Thread: Why we pay?

Set top boxes, pay channels and free channels

In foreign countries, pay channels are free from advertisements. But in our country pay channels do carry advertisements. India being a huge market place, the earnings of broadcasters through advertisements on satellite channels are ever increasing. Once a suitable amendment is made to bar advertisements in the transmission of pay channels, all the broadcasters will be compelled to declare all their channels as free to air channels.

TO PURCHASE or not purchase set top boxes? How much to pay for pay channels? What are included in free channels? These are some of the questions haunting the 420 lakh Cable TV viewers in the country.
This is all part of the debate over the Conditional Access System (CAS) for television channels slated to be mandatory from July 15 , 2003 , as per the Cable Television Networks (Regulation) Amendment Act 2002 and the Rules there-under made by the Central Government. In simple terms the CAS means, when some one is going to demand payment for viewing different TV programmes transmitted on different channels, the viewer (customer) is in a position to decide which he likes to view and pay only for that channel. But in practice it is not going to be so simple. The way it is being structured would ultimately lead to the public bearing the financial burden for increasing the profits of big players like Star, Sony, Zee, ESPN and such others. Therefore there is a need for the public to know all about it.
Three players
There is a chain of three players in running the Cable TV. The first is the broadcaster, like Star, Sony, Zee, who transmits the programmes via the satellite. Each broadcaster transmits a collection of channels known as package. The second is MSO (multi-system operator) who installs and maintains electronic equipment to receive and multiplex the satellite signals and to transmit on cable. There are half-a- dozen organised MSOs in the country. The third in the chain are the cable operators who lay the cables to the homes of the viewers and collect the charges. There are also smaller size cable operators who directly receive satellite signals and transmit on cable.
The channels for which the broadcaster charges a monthly fee from the cable operators are known as pay channels. To start with, all broadcasters, foreign or local, commenced their commercial operation with all their channels free of charge. But in due course some of them, especially the foreign broadcasters, levied and increased gradually their charges. Before the Central Government interfered in the matter, the monthly charges a viewer has been paying ranged from Rs. 150 to Rs. 300 a month depending on the city and the locality. These monthly charges included broadly, the package charges of Rs. 50 from Zee, Rs. 60 from Star, Rs. 55 from Sony, Rs. 32 from ESPN and Star Sports, Rs. 25 from Ten Sports and DD Sports and Hallmark, Rs. 10 from 3 movie channels and with cost of man power and maintenance at Rs. 10 roughly works out to a total Rs. 242 a month. To this is added 8 per cent service tax of Rs. 19 and entertainment tax of Rs. 30 which takes the whole to a grand total of Rs. 291 a month. With this type of rough calculation the cable operators argued that the subscriber charge of Rs. 225 a month would be justified. With this type of payment the viewers have been getting nearly 80 channels. Therefore a relevant question is, whether it would be possible to have access to all these channels with similar payment after the introduction of CAS? The answer is no. The position as it appears now is, viewers will pay more even after selecting only a few pay channels.
After July 14 , 2003, it will be illegal for the cable operators to broadcast pay channels without a set top box (STB) one each for each TV set. STB is an electronic device with an addressable system and remote control to permit only selected channels for viewing on TV set. Permission will be granted only to the channels selected and paid for. Viewers will have to buy STBs to watch pay channels. An analog STB is expected to cost Rs. 2 ,000-4 ,000 and a digital type Rs.4 ,000- 8 ,000 . Without a STB, however, viewers can still watch free-to- air (FTA) channels for a fee of Rs. 72 plus taxes. An FTA channel is one for which a cable operator pays nothing to broadcaster. With this Rs. 72 plus taxes, the cable operator will provide at least 30 FTA channels which include the three mandatory Doordarshan (DD) channels. The cable operator has to decide the other 27. At present, all DD channels (except DD Sports), Sahara TV, Sab TV, Aaj Tak, FTV, MTV, Sun TV and a number of regional language channels are FTA channels. Under Section 4 A of the Cable Television Networks (Regulation), 1995 (with the amendment in 2002) the government reserves the right to decide the bouquet of FTA channels periodically.
For whose benefit?
For whose benefit the STBs are being made compulsory to enable access to pay channels? This is a question of great public importance. During the search for an answer to this question, several facts surfaced showing justification for the demand that in our country there should be no pay channels and all channels should be free-to-air channels. When all channels become free-to-air, there will be no need for STBs.
In foreign countries, pay channels are free from advertisements. But in our country pay channels do carry advertisements. India being a huge market place, the earnings of broadcast

through advertisements on satellite channels are ever increasing. For instance in the year 2002, Zee TV earned over Rs.590 crores through advertisements and about Rs.190 crores from payment channels. For Star TV the respective earnings are much more. Similarly the Sony TV also has huge earnings from advertisements. Therefore a relevant question is, when broadcasters like Sahara TV, Sab TV, Aaj Tak, FTV, MTV, Sun TV and a number of regional language channels with much less earnings from advertisements have become viable with their free-to-air channels, why with much higher earnings from advertisements the Star, Sony, Zee and such others should not make all their channels free-to-air?
Control
The installation of STBs benefits only the broadcasters. Why this is so? A constant suspicion of broadcasters is that the cable operators routinely under- declare what they collect from viewers. This is a source of acrimony between broadcasters, MSOs and operators. Once the STBs are installed, the broadcasters are in a position to know exactly the numbers of viewers and to control the viewing as per the payment made by the viewers upon selecting the pay channels. With CAS and STBs, the broadcasters hope to gain added earnings from charges on pay channels which would be in addition to the earnings from advertisements. Therefore, only the broadcasters are going to be benefited from the STBs. It means, to benefit the broadcasters, the viewers are being made to pay for the STBs.
Government acquired many controls from the Cable Television Networks (Regulation) Act, 1995, its amendments and the rules made there-under. But there is no explicit provision to prevent advertisements in the transmission of pay channels. Once a suitable amendment is made to bar advertisements in the transmission of pay channels, all the broadcasters will be compelled to declare all their channels as free-to-air channels. The broadcasters cannot afford to lose their earnings from advertisements. Consequently, the STBs would become unnecessary and the public would be saved from investing on STBs. The channels like, National Geography, Discovery and Animal Planet which are watched by children and adults with equal enthusiasm would become in the process free-to-air channels.
The amendment to the said Act, 1995 can be simple but at the same time effective. Section 4A of the Act in its explanation at clause (f) reads, " `pay channel,' in respect of a cable television network, means a channel the reception of which by the subscriber would require the use of an addressable system to be attached to his receiver set." The clause (f) can be amended by adding at its end the sentence. "Pay channel shall be free from advertisements."
Convergence Act
Very soon Parliament is going to give final shape to the "Communication Convergence Act, 2001" on the lines of Nariman Committee Report. The Act is structured "to establish a regulatory framework for carriage and content of communication in the scenario of convergence of telecommunication, broadcasting, data- communication, multimedia and other related technologies and services." The Act establishes "Communications Commission of India" to function as regulatory authority and having the powers of a civil court. There will also be a "Communications Appellate Tribunal" to appeal from the decisions of the Communications Commission. But even in this Convergence Act there is no explicit provision to prevent advertisements in pay channels. A suitable amendment in this Convergence Act also can be considered to make the pay channels free of advertisements. Such an amendment is justified because in foreign countries pay channels are free from advertisements.
BUDDHI KOTA SUBBARAO
(The writer is a Supreme Court advocate)

Wow! A very long post.

To be honest, it was difficult to read this in one sitting.

About "Pay Channels". The definition about Pay Channels differs in India.

Abroad a "Pay Channel" is also a premium channel or "Pay per View". These are, as you said, ad-free. In India, "Pay Channel" is a channel that is available by subscription and hence not ad-free.

A long time ago, when HBO and Star Movies started broadcasting, the movies were ad-free. There were ad's during end of prev movie and start of new movie only. This changed because, they reported that they are unable to provide content purely based on subscription fees alone and also that MSOs/COs reported less revenue than actual. Hence ad's started pouring in.

In India, DTH operators are showing the "Pay per View" and "Premium Content". For example Dish TV has three channels (Zee Premier, Zee Action and Zee Classic) showing movies that are ad-free during the movie. They also have 6 Movie-on-Demand channels that are completely ad-free. TataSky has similar services.

Role of STBs and CAS: In theory the intention was to allow users to choose just the channels they watch. But because channels are offered in a bouquet, this is not possible to the ultimate granular level.

Another point about ad's abroad.

Abroad, the ad content is regulated by time. For instance, I counted the break time in a program during number of time in UK and USA. In UK, the total time allocated to commercial break is exactly 2 minutes. In USA, it is less than 3 minutes.

In India, there is no such limit.

In fact, DD is king of ad's. I remember watching "Deewar" on DD during the pre Cable TV days. During that time, the movie used to start at 9 pm, after National Hindi News (8:30 PM to 9 PM) and run till 9:30 PM. Then the English News Break was 9:30 PM to 10 PM. During the 9 PM to 9:30 PM slot the movie was "relatively" less ad-prone. After the news got over at 10 PM, the movie started at 10:35 PM. So there were 35 minutes of ad's. I remeber this distinctly because it appeared as a news item in the papers the next day.

Also watch any Cricket match Live on DD - where ad's begin the exact second when 6th ball is played out during an over and by the time you get back to action, the second ball is already in progress.