A matter of choice

Mumbai: The road to a digital future ought to be paved with good intentions. Or so the powers-that-be would have liked. But the conditional access system (CAS) is, at best, a regressive intermediate step — a step that should have ideally led India to a brave new digital world.

Digital-direct broadcast services are the endgame for a broadcaster. Satellite (or terrestrial-based delivery of digital streams with addressability) is a dream state for media business moguls — the proverbial pay-as-you-go paradigm, as versus the hitherto free-rider phenomenon that we have blissfully got used to.

Primarily, with CAS one is taking away a service which has been free and unregulated for many years and replacing it with the burden of a price and cost structure not quite of one’s choice or making. Unlike in the US, where the raison d’etre for conditional access-based pay-TV (HBO: 1975) is its offer of premium and special fare, over and above the regulated basic tier of services.

But with rollouts and the adoption of delivery of entertainment and information services over wireline and ether — like DTT (digital terrestrial television), DAB (digital audio broadcast), xDSL (extended digital subscriber line), LMDS (local multi-point distribution service) — the acceptance of the digital set top box (STB) as a standard household appliance is fairly obvious in the next couple of years.

At the same time, the customer cannot pay for and install a server rack of various STBs, receivers and customer premise equipment (CPEs) to cater to various technologies, operators and content providers when they roll out their services.

Therefore, an STB would need to perforce follow some semblance of open standards, common interface, remain interoperable across providers and be upwardly compatible for two-way interactive broadcast and broadband services. What I would define as a universal and integrated conditional access (UiCA). One does not see any standards and protocol initiatives by consumer groups, industry or the government to address the technical issues of ‘inclusiveness of delivery’ and ‘gateway.’

Instead, analogue STB is being pushed for basic CAS compliance, with the option for a digital regime. For quite the same value and enhanced functionalities, a digital and integrated STB for direct satellite services could have led to significant benefits to over 40 million cable and satellite (C&S), Internet, personal computer and broadband homes.

The new information and broadcasting and telecom ministers may well worth find it worthwhile to at least initiate some dialogue and debate on this.

Losers and shakers
The flip side is that an entire value chain of distribution as currently understood would be turned on its head. The multi-service operators (MSOs) and mid- and local-tier partners would, in essence, be eliminated from the distribution chain in one fell swoop, not to mention cables criss-crossing rooftops and streets.

This dis-intermediation would dramatically change the economics and cost structure of the broadcasting industry in general, and the C&S segment in particular. Certainly, CAS will be a boon (yes boom) for many players — members of the Consumer Electronics and Television Manufacturers Association (CETMA), for starters — and there will be short- and long-term economies and diseconomies for others.

The media and CAS
From a media angle, the understanding of cost per thousand (CPM) and cost per ratings point (CPRP) may drastically change as channels move from free and unaccounted to pay and addressed. The must-carry channels will show no change, but the scramble for the paid channel will drive audience reach, share and rate cards.

While the name of the game may move from advertising-sponsored business model to subscription-based models, broadcasters will be hard put to maintain high rates — both for advertising and subscription. Advertisers hopefully will be smart enough to realise that its 30-second ad is not going to be seen across all the homes that they currently plan for.

There will be fragmentation and emergence of clever marketing of premium and niche segments in the hope that a lower reach will mean precision marketing and, therefore, premium rates. Media planners will need to recreate new value propositions in a falling, mass (and hitherto unregulated) one-size-fits-all viewership market.

From now to June 2003 the main broadcasters will go hell for leather to promote their channels to remain prime and literally get into the urban viewers’ face. No one wants to be left out of the box when the local cable guy comes around asking you for your choice of channels.

To my mind the huge bonanza will be for the free-to-air channels or must-carry channels. They could recapture the lost ground as they can technically show 38 million C&S homes, or 75 million television homes, as the case may be. While Doordarshan may have lost out to the private players in the ad sales pie in spite of competitive television rating points (TRPs) versus their private peers, I expect this share to increase if they can get their act together.

Next steps
Convergence is a nice-enough concept for white papers, government committees and task forces, but is a difficult concept to put in practice. Especially with the various elements of convergence in a constant state of flux on account of technological innovations, which move faster than the Moore’s Law and the fickle consumer. One just had to be present in this year’s Consumer Electronics Show at Las Vegas to realise that.

The onus will need to be on advertisers and consumer groups to remain alert in this transition period of uncertainty (June-December 2003), as researchers reconcile with a priori hypotheses, and media planners, analysts and broadcasters recalibrate their go to market strategies in a CAS-enabled world.