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V. Rishi Kumar

Time's ticking away for the rollout of the Conditional Access System or CAS, but the ground situation is still not clear. Will things work here on the lines of Holland?

Sampath Kumar G.P./The Hindu

CAS or the Conditional Access System is the buzz word in the cable industry with time ticking away for its rollout. With the phased introduction of CAS in the country slated for July 15 beginning with the metros, there is a growing feeling that the necessary infrastructure is yet to be created to make the transition smooth.

Several issues, including last-mile connectivity and the massive number of decoders required to cater to the huge subscriber base, need to be addressed before the introduction of the system. But the good thing about the whole issue is that a deadline has been set and this means all players in the industry will work towards it, say some. The entire process from the initial offer of pay channels to a point where the scene becomes clear could take about six months.

What is the industry watchers' take on the scene? Gerard Meijer, senior consultant and Vice-President, Zintec Holding, told eWorld there's a general feeling among experts that CAS is most suited for a country like India as it will enable authorities to regulate the cable service industry and protect IP. Meijer was associated with the implementation of the CAS in Holland a few years ago, and is working on the Open TV concept with Zintec Software, a design house for digital entertainment solutions. However, the proposal to provide a bouquet of 30 channels for a monthly rental of Rs 72 seems to be turning out the problem area for the cable services industry. With such a big chunk of free-to-air channels provided by the cable networks under the analogue signal system, it will create hurdles for the implementation of digital cable access under pay channels.

There is this interesting similarity between what cable service providers offer in The Netherlands (CAS was introduced about six years ago) and the proposed system here. While in Holland, about 30 channels are offered as a standard package, and there are two pay channels providing entertainment, the new system in India also looks at 30 channels, but the big difference is if you start with such a big channel offering, how will you ensure that the CAS regime comes into play ?

If you look at channels such as Sony, Star, they will have to take a call on whether to go in for the standard package offered under the Rs 72 per month scheme under the new regime and forego some income and continue to garner advertisement revenues, or go in for the pay-TV mode. This will mean narrowing numbers and, in turn, cutting down on revenues, Meijer says.

"The other model that I see would do a world of good is to offer about 10 channels under the analogue system and the rest 20 channels under the digital system with decoders at the same time. This will ensure that the channels will be able to get additional revenues. Typically, as I see it, the general preference, in all probability, is loaded in favour of standard analogue offering and people settling down for what they want. This means other pay channels will have a tough time penetrating the market unless the offering is extremely compelling," says Meijer.

Typically, if such a large number of channels is offered in the analogue system, barely 5 per cent will actually hop on to the pay TV mode. And if the Government decides to offer 30 channels under the package of about Rs 72 per household, this works out extremely cheap with so much on offer. Then the issue boils down to this: How will channels take on the challenge of being pay channels?

The other issue is the need to organise the required number of set-top boxes to meet global standards, says Meijer. Multi-service operators are procuring them from wherever they can — China, Korea and Taiwan. If one takes a look at the boxes, they range between $50 and $70. The issue is, one gets what one pays for. If one needs good quality boxes, they would cost about $80 to $90, plus duties, which is high in India. One could either go for cheaper ones or procure higher-standard decoders. "I believe the best way out is to make it attractive for a domestic player to manufacture so that as volumes go up, they will get cheaper," says Meijer.

Puzzling equation

There is still a lot that's unclear with regard to what a consumer will actually pay for, apart from the standard package of Rs 72 for 30 channels. Apart from the cost of a set top box which could range anywhere between Rs 4,000 and Rs 12,000 depending on the product and its versatility, he will have to pay a monthly fee for pay channels.

The broadcasters, on the other hand, could end up being part of the 30 channels and will have to forego revenue from their subscribers, but continue to garner ad revenues with higher viewership. The multi-service operators or MSOs and cable operators will find that they will get much less from a subscriber unless consumers buy decoders/set-top boxes and go for pay TV channels. But as things stand today, the Government is firm on bringing in the CAS system.

vrishi@thehindu.co.in

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