''Addressibility'' box the only solution to cable TV issue

The Andhra Pradesh High Court’s injunction against pay channels in the state collecting subscription charges has not come too late. "In fact, it is a blessing in disguise to discipline the cable operators, channels and even the viewers," opines an official of a large multi-service operator (MSO). A MSO is the organisation that, besides giving TV channel signal feeds to small cable operators, offers several value added services including net over cable.

According to Mr. E.V.S Chakravarty, vice president of Hathway Cable and Datacom, "The judgement could well be the first step towards the introduction of the addressibility box." The addressibility box is a gadget that enables a cable TV subscriber to choose the channels he or she wants to watch. It is learnt that Ms. Sushma Swaraj, union minister for information and broadcasting wants the industry to introduce the gadget fast.

According to Mr Chakravarthy, the installation of an addressibility box at each subscriber premise will be beneficial for all the parties concerned – the subscriber, cable operator/MSO and the various channels.

Subscribers will pay only for those channels they choose to watch, unlike now where a flat sum ranging between Rs 150-300 per month is paid to the cable operator for receiving around 70 channels -- pay and free channels bundled together. There are 18 pay channels in India and their total charge per subscriber per month comes to around Rs 70. Incidentally, the operators do not offer all the pay channels. In rural areas where many households own old television models, cable operators give only the free channels for a lower charge.

The box also enables a subscriber to alter the choice of channels every month, depending on the programs. This will, in turn, force the cable operators to provide better services -- like supply of program schedules.

The benefit for the cable operators will be that they will be paying the MSO/channels as per the viewership and not on their total client base. Currently, all the pay channels demand payment from cable operators/MSO based on the number of connections. For them, connectivity is viewership. This could well be true in the case of sports channels in India, where the charges collectively come to Rs 18.

Finally, the MSO’s and the pay channels will be able to increase their collections, as they will be able to monitor the exact number of connections given by cable operators. "Under-declarations of subscriber base by the cable operators/MSOs, currently rampant in the country, will not be easy if the addressibility boxes come into vogue," remarks Mr Chakravarthy.

The total cable TV connections in the country are estimated to be in the region of 50 million. Of these, the cable operators declare only 10 per cent to the channels for payment of fees. Today, of the three --cable operator, MSO, pay channels -- it is the cable operator who is enjoying the lion’s share in this industry, on a one-time investment in equipment and cables. On one hand, he passes on to the subscribers any hike in charges made by pay channels, and on the other, under-declares his subscriber connections.

The under-declaration, in turn, impacts pay channel revenues as they expend huge sums in sourcing their programmes. To balance the revenue and their costs, pay channels in turn hike their subscription rates, which will be passed on to the households. "If addressibility is there, then there will be even distribution of the revenues. MSO’s and the pay channels will be benefited in addition to the subscribers," says Mr Chakravarthy.

The one problem with this gadget is its cost. The price of a base level box is not less than Rs 5,000. "There is no equipment to monitor the distribution of channels chosen by the household at the cable operator’s end," Mr. Chakravarthy remarks. Given the fact that MSOs and pay channels are going to benefit immensely by this box, it may be more appropriate for if these entities foot the equipment cost. The cost:benefit ratio will surely weigh in their favour than in the case of an individual household, feels an individual who has been given a notice by his cable operator about a Rs 30 hike in charges from December onwards.