The direct-to-home (DTH) industry is celebrating the Cabinet’s nod to digitisation, but cable operators are not impressed.
Apart from the fact that smaller operators face extinction, most also fear a backlash from consumers who will be reluctant to invest in a set-top box. Also, the total funding required for digitisation will be more than Rs 20,000 crore, say cable operators. “Cable companies will have to think about where funds are going to come from,” said the CEO of a leading multi-system operator (MSO).
Independent observers say this is a knee-jerk reaction, as local cable operators, who had limited incentives to digitise or partner with MSOs earlier, will now be compelled to undertake digitisation.
“With limited access to capital as also ability to digitise their own network, cable operators are now bound to partner with MSOs. This will address one of the key problems of the industry — under-declaration (of subscribers), and also keep prices under check. Once the key metros get digitised, there will be some amount of transparency in the market in terms of revenue declaration. This will lead to a consolidation of the cable and satellite sector, spurring mergers & acquisitions,” said Smitha Jha, consulting head - entertainment and media, PricewaterhouseCoopers.
Experts say the move will mark a paradigm shift in the television distribution industry, reeling under huge revenue losses due to under-declaration of subscribers by local cable operators and industry fragmentation.
The ordinance will enable the government to amend the Cable TV Act to make it mandatory for all operators to switch to digital signals in metros (by March 31, 2012) and in the rest of India (by December 31, 2014) in a phased manner.
In the past few years, digitisation has been mainly driven by consumers switching to DTH, while digital cable is yet to gain momentum.
According to a KPMG report on the media and entertainment industry, there were 103 million cable homes in 2010. Of this, 68 million were connected by analogue cables, while 28 million used DTH and five million switched to digital cable.
