The government on Thursday gave a major boost to the television industry by clearing an ordinance to completely digitise the Rs 20,000-crore cable and satellite television industry in the country by 2014.
The move is expected to improve subscription revenue for broadcasters beaming to 116 million homes and end a hefty carriage fee they pay cable TV operators.
The proposed digitisation will be carried out in four phases, as per the ordinance to amend Section 4A of the Cable TV. “The move to full digitisation with addressability will benefit all stakeholders in the value chain — from consumer to service providers to broadcasters and the government”, said M G Azhar, president, strategy and business development, Den Networks Limited.
The proposal had its genesis in August last year when the Telecom Regulatory Authority of India suggested the digitisation of television transmission in the four metros of Mumbai, New Delhi, Kolkata and Chennai March 31, 2012. Now, the rest of the country is to follow suit — in phases — by December 31, 2014.
Cities with a population of one million will be covered by March 31, 2013. All urban areas would be covered by September 30, 2014 while the entire country will be covered by the end of that year. The government accepted the recommendations with minor revisions.
Currently, analog cable does not offer consumers any choice of what channels they can select. In most cases, a single rate is charged to all customers and a single package of 80-90 channels is offered at the most.
Digital platforms will carry more channels and offer better quality. Digital cables have the capacity to carry up to 1,000 channels.
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Broadcasters, too, are likely to benefit because digitisation will remove the need to pay carriage fee to cable operators, bringing down the cost of operations of running channels. Currently, carriage and placement fee contribute to nearly 20 per cent of the total cost of running a channel. All satellite channels will be beamed to houses through set-top boxes.
The news escalated the value of shares of companies engaged in broadcasting and providing cable service. Hathway Cable and Datacomm closed at Rs 101.74, up by 10.3 per cent; Zee-promoted Wire & Wireless India jumped 19.52 per cent to close at Rs 8.49 and Den Networks rose over 0.8 per cent to close at Rs 82.05.
Broadcasters termed the ordinance as an “important development” for the industry as well as consumers. Reliance Broadcast Network noted that the current capacity constraints in analog cable had led to stifling growth of new channels and introduction of technologically advanced content. “The increased capacity of digital distribution will drive greater investments by broadcasters toward focused, targeted and HD content,” said Tarun Katial, its CEO.
Another official said the broadcaster, instead of paying huge carriage fees, could make higher investments into creating good content. “Channels will no longer need to be only advertisement-driven,” he added.
Tata Sky termed this development as encouraging to DTH service providers. “The digitisation will aid the organisation of the industry and result in clearer subscription figures for broadcasters,” according to its CEO, Harit Nagpal.
However, a section of few cable operators opposed this move, as complete digitisation would require them to invest at least Rs 25,000 crore. “The ordinance hasn’t mentioned about raising foreign direct investment limit to 74 percent from 49 percent. This will cause difficulty in raising funds for our requirements,” said the boss of a leading multiple system operator.
Further, most of them also fear a backlash from many consumers who will be reluctant to invest in a set-top box. What’s more, a sudden demand for millions of such boxes would entail an escalation in their prices.