India Broadband Forum

yoursraman

NEW DELHI: The direct-to-home (DTH) industry believes its losses will double if the government fails to provide sops, like reduction in licence fee
and relief from multiple taxation.

Industry players met additional secretary at the ministry of information & broadcasting Anand Sharma and pressed for moving the licence fee reduction bill to the cabinet. As per this proposal, the licence fee — currently 10% of the total gross revenue of a player — would be reduced to 6%.

DTH players informed the ministry that the industry expects its losses, worth an estimated Rs 2,000 crore, to double in the new year. Dish TV managing director Jawahar Goyal said: “Industry estimates indicate that the losses incurred by the industry could double to about Rs 4,000 crore in 2009. We are subjected to a huge licence fee, multiple taxation as well as dollar-rupee currency fluctuation.” He added that the government must implement the Licence Reduction Bill to provide the DTH industry with a level playing field.

In June 2008, the ministry had asked the Telecom Regulatory Authority of India (TRAI) for its recommendations on the proposed licence fee.

Trai had given its approval and the ministry was planning to take the proposal to the cabinet. But with elections round the corner, DTH operators fear that the proposal would not be passed in time and the bill will get delayed by another year.

The DTH Operators Association of India is also expected to meet the Planning Commission to provide relief on the multiple taxation issue. Currently, the sector is subjected to both entertainment and service tax. Another senior executive with a DTH operator said: “The licence fee alone could help the industry save Rs 50-60 crore. It is a small component. However, it’s the relief from multiple taxation that could help the industry save much more.”

Most DTH players import their set-top boxes (STB) and sell their products at a discounted price to consumers in a bid to grab larger volumes. A MPEG2 STB could cost a company between $32-50 and its consumer acquisition cost is around Rs 2,600-5,000 per STB for the DTH players.

Similarly, MPEG4 STB could cost a firm between $50-62 taking the subscriber acquisition cost for a DTH player up to Rs 5,600 per set top box

Economic Times

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the real question is that whether this will really bring down the subscription