Published: The Hindu Business Line, June 10, 2003

By Pradeep S Mehta

Under the Conditional Access System, cable TV operators will neither be able to bundle popular channels along with the less popular ones, nor charge high premiums on the popular ones and a notional sum for others. This, their interests being fairly well protected, consumers can give their thumbs-up to the new regime, which will, hopefully, benefit all the players, says Pradeep S. Mehta

The Conditional Access System (CAS) has become quite a hot topic, with the Prime Minister and the Deputy Prime Minister getting involved with the “consumer-interest-should-be-kept-in-mind” refrain; they are worried that this might become an election issue.

The Delhi Chief Minister has added her bit too, asking the Government to withdraw the CAS order. The BJP president, Venkaiah Naidu is not far behind, while the Information and Broadcasting Minister, Ravi Shankar Prasad continues to worry.

What’s all this brouhaha about and is it really worth it? CAS or enabling consumers to select only those cable TV channels they wish to see, is all about promoting the consumer interest. But objections from certain vested interests have blown the whole issue out of proportion.

CAS is a popular concept in many countries. When consumers get a huge number of TV channels, they may not want to see all of them. Especially if they are pay channels, the consumer will want to select only those he wants to see.

A set top box (STB) regulates the channels coming in via cable. The pay channels are scrambled, and the consumer will get unscrambled signals for the channels paid for. With a set of free-to-air channels, the uesr pays much less in the new system than if there was no CAS.

An STB can cost anything between Rs. 2000 and Rs 5000 and is a one-time investment. At this point the boxes are imported but will be manufactured indigenously over time. Once the system is in place, cable TV consumers should end up with a much smaller monthly bill than they have been paying.

There is also a proposal to give consumers STBs on lease/rental. However, confusion still prevails on whether STBs can be used interchangeably on different systems. That needs to be clarified by the industry.

To begin with, the Government has proposed that CAS be introduced from 15th July in the four metros of Kolkata, Chennai, Mumbai and Delhi. After studying how it functions, it will gradually be introduced in other parts of the country.

Undoubtedly, CAS favours consumers, but much more needs to be done before to make it foolproof. It is much easier to uproot a sapling than a tree. Unfortunately the cable TV system in India has grown wildly in absence of any proper regulation in place.

In the prevailing situation, the Government’s announcement to set up an autonomous regulatory body to oversee the electronic media is most welcome. This step comes at the right time when there is a lot of confusion about CAS. The Broadcast Regulatory Authority of India (BRAI), as it is tentatively called, will monitor the industry and regulate it through price capping and performance standards and resolve inter-industry disputes.

Some people do feel that the introducing CAS was a hasty decision on the Government’s part, without preparing either the infrastructure or the consumer for such a change. This is true to a certain extent but certainly not something that cannot be rectified.

In fact, the I&B Ministry has already initiated steps in this direction. Recently, an excellent set of ‘frequently asked questions’ was published by the Ministry in leading dailies to spread awareness among the consumers on this issue.

Now the government needs to educate the cable TV viewers and try to answer their simple questions, including: Which channels would be included in the free-to-air (FTA) bouquet and which would be pay channels; what would be the subscription to these pay channels; at what prices will the STBs be available; and the relative advantages of the different types of STBs; whether STBs can be moved, like TV sets, to different cities, or operators, and so on.

Let us look at the subject rationally. CAS gives consumers the right to choose. While the government has decided the FTA package, broadcasters will fix the prices of the pay channels. The FTA package includes more than 30 channels and will cost Rs. 72, plus taxes. There is no need for an STB to watch these channels. CAS not only benefits the consumers but other stakeholders as well. It offers broadcasters and 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 critical issue of pricing the FTA package has been addressed by the Government, leaving the pay channel prices to be determined by market forces. Here the only thing that the Government needs to do is to ask the broadcasters to declare the prices of the pay channels.

If required, the Government should intervene here too, in case the prices are unreasonable or if the consumer is coerced into taking more than he wants.

Price-capping is resorted to everywhere in the world, including India, in sectors where natural monopolies operate. For instance, electricity and telephone prices, or bus and taxi fares, are all fixed by the government through proper procedures.

The fear that the consumers’ right to choose will be defeated by the pay channels’ business strategy to offer single channels at very high prices and making a bundle or a bouquet just about a little more expensive on a cumulative basis, is also being addressed.

The government is insisting on “unbundling of channels in the real sense” which “allows real choice to the consumers”. In any event, if the consumer is coerced into taking channels he does not want the Consumer Protection Act can be invoked for tied sales or restrictive trade practice.

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 intervals at which such subscriptions are payable for receiving each pay channel provided by the cable operator.

Thus, even as the advertisers adopt a wait-and-watch policy till the implementation of the CAS, broadcasters will not be able to make good their revenue deficits by either bundling popular channels alongwith the less popular ones, or charging high premiums on the popular ones while charging a notional one for others.

Under these circumstances, and after the PMO’s intervention, given the steps being taken by the Government, consumers have little to worry about.

Consumers and consumer organisations must give the Government their full support in this matter and help bring about a complete and comprehensive regime that is in the interest of all – broadcasters, MSOs, cable operators and consumers.