budget 2011-12 on the Media & Entertainment sector is neutral.

• CVD exemption cheers film industry

The Government announced exemption of countervailing duty (CVD) on jumbo rolls of cinematograph films of 400 feet and 1000 feet, a demand that the film industry has been making for long.

The full exemption from excise duty is expected to help boost the Indian film industry as print costs are estimated to shrink by 5%.

Finance Minister Pranab Mukherjee, in his Budget proposal for 2011-12, told Parliament that the Indian film industry had represented that colour, unexposed jumbo rolls of cinematographic films are not manufacturered domestically. These rolls had to be imported.

Said noted filmmaker Mukesh Bhatt, “This is a good step on the part of the Finance Minister. We had been prevailing upon him that the duty should be waived off. The reduction of duty that amounted to 10% of the cost will help the film industry and the nation fight the cause of piracy. Piracy used to take place as distributors could not make more prints because of the high roll costs. Now, with the e x e m p t i o n , distributors will come out with more prints that will help in curtailing piracy.”

Print on an average makes up about 10% of the total movie cost. Said a media analyst, “The exemption of excise duty will not be a major cost-saving operation. For big movies, the print cost is only miniscule. It is only the small producers who will gain in a big way.”

The Budget did not waive off service tax on copyright. “This was one of our main demands. The Budget has not responded to this demand of ours,” said Bhatt.

The government has also announced a levy of 1% excise duty on CDs and DVDs. Said Shemaroo Entertainment director Hiren Gada, “We are sad at the Finance Minister’s decision to levy 1% excise duty on CDs, and DVDs. This will involve administrative hassles also as CDs and DVDs were exempt from excise duty.”

Moser Baer CEO Harish Dayani is happy that the government has exempted CVD on jumbo rolls. “There is nothing to comment on the 1% increase on excise duty on CDs and DVDs. A blank CD costs Rs 4 and what is 1% of that ? The industry will gain from the CVD exemption on jumbo rolls.”

• Print media gets CVD concessions

The Government extended to mailroom equipment the concessional basic customs duty of 5% and countervailing duty of 5% presently applicable to high-speed printing presses imported by newspaper establishments.

Furthermore, the decision to reduce excise duty (and hence CVD) on parts of ink-jet and laser-jet printers from 10% to 5% will also help the print industry.

Media analysts, however, feel that the concessions will have a marginal impact on the print sector. “The concession on mailroom equipment will be for those who print 70,000 copies per hour. The vernacular press does not print that many copies at that speed. And the English press is not having any capex plan at the moment. They will gain only if they go to new territories,” says an analyst at a broking firm.

No sops for cable and DTH

The drive to digitisation has found no special favours in the Budget for 2011-12, disappointing both cable TV operators and direct-to-home (DTH) service provivers who were expecting sops on set-top boxes.IndusInd Media & Communications managing director and chief executive Ravi Mansukhani said, “The I&B Ministry should have convinced the Finance Ministry to drop the duty the government imposes on the set-top-boxes. It would have given a feeler to the world that the government is serious about digitisation. We were expecting a deduction in the custom duty and rationalisation of the tax structure. However, there is nothing.”

The fast growing DTH sector also could not find any relief that the Finance Minister Pranab Mukherjee had on offer for them. Terming the Budget as a “setback” to the industry, Bharti Airtel Director and CEO digital TV services Ajai Puri said: “We were expecting that this time government will remove the custom duty on import of STBs. As almost 95% of boxes are imported, it is an undue burden.”

Dish TV India MD and former Indian Broadcasting Foundation (IBF) president Jawahar Goel agreed that the media industry had nothing to cheer about from the Budget. “The distribution business is highly taxed. DTH is considered as a service sector by the central government and an entertainment sector by the state governments. Both impose taxes on us and the government has done nothing to change the status quo.”

• FDI being liberalised, M&E sector to gain in deals

The Government reiterated that discussions are under way to liberalise the foreign direct investment policy, a move that will help the media and entertainment sector which is looking at raising foreign capital to fund their growth. Finance Minister Pranab Mukherjee, said to make the FDI policy more userfriendly, all prior regulations and guidelines have been consolidated into one comprehensive document, which is reviewed every six months.”The last review has been released in September 2010. This has been done with the specific intent of enhancing clarity and predictability of our FDI policy to foreign investors,” Mukherjee said. Cable TV companies, who need massive capital once the digitisation policy framework is put in place, are in talks with foreign investors. The direct-to-home companies are also looking at funding support as they see a huge growth in subscribers.Private FM radio firms may soon be able to get more foreign exchange through partnerships, if the government proposal for increase the FDI from 20 to 26% goes through. The Ministry is understood to be working towards raising the FDI in the cable sector from 49% to 74% as that would aid the process of digitisation in the country.At present, there are different FDI limits for different segments in the broadcasting industry. The Telecom Regulatory Authority of India (Trai) had in July last year suggested bringing uniformity and raising the limits – noting that it was as low as just 20% in some cases. However, Trai had made an exception at 26% for FM radio and television news channels.

2. Telecom Sector

The telecom sector , which has been the centre of attraction for the wrong reasons lately, expected significant tax reforms from the Government in the Budget 2011 to support its massive investment in the past year. However, not much seems to have been addressed in this Budget. The reduction in the surcharge on corporate tax from 7.5% to 5% will hardly be carrot to an industry which was looking forward to a more broad based change.

More particularly, the industry was expecting at clarity on corporate tax treatment of spectrum charges and the associated borrowing cost along with tax holiday benefits on consolidation. Moreover, extending the cut-off date of 31 March 2005 for availing the tax holiday would have created a level playing field.

Though India has progressed tremendously on mobile service penetration, it has significant ground to be gained on internet connectivity. With no tax holiday for the newly introduced BWA licensees, will this industry be able to replicate the penetration which the mobile industry has so brilliantly achieved ?

• Some proposals on the indirect tax front which would impact the telecom industry include:
• Service tax now payable on gross amount charged to subscriber – ambiguity removed
• Credit of duty paid on input or input services used in civil construction not available – will impact telecom infrastructure companies
• Point of service rules have been issued – the provisions itself and ambiguities are likely to impact cash flows of telecom companies as also increase the difficulty in compliances.
• Rural Broadband

Finance Minister Pranab Mukherjee’s plans to provide broadband connectivity to all villages in the Union Budget provide opportunities for Indian IT. The allocation for this project is not clear, with reports stating that Mukherjee will be providing Rs 10,000 crore to enhance data connectivity to rural India. “A plan has been finalised to provide Rural Broadband Connectivity to all 2,50,000 Panchayats in the country in three years,” Mukherjee said.

But, this proposal is three years old, and as per the telecom department’s own estimates, it will cost upwards of Rs 18,000 crore. Besides, the UPA is also not clear about its implementation strategy, with different arms of the government squabbling over varying business models.

The funding pattern is clear. The government will dig into the Universal Service Obligation Fund established in 2002 to improve rural connectivity, to launch the broadband project. It is estimated that nearly Rs 25,000 crore is lying idle in the USOF.

The project, depending on how it pans out, is expected to boost broadband penetration, which is less than 1% compared to a mobile penetration of nearly 66%. India has a mere 11 million broadband connections compared to over 750 million cellphone connections, and the government had failed to meet its target of 20 million broadband connections by 2010- end.

Improving broadband connectivity has found the pride of place in the government’s to-do list because studies have shown that for every 10% increase in internet penetration, GDP climbs by 1.38%. Key government bodies such as the ministries of higher education, elementary education, Panchayati Raj, telecom and IT and department of economic affairs as well as the Planning Commission are pushing for the project.

A section of the telecoms department wants this project given to BSNL in a bid to provide the state-owned telco a lifeline as its snail-like expansion plans have left it groping in the dark against fleet-footed private rivals.

But Sam Pitroda, advisor to the Prime Minister on information, infrastructure and innovation, who has been asked to oversee the project, favours the formation of an Special Purpose vehicle (SPV) in which BSNL, RailTel, PowerGrid, CDoT, National Informatics Centre (NIC) and Universal Service Obligation Fund (USOF) are to be co-stakeholders.

• Mobile accessories:

The concession available to parts, components and accessories for manufacture of mobile handsets has been extended by a year, till 31st March, 2012 and a few more items are being included in its ambit. This includes full exemption from basic customs duty, additional duty of customs equivalent to excise duty and full exemption from Special Additional Duty of customs on parts, components and accessories of mobile handsets, as well as battery chargers, PC connectivity cables and hands-free headphones of such mobile handsets and sub-parts for the manufacture of such parts and components (source, source and source).

• Packaged software (including games and music):

“Full exemption from payment of Additional duty of Customs (CVD) is being granted on the portion of value representing the consideration paid or payable for the transfer of the right to use such goods to those packaged or canned software, which do not require affixation of RSP under The Legal Metrology Act, 2009 or the rules made there under, subject to the Importer being registered under the Service Tax” (source, source, and source).

LED Lights:

“In the last Budget, Central Excise duty on LED lights was reduced from 8% to 4% to promote their use. The basic component of these lights viz. the LED attracts an excise duty (hence, CVD) of 10% and a special CVD of 4%. The excise duty on LEDs is being reduced to 5% and special CVD is being fully exempted. These are also fully exempt from customs duty.

3. Information Technology

The Finance Minister announced some unexpected moves which will hurt the IT companies in the form of higher taxes after the proposed higher Minimum  lternate Tax (MAT) rate of 18.5% for units operating in Special Economic Zones (SEZ) and on developers of the SEZs. IT companies have been migrating to special economic zones as tax breaks under the Software Technology Parks of Indian (STPI) scheme will come to end this year under which companies operating in these units had been given a 10-year tax break that was to end in 2010. In the FY 10 Budget, however, this was extended to March 31, 2011. The IT industry had been asking for an extension of one more year until the Direct Tax Code is implemented in 2012.

I & B Minister’s budget allocation

The I & B Ministry’s total plan and non-plan budget for 2011- 12 has risen marginally to Rs 26.4364 billion against last year’s revised estimates of Rs 26.1806 billion.The allocation for the Ministry includes an outlay of Rs 25.6819 billion for the information and publicity sector which includes films. Perhaps keeping in view the centenary of Indian cinema in 2013 for which preparations have begun, the allocation for the film sector is up and pegged at Rs 1370.3 million from the revised budget of Rs 1091.8 million in 2010-11. In addition, there is a separate allocation of Rs 77 million for Certification of films.Interestingly, the secretarial-social services budget has shot up from Rs 522.4 million to Rs 754.5 million, primarily on account of the National Film Heritage Mission, and the proposed National Centre for Animation and Gaming.The allocation to the Electronic Media Monitoring Centre has been marginally raised to Rs 45 million from revised estimates of Rs 43.6 million in 2010-11 (as against the Rs 62.8 million allocated in the budget last year). The EMMC was set up for monitoring television and radio channels for violation of programme and advertising codes.

Interestingly, the government has not announced any investment in the National Film Development Corporation. The allocation for Press Information Services which includes grants to the Press Council of India has been lowered to Rs 592.4 million from the Rs 770 million in the revised estimates for 2010-11 that had been allocated to meet the expenses to set up media pool services for the Commonwealth Games.The allocation for advertising and visual publicity has been raised to Rs 1233.3 million from Rs 1088.7 million in the revised estimates of the last budget, following the increase in the advertising rates of the Directorate of Advertising and Visual Publicity (DAVP).The plan outlay and lump sum provision for projects and schemes of the Ministry for development in the north-eastern region and Sikkim has gone up to Rs 861.3 million from Rs 789 million in the revised estimates.

The Prasar Bharati will have to learn to tighten its belt as it faces a budget cut. The grant-in-aid to Prasar Bharati in the budgetary allocation of the Information and Broadcasting Ministry has been reduced to Rs 14.84 billion from the revised allocation of Rs 15.70 billion in 2010-11.According to the Budget for 2011-12 the Ministry’s investment in Prasar Bharati is Rs 3.7997 billion, which is marginally lower than the Rs 3.8964 billion in the revised estimates for 2010-11.It is understood that this been done since most of the increased expenditures in view of the telecast rights of the Commonwealth Games 2010 have been met.While  the grantin- aid is to cover the gap in resources for meeting revenue expenditure, the investment is to finance the capital expenditure of the pubcaster.

Independent complaints forum

The Indian television industry is taking steps to regulate itself with the establishment of an independent complaints forum for non-news channels, following recent  moves by the government to reschedule TV content deemed unsuitable for universal viewing to post-11pm. According to source the Indian Broadcasting  Foundation (IBF) is to establish a Broadcasting Content Complaints Council (BCCC) in the next three months, in an effort to self-regulate entertainment and special interest TV channels. According to the report, the BCCC will be similar to the existing News Broadcasting Standards Authority, set up by the News Broadcasters Association. It will be headed by a retired Supreme Court judge, with representatives from the industry, academia, and non-governmental organizations (NGOs). Initially aggrieved viewers would complain to the broadcaster or channel, and then, if their issue remained unresolved, they could then address their complaint to the BCCC.

The Indian Government has backed the idea of self-regulation for electronic media, as long as representatives from ordinary walks of life are properly represented. The selfregulation vehicle being developed stems from a joint task force established earlier this year by the Ministry for I&B and IBF which has been listening to  views from members of the public, DTH operators, academics, resident welfare associations, and NGOs. Last month, government disapproval of scheduling of what may be deemed adult content in prime time hit the headlines, when it sought to move the transmission time of Big Boss 4 (India’s version of ‘Big Brother’) and Rakhi ka Insaaf to between 11pm and 5am.

Workshop on self regulation

The two-day workshop on ‘Comparative Perspective on Media Regulation and Society’ got underway in Delhi on December 14, 2010. The first day of the workshop explored international and comparative perspectives on media regulation as it affects current debates and future role of information in society. The first session of the day delved upon the topic of the challenges of implementing selfregulation from the perspective of the Indian Government, industry and academies.

Wider representation needed

The government is in favour of self-regulation for the electronic media provided there is adequate representation of members of civil society, said Information and Broadcasting Ministry additional secretary Rajiv Takru. The government should be able to step in whenever self-regulation fails but only as a last resort, Takru added. Addressing a meet on ‘Comparative Perspectives on Media Regulation and Society’ , he said any self-regulation body has to be fair and transparent, and seem to be so. Therefore, there should be no paid employees of the stakeholders – the broadcasters. He also said the members, or at least the heads of the regulatory body, should work on a rotational basis and their selection should be transparent.

Quick damage control required

Takru expressed the view that self-regulation has to be time bound to ensure quick damage control. The government should be able to step in when such cases occur. The government was, therefore, trying to finalise a mechanism where self-regulation could work effectively, he said. Speaking at the inaugural session, he said self-regulation was the best form of regulation, but commercial considerations and the aim to get more eyeballs often took over. Commercial forces were not conducive to regulation. He said the television rating was being done in just about 8,000 homes in a country of a billion plus population and this was not fair. Answering a question later, he said the government was examining the issue of cross-ownership and monopolisation of the media.

The meet was organised by the University of Oxford’s Programme in Comparative Media Law and Policy (PCMLP) in collaboration with the National Law University- New Delhi, the National University of Juridical Sciences- Kolkata, and the Annenberg School for Communication, University of Pennsylvania, with support from Star India. Jusrice J S Verma, former Chief Justice of India who now heads the News Broadcasting Standards Authority set up by the News Broadcasters Association, said self-regulation showed a realisation of the need for restraint. The freedom of speech enshrined in the Constitution was subject to reasonable restrictions. The essence of democracy was to accept even divergent views and appreciation of this fact will not need someone else to regulate others. He said the electronic media needed to be more circumspect, but imposing curbs only leads to more rumour mongering. Self-regulation, in fact, disciplines the channels and they know what should be kept out. Answering a question about the role of the electronic media during the Mumbai attacks on 26 November 2008, he said the advisories prevented the media from going haywire. He said the Authority was working towards a programme to teach media ethics to the media within the next few months in collaboration with some recognised law schools.

TV has greater power than Cinema

Star India chief operating officer Sanjay Gupta said television touches people even more than cinema does. TV created 600 hours of entertainment content and  1000 hours of news content daily, while cinema creates 600 hours in a whole year. He said greater power brings greater responsibility. Referring to self-regulation, he said people who regulate have to be linked to consumers, and should be able to respond to challenges. He also stressed the need for quick hearing. He said the media was only reflecting what the consumers wanted. Professor Satish Deshpande of the Delhi School of Economics in Delhi University said India was at present a media saturated society and regulation derived from its meaning from crossing certain boundaries. The soft content produced by the media was affecting society and a large portion of it was stupid and mind-numbing. The workshop explored international and comparative perspectives on media regulation as it affects current debates and the future role of information in society. It explored contemporary issues around media self-regulation in India from the differing perspectives of academics, bureaucrats and politicians, industry leaders, civil society and legal experts.

Governing laws

The Cable Television Networks (Regulation) Act 1995 aims to provide a basic framework to regulate the operations of cable television broadcast across the Indian Territory. According to Chapter II of this act, channels on TV and radio are bound to adhere to advertising and programme codes prescribed by the law. Non-adherence to the standard codes can lead to legal proceedings under the Criminal Procedure Code. The Cable Television Networks (Regulation) Act was amended in 2000 and 2002 to include new developments in broadcast media, such as direct-to-home services. Apart from that, The Cinematographic Act, 1952, also gives powers to government nodal agencies to regulate content in films and video productions.

Electronic Media Monitoring Center

To keep a check on the violation of content and advertising guidelines by private television channels and radio stations, the government has set up Electronic Media Monitoring Center, under the auspices of the Ministry of Information and Broadcasting. The center began operations in 2007. It works as a nodal agency to facilitate consumer complaints against broadcast media.

How to complain against a channel ?

Electronic Media Monitoring Center allows consumers to file complaints against private television channels and radio stations in a prescribed format. Before making a complaint, you should:

1. Electronically record the piece of content which is objectionable as per your understanding or simply make notes of it.

2. Keep a note of the programme name, channel name and date and timing of the broadcast.

3. Make sure that your complaint falls under the following types of violations:

• Child Abuse
• Child Marriage
• Violence against Women
• Contains anything obscene or nudity
• Superstition
• Half truth
• Communal speech
• Promote communal violence
• Provocative statements
• Drugs, alcohol and solvent abuse
• Sexual conduct
• Coarse and offensive language
• Imitative behavior
• Impartial reports
• Contains criticism of friendly countries
• Against any law and order
• Bad language or explicit scene of violence
• Attack on any particular religion

On receiving a consumer complaint, the agency validates the information against the official records. If the complaint is valid, it is forwarded to the Ministry of Information and Broadcasting, which can then take strict action against the party that has violated the law. News Broadcaster Association (NBA) is another agency which seeks consumer complaints against unlawful reporting. It is an industry consortium for news broadcast channels and aims to promote self-regulation in news reporting. It is a private entity and not a government agency.

Why channels need self-control ?

Media experts, academicians and lawyers feel the need of the hour is to establish a regulatory body that inspires public confidence and has a creative focus on enhancing standards on television and Internet, says Divya Kapoor. Veena Malik continues to seize prime time news slots for her raunchy massages and towel-dropping acts, another ex gets axed on a reality show, uncensored clips of Splitsvilla are being watched by over 5,000 people on You Tube everyday and add to this, the latest: Repeat telecasts of Dehradoon ka darinda who “chopped of his wife’s body into 72 pieces” is the current topic of discussion in most Indian households. As TV shows and news channels turn personal in their obsessive TRP race, obscenity has touched an all-time low.

If one goes by what academicians and lawyers feel, regulation in electronic and online media can be brought about only through a certain degree of self-regulation. Agreed actor Anupam Kher. “Of course, the timings of some programmes need to be changed, that is, they should be shown post-11 pm. But what is more important is self-regulation. Because I may stop you from watching a TV show but you can always go a Google search and get over a dozen results on it,” he said. Talking further in favour of censorship, Kher argued how these days people find it fashionable to reject the suggestions on censorship. “There are more beeps in a TV show than the content.

Do you think the audience unwise to not understand what they mean? It’s fashionable for the rich who live in posh apartments and lead luxurious lives to say we don’t need censorship. If you go to smaller cities, you realise the importance of regulation,” he said, adding, “People have double standards. They tell their children not to watch a particular programme and then step outside to talk about why there should be no regulation on TV.” Kher, who had tweeted about attending the seminar on censorship in media, said he found 80% people in favour of regulation. “Those 20% who spoke against it are the ones who write columns in national dailies,” he said.

Internet also faces similar challenge

Discussing the challenges Internet faces, Google India’s policy analyst Raman Chima said, “The problem right now with Net is that most websites are not performing editorial services. They are merely providing services. To be able to have a strong filter, you need to have a legal system but it must not damage the freedom of speech.” Internet, Chima further explained, also allows people to be more vocal. “For example, if Google does something wrong, people can go to a social networking site and discuss the problem in communities.

Many a times, I’ve seen engineers who read those inputs and make useful changes,” he said. Chima added India needs to cope up with this problem through an open policy. “The first thing President Barack Obama did after taking over office was to start ‘open government directive’ which means all departments must lay out the work they conduct and involve citizens to participate in it. India is now trying to do the same. Through online networks, people are providing suggestions so that they help the Government bodies to get better results.”

NDTV Group CEO and executive director Narayan Rao said that there is always a possibility of those in power using the national security claim to bludgeon critics. “We have all discussed about what China did to Google. But what is happening to Julian Assange is in the manner of retributive punishment and it is difficult to convince that only sexual offences have landed him in jail,” he rued. Maintaining credibility will continue to be a huge issue, senior journalist Paranjoy Guha Thakurta pointed out how Internet has changed the way content is consumed. “Unfortunately, there are enough myopic people around who are willing to sacrifice a few bucks in order to make fast bucks,” he observed.

To cope up with these issues on a day-to-day basis, Professor Munroe E Price from University of Pennsylvania, suggested, “India is an open democratic society but with a complex culture. Therefore, TV is a boisterous medium here. If it is over-the-top, it is because of the abundance and cultural diversity in the society. As for expression within it, censorship and regulation are perhaps wrong words to be used. Rather we should evolve a vocabulary of appropriateness.”

The reason why regulation works best in certain Western countries, he said, “It is because they tend to have a more centrist approach as in India, you can’t work with the same grammar.” He argued for a structured response in case of emergencies though. “We need to have self-imposed restrictions with the idea of us being in it together and internalising the idea of commonality and shared concern,” he added.

On 22 Nov, government’s another attempt to play ‘Big Boss’ against private broadcaster Colors has failed again. The controversial reality series has got a lifeline support from the Bombay High Court to air at 9 pm till at least 3 December, much against the government directive of shifting it to the adult viewing hours between 11 pm and 5 am. Ironically, the Information and Broadcasting Ministry has sought more time to prepare its response to the petition filed by Viacom18, the company that owns and operates Hindi general entertainment Colors, in the Bombay High Court.

The government has also decided to ban SS Music, a multilingual music channel, for seven days for allegedly showing nudity. A recommendation had been made to the Ministry on 15 November in a meeting of the Inter Ministerial Committee (IMC) comprising representatives of the ministries of Information and Broadcasting, and various child rights and women’s rights organizations.

The IMC in its meeting on 15 November viewed the programmes, Rakhi ka Insaaf and Bigg Boss Season 4, tapes. It said that Rakhi Sawant in the reality show Rakhi Ka Insaaf asks certain questions to the participants relating to their personal lives which are not found suitable for unrestricted public exhibition, and she uses abusive language. It has also been noted that participants often reveal intimate details of their relationships, resulting in great embarrassment to the viewers watching the programme along with their families and also to the participants in the show. Participants are often shown quarrelling in the programme and hurling abuses on each other. The Ministry accepted the recommendation of the IMC and has directed Imagine TV and Colors channels to shift the programmes to anytime after 11 pm and modify the content in accordance with the Programme Code with effect from 17 November.

Viacom18’s counsels Aspi Chinoy and Ameet Naik told the court that there is nothing obscene in the show and it is in accordance with the ministry’s guidelines. In  its order, the ministry had said that the show can be aired between 11 pm and 5 am and that even promotional clips should not be aired beyond these hours. The ministry felt that the show was not suitable for viewing by children.

Chinoy argued that the ministry had not pointed out a single incident which they found objectionable. “They ask us to modify content without saying what needs to be modified,” he said. He added that the show, running in its fourth season, has been on air since October 3 in the prime-time slot. He further argued that the order was passed by the ministry without giving the channel any time to respond. “There should at least be a 24-hour or 48-hour notice before issuing such an order. My (Viacom18) advertising commitments will fail and lead to civil consequences,” Chinoy said.

Justices DK Deshmukh and ND Deshpande said they found prima facie substance  in the submissions made on behalf of Viacom18. Issuing notice to the ministry, the court said it would dispose of the matter finally on November 22. “Will you assure it (Bigg Boss) is of good taste and decency?” justice Deshpande asked. “We will not change the time then.”

More shows under scanner

The ministry has been monitoring shows in the past and issuing warning to the channels airing offensive and objectionable content, However this is the first time  that the I&B Ministry dictated a change in broadcast timing. While the Inter-Ministerial Committee – that looks into complaints of violation of programme and advertising codes plans its next move on the stay order on Bigg Boss, sources in I&B ministry inform that programmes like Emotional Atyachar, Splitsvilla and Roadies are also under scanner. A highly placed source confirms, “The coming days will see more notices issued to channels if the content in programmes is found inappropriate.” We hear that Emotional Atyachar season 2 is being followed closely, while keeping a tab on Roadies 8, which is in the audition stage. Also, the ministry is not impressed by the teaser of season 5 of Splitsvilla that starts December 5. If found objectionable, these programmes will have to face ministry’s crackdown under Section 5 of the Cable Television Networks (Regulation) Act, 1995, and also get channels to take shows off prime slot.

What is Section 5 of the Cable Television Networks (Regulation) Act, 1995?

No programme can be transmitted/re-transmitted on any cable service which offends good taste or decency, contains anything obscene, defamatory, deliberate, false and suggestive innuendos and half truths; criticizes, maligns or slanders any individual in person or in certain groups, segments of social, public and moral life of the country; and is not suitable for children and unrestricted public exhibition.

Most countries have a clearly laid down watershed schedule, that’s the period when what’s deemed to be adult content can be telecast, mostly starting between 8 pm and 10 pm and ending early morning, and a violation of guidelines can invite an indecency fine. Indecency is, crucially, a tricky charge to level. Television, like cinema, retains edginess by pushing the envelope on what subjects can be within the purview of telecast and in what manner. Certification of such content and decisions on its suitability for wider viewership require an open mind on the changing context; the parameters cannot be constant.

This is why such decision-making needs to be made in a zone apart from the government (which, even when it’s not actually moving on a censorship impulse, will always be viewed with suspicion) and the broadcasters (which, obviously, would take as liberal a view of guidelines as possible). In the UK, for instance, the Office of Communications was established by an Act of Parliament in 2003, as a forum where, among other things, concerns about programming can be raised,  discussed and acted upon. There’s been no shortage of occasions to perceive the absence of such a mechanism in India: from questions about some of the live coverage of the November 2008 Mumbai attack, to the full-throated demand in Parliament last year for curbs on entertainment channels, to I&B’s Bigg Boss initiative. The failure of government and industry to move beyond these periodic face-offs, however, leaves the impression that each is rather more comfortable with the current arrangement.

Divided Civilization

Meanwhile, the fate of other shows with ‘adult’ content hangs in the balance, with channels claiming that they have not heard from the I&B ministry. “We have been getting news about shows like Bigg Boss and Rakhi Ka Insaaf being considered for adult viewing only. But we have not received any official communication for Roadies and Splitsvilla,” said a spokesperson from MTV.

However, the government’s decision to have adult television hours between 11pm and 5am has received mixed responses. “The ministry’s order has raised questions about whether it is the ministry’s job to decide who should watch what and at what time. Moreover, the move has only given free publicity to these shows. This may now compel underage viewers to stay up at night to see what the government does not want them to watch,” says mother-of-two Naina Roy.

Censor Board member and sociology professor Nandini Sardesai finds the idea of restricted telecast “quite harebrained”. “I think the idea of any kind of censorship is over and done with. Today’s kids are leagues ahead of the censoring generation. Just because you block something out at a certain hour, you cannot guarantee they will not catch it on the internet,” she says. Dr Anjali Monteiro, documentary filmmaker and professor at the Tata Institute of Social Sciences, feels that it would be better if the television industry evolves a code of ethics to ensure that what hits the air does not violate human dignity and rights.

However, Pratibha Naithani who had filed a PIL in 2005 to prevent unchecked telecast of adult movies, says that expecting channels to self-censor is not going to work. “The standard of what channels put on air is slipping. Reality shows stop short of showing hardcore porn in their race for TRPs,” she says. She suggests that adult content should only be available on paid channels as is the norm in the West. It is the first time that channels have been asked to observe a time slot for certain shows. However, it is not clear whether the six-hour slot will be a designated adult viewing slot since the I&B ministry has termed its move only as “a  crackdown on vulgar content at prime time”.

So how deeply will the time shift hurt the ad revenues of the two reality shows? Mindshare leader, South Asia R Gowthaman believes this is a very important order and will have a huge impact on the channels. “It will definitely impact the ratings and revenues of the channels. At 11 pm, the ratings are going to drop significantly and we have to reconsider our investments on these shows,” he said. An example of how ratings can be damaged due to a late night shift is Star Plus’ Sach Ka Saamna. Says Lodestar Universal COO Nandini Dias, “The late primetime (11 pm) slot usually has lower viewership. This may possibly impact on the ratings of the two shows. And advertisers, who must have done agreements based on the primetime airing of these shows, will definitely review their deals.”

The country added a whopping 51.18 million mobile users during the quarter ended June 30 this year, taking the wireless subscriber base to 635.51 million. The wireless (GSM and CDMA) user base grew by 8.76% during the April- June quarter of this year to 635.51 million from 584.32 million in the preceding quarter, the Telecom Regulatory Authority of India (TRAI) said in a statement. The total telecom subscriber base (wireline and wireless) touched 671.69 million for the quarter ended June this year from 621.28 million in the quarter ended March, registering an increase of 8.1%

The overall tele-density (number of telephones per 100 people) for the quarter ended June reached 56.83, TRAI said. However, the all-India blended Average Revenue Per User (ARPU) per month for the GSM segment (full mobility) decreased by 7% to Rs 122 in June from Rs 131 in March, while the ARPU for the CDMA segment during the same period dipped 3% to Rs 74 from Rs 76. Subscriber base of wireline service has declined from 36.96 million (in March quarter) to 36.18 million at the end of June, 2010, taking the wireline tele-density to 3.06.During the April-June quarter, subscription in urban areas increased to 452.59 million, while rural subscription grew to 219.09 million, taking the tele-density in these areas to 128.20 and 26.43, respectively. The total Internet subscriber base reached 16.72 million for the April-June quarter from 16.18 million in the previous quarter, registering an increase of about 3.33%.

Share of Broadband subscription in total Internet subscription increased to 56.7% in April-June with 9.47 million subscribers, it said. Earlier, TRAI said in August the country added 18.18 million subscribers this year, taking the total number of mobile users in India to 670.60 million. According to data released by the telecom regulator, the wireless subscriber base increased from 652.42 million in July, 2010, to 670.60 million by the end of August, 2010, translating into a growth of 2.79%. The total number of telephone subscribers (both mobile and landline) in India increased to 706.37 million by August-end from 688.38 million in July, it added. With this, the overall teledensity (telephones per 100 people) in India touched 59.63%.

iSuppli has arrived at this figure going by the current growth rates. By 2009 end India had “just” 525 million mobile subscribers – and in a year, the number is set to reach 766.0 million – that’s an increase of almost 50% in just a year. The only country with more mobile subscribers than India is China.

Trai Initiative to Bring down charges

Trai initiated an exercise to rework telecom tariffs for mobile as well as basic services, a move that may further bring down charges, especially in the long distance segment. Trai’s initiative assumes significance in the wake of rising number of promotional offers and increasing competition in the telecom market. It has received representations from consumers against the multiplicity of plans in the market, leading to confusion among consumers. Regulations bar a service provider from offering more than 25 tariff plans in a service area at any given time.

Trai has issued a consultation paper, “Certain Issues relating to Telecom Tariffs”, and has sought views from all stakeholders including operators by November 15. Trai move coincides with the government plans to merge all 22 telecom circles (states) into one in order to slash roaming charges. The Department of Telecom (DoT) is likely to consider the proposal soon. Trai has specified a standard tariff package for rural fixed line services which the service providers are mandated to offer to the customers in addition to any alternate tariff packages.

According to some of the operators, there is a scope for reducing termination charges (a charge paid by an operator on whose network call ends to the one from whose network call originates). If this happens, call charges are likely to fall further from current levels. The tariff plans offered by the service providers have different component of rent and call charges, processing fee, talk time and value added services etc. Adequate price transparency is crucial for the correct operation of an efficient and competitive market. Sometimes it becomes difficult for consumers to find, understand and use the information available on the market in order to make decisions on the choice of service provider and/or tariff packages that best meet their needs.

The transparency of tariff in telecom sector is necessary to protect interests of consumers and to facilitate further growth of telecom services in India. The highest number of tariff plans in a service area in respect of GSM prepaid category is 39 (Bihar and Mumbai) and the average number is 27. Whereas, in case of CDMA prepaid category, the 22 highest number of tariff plans is 18 (MP and Punjab) and the average number is 12. In respect of GSM post paid, the highest number of tariff plans is 95 (Mumbai) and the average number is 61. In respect of CDMA post paid, the highest number of tariff plans is 38 (Punjab) and the average number is 27.

The shipments of mobile handsets

The shipments of mobile handsets in India grew by 6.3% quarter on quarter to touch an all-time high of 38.63 million units in a single quarter, said a study released  by advisory firm IDC’s India quarterly mobile handsets tracker ‘2Q 2010’.

According to the study, the dual and triple SIM card slot phones have grown to touch 38.5% of the total India mobile handset shipments, from less than 1% in the second quarter of 2009. ‘In the recent quarters, several new players successfully launched their own devices at significantly lower average selling value in the price sensitive India market,’ said Anirban Banerjee, associate vice president-research of IDC India. ‘Such handsets found ready acceptance amongst first-time buyers, especially from small towns and villages,’ he added. The study revealed that entry of new brands led to a spurt in overall market and saw emerging vendors corner 33.2% of total India mobile handset shipments in the second quarter of 2010.

The Finnish handset maker Nokia retained its number one position with a market share of 36.3% in terms of units shipped. The Korean electronic giant Samsung retained its number two position while the Chinese brand G’Five emerged as the number three player. According to Naveen Mishra, lead telecom analyst of IDC India: ‘The Indian mobile market saw a unique trend of multi SIM phones capturing 38.5% of the market.’ ‘This could be attributed to several new service providers responding with highly competitive tariff plans to a price sensitive mobile telephony user market,’ he added. According to the study, the number of emerging  vendors in the growing mobile handsets market in India grew to 35 in second quarter of 2010 and garnered 33.2% of total shipments for the first time during the April-June 2010 quarter. This represented a manifold increase from 5 new vendors representing a 0.9% combined share of units shipped in the January-March 2008 quarter. During the last 6 months, the top five mobile handset vendors in India were Nokia, Samsung, G’Five, Micromax and Spice, said the study.

Akshoptifiber (iControl) and Smart Digivision (MyWay) together have garnered more than 70,000 customers so far. Smart Digivision plans to offer IPTV services to between 1.6 million and 1.7 million broadband subscribers of BSNL and MTNL in these selected 54 cities which comprise 80% of the country’s broadband subscriber base. Bharti Airtel is also finalizing plans to expand services in the top eight cities of the country. Despite low levels of penetration right now, the future of IPTV is bright. This is clearly evident from the amount of interest shown by biggies such as Google, Cisco, UTStarcom, and CopperGate etc.

Customer Activities

Ericsson’s Consumer Lab recently conducted a study called Multi Screen Media Consumption 2010. Data was collected in China, Germany, Spain, Sweden, Taiwan, the UK and USA. The sample in the study is representative of more than 300 million consumers.

The study says, “At least once a week, 93% are still watching scheduled ‘linear’ broadcast TV, but the role of broadcast TV is changing owing to the introduction of new distribution channels. More than 70% of consumers surveyed are streaming, downloading or watching recorded broadcast TV on a weekly basis, and 50% are using internet based on demand TV or video, every week”. While this study has been conducted in other countries, it does give a glimpse of what consumer behaviour will be like. This clearly shows a preference for time shift capability, in which IPTV has the unique capability that enables continuous recording of channels without the user’s intervention.

In India as well, consumers are showing interest in IPTV services. According to a survey by KPMG, 18% people want to retain their landline connection in anticipation of future services such as IPTV. This is a very big number given the fact that IPTV awareness level is very low in the country. IPTV can not only help check negative growth of the landline business, it can also push up the broadband penetration in the country manifold. Internet over TV, as a concept, is so lucrative that Google has jumped in to provide this technology by introducing Google TV, for which it has collaborated with DISH in the USA, and will offer online TV and a web platform. Cisco has also recently purchased a Canada-based company ExtendMedia, a provider of software based content management systems (CMS) that manage the entire lifecycle of video content through monetisation for pay media and ad supported business models, which will help Cisco offer solutions to service providers for delivering multi screen offerings.

Limited availability of Broadband

Limited availability of fixed line broadband in the country is a limiting factor for the launch of mass market IPTV services. But this limitation will be addressed by set top boxes, which use wireless broadband access to deliver IPTV. A media person says, “If we can have 2Mbps or more through wireless access, we can provide IPTV service. And both WiMax and LTE standards provide speeds much greater than 2Mbps.” Akshoptifiber has already showcased a wireless set top box in India, and though the cost is currently three times that of the normal set top box, it will come down drastically once service providers start rolling out services.

Mobile IPTV

UTStarcom, a USA-based provider of internet protocol TV (IPTV), next generation networks (NGN), and broadband services, said it is ready for a commercial launch of its Mobile IPTV services, and that it is currently in talks with various service providers.

Vijay Yadav, managing director, UTStarcom, told, “We are presently in talks with various telecom operators. The technology is already here. It will be available in the market shortly.” Mobile IPTV extends multimedia services such as TV, videos, data etc, over IP-based networks to mobile networks. The service will be  available for use via a URL link or an on device portal. The bandwidth requirement, informed Yadav, is typically between 40Kbps-2Mbps depending on screen resolution. “We noticed that bandwidth of around 80Kbps will provide satisfactory video and audio playback using the 2.5G network to carry mobile IPTV,” he said.  On a 3G network bandwidth of 144kpps will be available for mobile IPTV in a high speed moving environment, 384 Kbps in a slow moving environment and 2Mbps in a stationary environment. Maximum bandwidth speed of 75 Mbps will be available through WiMax IEEE 803.11g, and 20 Mbps will be available on LTE network.

As far as pricing the service is concerned it would totally depend on the plans offered by the service provider, said Yadav. UTStarcom is already offering IPTV services with Airtel in India and hence there is a chance that we can see Airtel to be one of the first few service providers offering the service.

The service will be similar to mobile TV services that CDMA carriers such as Tata Indicom and RCom will offer over their EVDO networks. However, the key difference would be the interactive features like time shifted viewing of live channels. This feature allows user to pause live TV or watch some of the pre recorded content later, just like on a normal IPTV on the bigger screen. Yadav feels, “Mobile IPTV definitely has tremendous scope in India since mobile phones are the communication technology with the highest acceptance here. Mobiles are among the most personal devices that people have with them at all times. It gives TV viewing users freedom of choice and location. Plus, with the added features of IPTV now accessible on your mobile phone, this technology is bound to take off.

A recent study by Cisco also indicates that volume of video traffic is expected to grow 151% in the period of 2008 to 2013 and Western Europe and APAC will account for 60% of mobile traffic in 2013. Yadav believes that the mobile TV has not picked up mainly due to the lack of quality. The delay in 3G spectrum in India has also held back the technology.

Going ahead, UTStarcom sees continued limited storage capacity in mobiles and limited coverage in remote areas as possible hindrances to the popularity of the service. He further adds, “In India we have seen a pent up demand for consuming video. And given that mobile phones are most pervasive, video consumption would go up as search and discovery is made easy with UTStarcom’s mobile IPTV solution.”

Web IPTV

Some companies are already testing the integration of Google’s Android platform with its set top boxes, which will enable users to enjoy experiences similar to a PC, on the TV. The company has already added services such as online ticket booking through TV. There are currently 22 million digital TV homes in India which, according to a report by equity research firm IDFC Securities, are set to grow to 86 million by 2015. These numbers reflect a large user base specially because unlike a laptop or a mobile phone which is more of a personal gadget, a TV set is a shared resource in a home and is used by the entire family.

There are other benefits such as video chats which will provide much better user experience on TV sets thanks to the bigger screen size compared to a conventional PC or laptop. For a price sensitive market such as India, integrating PC into a TV will mean investment protection for families. TV sets are comparatively cheaper, with conventional cathode ray tube TV prices coming down to below Rs 10,000 for a 29 inch TV. While IPTV cannot replace a full fledged computer, it can provide capabilities that a cloud based thin client computer can provide which, for most first time users, is more than sufficient.

Applications

IPTV not only has the capability of providing net access, it can also be used to push value added services and applications. Gaming is already included in the currently available services. This can be improved by introducing more interactive gaming, for which service providers can charge a fee. Video conferencing is another area which can be of interest not only for consumers but also for enterprises. Similarly, TVs can also be used to provide applications similar to what we see on smartphones today.