Published: The Financial Express, June 16, 2003

By Pradeep S Mehta

Is there any chaos, just because the word rhymes with CAS (conditional access system)? Aaj Tak puts out a programme with a more dangerous suffix: CAS ka kahar (curse). There is some chaos, as indeed for anything which is new and creates problems for some.

But there is nothing accursed about something which will be of great benefit to consumers. Often, the government deals with issues hamhandedly, which creates confusion. This is compounded by vested interests who are opposed to any change. Some oppose it because it is just fashionable.

This reminds me of the compressed natural gas (CNG) issue in the capital. A few moons ago, the Supreme Court directed the government to start CNG conversion of public transport, so that vehicular pollution could be arrested. Many bus drivers were opposed to it, because that would stop the extra income they earned by selling diesel. However, under the danda of the apex court, the government went ahead in implementing the order. But the arrangements for making CNG available were very poor. Long queues of vehicles could be seen waiting at filling stations. This has now eased, but the whole experience offers a good insight into governance matters, whenever a pro-people change is being brought about.

We will probably see a similar situation in the cable TV sector in the four metros, which are required to offer a set top box (STB) to consumers who wish to go in for them. What will these STBs do? They will offer a choice to the consumer to select and pay for only such pay channels that s/he wants. However, consumers may not even go for a STB, if s/he is happy watching the free-to-air channels (FTA) only. This is where the chaos springs from. Not all the 6.7 million cable TV consumers in the four metros would go for a STB and pay extra for pay channels.

The other part of the chaos or confusion arises from the silence on the part of the cable TV system to announce the prices of the pay channels. The cable operator was asked to declare the price of pay channels and discounts, if any, by June 15. There is no progress on this front, as the broadcasters have not yet declared channel pricing. They have asked for some time with the specious plea that their key personnel are travelling.

In the midst of all this confusion, one thing remains quite clear: The Information and Broadcasting Ministry’s deadline of July 14 for the CAS roll-out stands firm. The Prime Minister, Deputy Prime Minister and Chief Minister of Delhi on their part have chorused the same — consumer interest should be kept in mind. Ravi Shankar Prasad, the I&B minister, has announced that there will be about 70 FTA channels for a nominal Rs 72 (plus taxes), and that the overall bill will not exceed Rs 200 per month. With this, the government has addressed the crucial issue of pricing of FTA channels, while market forces will determine the price of pay channels. Hence, price-capping is not required for them, claim officials from the I&B ministry.

Indeed, this is a grey area, and broadcasters are already scared of dipping revenues. Revenue from advertisements constitute almost 70% of a broadcaster’s total revenue, and hence, they will have to carefully (read nominally) price channels so as not to lose viewership. More so, because investment in a CAS/STB is required to view pay channels and not the FTA channels.

In light of this and other measures by the government to contain restrictive trade practices like bundling of unpopular channels with popular ones, consumers have little to worry about.

Broadcasters, instead of competing with each other, have decided on presenting bouquets of similar channels. For example, all entertainment channels may be offered as a bouquet. Similarly, all sports channels may be presented as a bouquet, and so on. In the event of the consumer being coerced into buying channels s/he does not want, s/he can go to a consumer group or a consumer court for redressal.

CAS undoubtedy favours consumers. But, not enough information is available to them yet. Some questions need to be addressed, like which channels will be included in the FTA and which would be pay channels; at what prices will the STBs be available; what are the relative advantages of the different types of STBs; what happens if one moves residence or requires to change the cable TV operator; will the STBs be of any use once DTH is launched, and so forth.

According to the Cable Television Networks (Regulation) Amendment Act, 2002, every cable operator will have to publicise, in the prescribed manner, the subscription rates and the internals at which such subscriptions are payable for receiving each pay channel provided by the cable operator. Further, cable operators have offered to allow consumers to choose the pay channels they wish to view at the beginning of every month so that they may be billed likewise. This is good news, as a consumer can subscribe for say a sports channel just before the World Cup or “un-subscribe” an entertainment channel before the board exams are due.

CAS is emerging as a win-win situation for all, with all stakeholders standing to gain by its implementation. Besides the obvious benefits to consumers, it offers broadcasters and multi system operators (MSOs) a system that will reduce revenue leakage from the current subscriber under-declaration. The government also benefits from the entertainment and service tax collections.

The proposal to have an autonomous body to regulate the broadcast industry is a very welcome one. This step comes at the right time when doubts are being raised, creating confusion about CAS. The Broad-cast Regulatory Authority of India (BRAI), as it is tentatively being called, will monitor the industry and regulate it through price-capping and performance standards and resolve inter-industry disputes.

Having taken pro-consumer steps, the government, in turn, needs the support of consumers and consumer groups to bring about a competitive and comprehensive cable TV regime.