India and China feature among the worst countries in the world in formulation and implementation of regulatory policies for the video broadcasting industry, says a report from the Cable and Satellite Broadcasting Association of Asia (CASBAA).
According to the study, ‘Regulating for Growth 2011 — a regulatory regime index for Asia Pacific multichannel television’, India ranks second lowest (ahead only of China), scoring 43 per cent in the effective regulatory regime index, as compared to 95 per cent attained in developed markets like New Zealand and the United States. The most favourable regulatory environment was found in Hong Kong in Asia, with Japan, Australia and Malaysia close behind.
John Medeiros, deputy chief executive officer and director of regulatory affairs, CASBAA, said: “Our research shows that markets where the regulatory environment is friendly have higher levels of economic activity. This benefits ancillary industries, local content creators, tax collections and enables consumers to access newer forms of technology.”
In India, he said, while the government has taken a light-touch approach on content regulation and asked stakeholders to frame sector guidelines, much remains to be done in the areas of economic regulation, protection of intellectual property and restrictions imposed on content supply.
Data from Media Partners Asia (MPA) shows while India has the second largest pay TV market in the world, its contribution to national economic output remains a mere 1.2 per cent. Adverse policy measures in the pay TV market in India has meant that profit margins in the broadcasting sector fell to 13 per cent in 2010 from 23 per cent in 2003, limiting investment in content.
Besides, capping of wholesale and retail rates in the pay TV industry by the Telecom Regulatory Authority of India has meant average pay TV revenues have remained stagnant. These have grown a mere 2.5 per cent between 2004 and 2010, though the number of channels available to cable operators has more than doubled to 727 now.
The requirement that the same content be provided across all platforms has stifled innovation in content creation and restricted consumer choices, holds the report. “Regulation of the Indian pay-TV industry has become the most restrictive in the region, if not the world. Almost every aspect of the industry is controlled, from channel availability, retail and wholesale rates, packaging, advertising, investment and even the commercial and technical arrangements between different levels of the supply chain….,” says the report.
There does not appear to be any prospect of improvement in the near future, though the possibility of widespread digitisation does hold some promise,” says the report.
Loosening the foreign direct investment limits to boost investment, licensing cable operators, enabling consolidation in the fragmented distribution marketplace, removing price controls on distribution of content and offering tax incentives for addressable digitisation could foster growth in the sector, it says. Once such proposals are implemented, the Indian pay TV industry has the potential to grow to $130 billion from the current $25 bn and contribute as much as five per cent to national economic output of the country by 2017.
The report was formulated after examining the effectiveness of government policies in regulating the delivery of video content over multiple networks to paying customers in 17 large markets for pay television globally.
