Turning full circle
By Surely, with the ministe | 18 Jan 2001
At that point in time, the only player to be seriously affected by the government’s order was News Television India (NTVI), owner of the well-known Star Plus channels. NTVI had only four months back, in March 1997 to be precise, made a grand announcement that it would be launching its DTH service in India, entailing an investment of about $500 million.
Then suddenly, as if out of the blue, the ban came. And why? Though wags said that the decision was at the behest of a rival TV channel, the government's official explanation was, "A direct satellite service to consumer homes via small receiver dish antennas could set off a cultural invasion by foreign broadcasters, which could prove detrimental to national interest."
The argument was that because of their ability to reach directly into Indian homes without any intermediary, the signals could pose a threat to national security as well as Indian culture causing moral and social turpitude.
Technology driven changes
Does it mean that moral and social values stand changed three years later? Well no!
The actual reason lies in the fact that new technology has now ensured that similar programs, earlier sought to be banned, can be accessed easily through the Internet and therefore it made little sense for the government to continue with its earlier directive.
The government confirmed this when the minister stated at the press conference that the ban is no longer valid in view of vast technological changes. According to her, with the relaxation of the ban, a positive step has been taken towards convergence. She went on to add that DTH would provide a broad-band backbone for convergence and IT enabled services besides using superior technology for distribution and reception of television programs.
Another good reason for the government to withdraw the earlier order could have been the report prepared by FICCI in March 2000 at the request of Indian entertainment industry.
The report clearly stated that the ban on KU-band reception equipment should be lifted. The report pointed out that the rationale for introducing this ban no longer existed, considering that in the near future channels may be broadcast on the world-wide-web, which can be directly received by subscribers at their homes. It also said that since cable operators have not shown any interest in laying cables in less densely populated localities, one way for the government to rectify the situation was to permit DTH.
The final thaw came in the form of a green signal given in October 2000 by a group of ministers appointed by the government, in January 2000, to look into the matter and give recommendations on DTH operations in India.
The group consisted of senior ministers in the government and included Mr. LK Advani (home minister), Mr. Arun Jaitly (then information and broadcasting minister), Mr. Pramod Mahajan (information technology minister), Mr. Yashwant Sinha (finance minster), Mr. George Fernandes (defence minister), Mr. Ram Vilas Paswan (telecommunications minister) and Mr. Ram Jethmalani (then law minister).
After much deliberation, the group finally gave the go-ahead to the government with certain cautionary riders. These were:
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DTH license should not be given exclusively to any agency, private or public, to avoid monopoly in the sensitive areas of information and program distribution.
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since DTH is an alternative to cable for distribution of TV programs, the vertical integration of these two services should be guarded against to avoid monopoly in distribution services.
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vertical integration and monopoly between DTH operators and TV channels should be avoided to ensure fair competition and a level playing field for all TV channels.
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programs/channels distribution through a DTH platform should be uplinked from India to ensure that they comply with programming and advertising codes and allay concerns about national security.
The final leap
In keeping with this overall clearance, the ministry of information and broadcasting framed the policy for the launch of DTH services in the country. These included:
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only Indian companies, registered under the Companies Act, will be allowed to apply for such licenses
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total foreign investment in DTH companies, through whatever means, will not exceed 49 per cent of the total equity
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in the total equity of the company, the holding of broadcasting and/or cable companies cannot exceed 20 per cent
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control will vest with Indian residents and the chief executive has to compulsorily to be an Indian who will be responsible to ensure that no cultural invasion takes place from foreign shores
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the broadcaster will not violate the advertisement and programming codes and not beam channels prohibited by the regulatory authority
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the broadcaster will be required to preserve tapes and cassettes for a minimum period of 90 days from the day of beaming to enable the government to scrutinise content
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the company will have to pay an entry fee of Rs 10 crore plus annual revenue sharing with government equaling 10 per cent of turnover
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the licensee will be required to execute a bank guarantee of Rs 40 crore, valid for the duration of the license i.e. 10 years
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uplinking will be allowed only from India and licensees will be given one year's time to set up an earth station in India
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the DTH operator will ensure a SMS or subscriber management system and an open architecture set-top box
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separate licenses to be obtained for carrying value added services such as voice, fax, data and the internet
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the DTH operator will carry channels of Prasar Bharati (the state-owned television company) on favoured financial terms in comparison to any other channel
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the regulatory authority, in this case the information and broadcasting ministry, will have the powers to revoke license and also impose a penalty of Rs 50 crore if rules are violated
Why Is The Industry Not Biting?
Although more than two months have elapsed since the DTH was opened up, a concrete move by broadcasters is yet to emerge, except for some stray announcements. Zee Network, barely two days after government's decision to open up, was the first to announce its intention of setting up a Rs 1,350-crore DTH service in partnership/joint venture with Sterling Infotech. There were reports that Sun, Udaya and Asianet channels would also joint the platform at a later date. However the announcement clearly noted," The time frame to launch DTH service will be decided once detailed guidelines are formulated by the government". A month later there were reports that the Star Network was considering opening up a DTH service in partnership with Zee. Sony also announced its intent of putting in place a multi-crore DTH platform by 2002. However, these have merely remained announcements and nothing concrete has emerged yet.
The stumbling block
The biggest stumbling block preventing DTH from taking off is the sectoral cap of 20 per cent on broadcasters. The cap is proving to be the biggest hurdle in bringing in the investment required to put in place a DTH service. Mr. Yash Khanna, corporate communications manager, News Television India told domain-B, "With total investment requirement of about Rs 2,000 crore, where will the money come from unless the cap is removed? As returns from DTH will accrue only after about 5 years, will shareholders not stand up and ask questions if big investments are made and returns do not come in?"
Mr. Subhash Chandra, chairman Zee Network and chairman of the National Media Committee of the Confederation of the Indian Industry (CII) is very clear that, while the government had the right to keep consumer interests in mind, the move to restrict equity holding of broadcasters to 20 per cent, will only prevent them from moving from their existing C-band to the KU-band.
He went on to add that the government ought to define monopoly, based on the viewership for a broadcaster or the number of homes reached in the case of a cable operator. The committee suggested that restrictions on equity could be imposed on broadcasters, whose viewership is in the range of say 50 per cent to 60 per cent of the television homes or big players with a greater reach in the cable sector.
The other hurdle is the clause, which requires broadcasters to share 10 per cent of their revenue with the government. Says Mr. Rajesh Pant, chief operating officer, Sony Television, "the DTH service provider will have to cough up 10 per cent of its revenues to the government, whether its company is making profits or not." With profits expected to flow in only after 5 years, broadcasters have demanded that a 5-year moratorium be imposed on the annual revenue sharing of 10 per cent.
Clearly, economic viability is the most important barometer for any commercial venture and DTH is no exception. Unless the government and the broadcasters sort out their differences, DTH will remain a non-starter as far as India is concerned.