Search the Internet          Tips  Sites: Finance, Investment

Conditional access to change cable TV

BS Corporate Bureau

The conditional access system will change the rules of the game for the consumers, the cable operators, the broadcasters as well as for the producers of set-top boxes.

About half of the 40-million households with cable TV connections are expected to switch over to CAS and will pay only for the channels they choose to view.

The remaining half will continue to get the free-to-air channels through the cable connection and their monthly subscription for the cable connection will come down.

Those who switch to CAS will have to invest in a set-top box, which could cost between Rs 2,500 and Rs 5,000. This could be paid upfront or in monthly instalments to the cable operator.

Instead of being bombarded by a large number of channels, these households will only pay for the channels they want to see. Their monthly subscription too is likely to come down, though it is not clear by how much.

For the cable operators, a new way of doing business is going to open up. At the moment, these operators understate their number of connections to evade making payments to the broadcasters.

According to industry estimates, the operators understate their connections by a whopping 83 per cent. This will end with the CAS being put into place.

Though they might be allowed to retain the entire subscription money for free-to-air channels, they will be required to pass on a large chunk of the subscription money to the broadcasters.

While on the one hand, they will need to sell the set-top boxes to the households, they will also have to invest in upgrading their systems to adapt to CAS.

The investment in set-top boxes for 20 million households is estimated at Rs 80 billion and the cost of upgrading the equipment is around Rs 4 billion.

"The only solution for funding these investments is that the whole industry should come together," Zee Networks chairman Subhash Chandra said.

He added that one option was to tie up with banks to finance the set-top boxes. The money could be recovered in monthly instalments.

For the broadcasters, the days of giving out impressive numbers and contesting each other's claims are over. Viewing habits of customers will be monitored in a more transparent manner.

This will make the task of media planners a lot easier. Broadcasters will also have to divide their channels between the free-to-air space and the pay segment. "We are looking for scope in both the segments," Chandra said.

More important, they can look forward to improved cash flows with the understatement by cable operators coming to an end.

The biggest bonanza will be for producers of set-top boxes. With a Rs 800-billion market opening up in the next few years, consumer electronics companies like Videocon, Super Cassette Industries, Salora and Western Electroniks can look forward to riding the gravy train.

Powered by

ALSO READ:
Govt to seek details of cable connections
The Rediff Budget Special
The Rediff-Business Standard Special
Money