Digital addressability: miles to go

Too many issues have clouded the television distribution space in India. And a transition from the present scenario, plagued by adversarial commercial relationships among stakeholders, outdated distribution technologies, poor investment climate and weak consumer protection, to a future state of digitised addressable networks, equitable revenue sharing across the value chain, and consumer friendly options, is at least five years away. Utility companies including gas and power firms would start carrying television content into households in due course.

Sounds far-fetched? No, said speakers on Day 3 of FRAMES 2005. The caveat though, was that things wouldn’t change in a hurry. Cable still accounts for 75 percent of the US television market. So will it remain the primary system of distribution in India too, even after introduction of DTH and broadband options? According to Shantonu Aditya, President, SET Discovery, cable will continue to remain the primary form of Television distribution even after 2006. At the session on ‘Distribution: Miles to go…’, he said, “The issues raised over the last three years haven’t changed. But the challenges have increased. What is required is acceleration in the process.” While Day 2 saw Pradip Baijal stating that the lack of content limited DTH, Shantonu indicated that in DTH, there may be a pricing issue, making it even more expensive than broadband in the medium-term.

It may take at least five years, speakers agreed, for all Indian homes to start receiving content in the digital format, given the huge investment required to convert from the existing analog systems. “We cannot just put a sunset 2008 for Analog. But we can look at going digital and increasing the quality of content. We have also floated a consultation paper on whether the terrestrial route should be taken to allow distribution”, said Rajesh Kacker, advisor, TRAI.

With most existing analog distribution networks have a carrying capacity of up to just 550 MHz, or just 67 channels, Aditya felt it was necessary to go digital to enable choice for customers. But without a protection of territories, he said it was unfair to ask cable operators to upgrade to digital. Said S.K. Arora, additional secretary., I&B Ministry, “Operators need both foreign and domestic investments, and more importantly, they need to import equipment. They have been asking for a reduction in the import duties to make it on par with the incentives for telecom equipment.”

Ashok Mansukhani, President, MSO Alliance, alleged that the investment required to go digital would come to rest with the MSO operators. Issues like addressability were a must, he contended, with a reasonable timeframe of around five years. He said, ”Digitalization is not a magic remedy. It will come naturally with the demand to see more channels. We do not want to go back to the days of ‘Licence Raj’.”

With 100 more channels expected to start beaming into India by 2010, a heated debate ranged on whether consumers wanted more channels at all. Kacker said, “Consumers want to know why there are more channels coming into the market. They are apprehensive about prices going up and the issue of addressability is applicable here.”

The role of state governments was recognized in implementing CAS, because of the dependency on managing multiple relationships including that between the last mile operators and the MSOs. “Implementation of CAS in Chennai worked because the customer has the right to say ‘we don’t want pay channels’. He also has the right to go a la carte. If you want to order a biryani, why would you want to pay for the entire menu card?”, questioned Mansukhani. S K Arora added that with India living in six different socio-economic layers, it was necessary to make content affordable to each level of consumers, saying, “This is the challenge for India”. Television where you can block the ads: far off, but is already happening in countries like the US and the UK. With the evolution of addressable systems in India, this might throw up a huge challenge for advertising sales on television. With 37 percent of the revenues coming from advertising, this might just be television’s biggest challenge yet, but it was still some time away, felt Aditya.

On the role of a regulator, Arora said, “The role of the regulator is critical not just because content has to be carried, but also because the distribution sector has evolved in a manner that does not lend to easy regulation for future growth.” Discussing fixed consumer pricing, Aditya reflected that implementation should be demand-led rather than through ‘push’. “Fixing consumer prices will reduce choices. Leave it to the consumer to decide with the advent of competition, like the mobile market. Market forces will also enable operators to segment markets to addressable high-paying and basic-level customers,” he added.

The must-carry clause in the tariff order evoked criticism from the MSOs. Speaking for the segment, Mansukhani said, “What we demand is a level playing field. Why are we being disallowed from providing addressability?’ One didn’t find answers to too many questions on Day 3 of Frames 2005. As they said, it would take at least five more years to figure out the Indian distribution maze. Hopefully, a consolidation in the interim will help garner the much-needed investments.