Shift from analogue to digital TV makes mockery of policy

The jugaad way of shifting from analogue to digital TV makes a mockery of policy. Public interest is the first casualty

alam-srinivas

Alam Srinivas | May 4, 2013




This can happen only in India. The government decided that millions of cable homes in dozens of cities, including the metros, or those households that received hundreds of TV channels through analogue cable, had to become digitised. But when a friend, who stays in trans-Yamuna Delhi (i.e., in one of the residential colonies across the Yamuna river), opted for cable digitisation, he was in for a surprise. His local cable operator came one evening and, in about five to seven minutes, finished the job.

“You have just attached the new digitised set-top box (to receive the digital signals) with the old cable wire, which was meant to receive the old analogue signals. How will this work ? Will I get better-quality digitised channels on this connection?” quizzed my friend. “Don’t worry, the quality of both picture and sound will improve. Here, let me show it to you,” replied the operator as he surfed various channels. My friend, who is a TV buff, could not figure out any change.

Since he is a technology person, he knew that analogue signals received by a digitised set-top box only allow for interoperability between the analogue and digitised systems. However, the signal quality cannot improve. Then he enquired about the new monthly tariff. “You pay me the earlier monthly subscription fee (Rs 200) to receive all the channels,” he was told. This stumped my friend as digitisation should give him a choice of what channels he wanted to watch and, thus, what he desired to pay.

A few days later, my friend met the operator and complained that his cable wasn’t receiving any signals for the past few hours. “What is the problem?” he asked. “Oh sir, it is nothing. Rats have eaten the cable in some places. We will fix it soon.” This was bizarre. This is exactly how the shift from analogue to digital has taken place in the country’s broadcast arena. However, there are other major problems associated with the government’s decision to go digital.
Most of these critical issues were analysed and assessed in a recent India report on “Mapping Digital Media” (http://goo.gl/7rL0j), commissioned by a global organisation, Open Society Foundation (OSF). It was part of OSF’s series of reports in over three dozen countries. This writer was one of the two ‘lead reporters’ who put together the India study with inputs from several reporters and experts.

There are three main governance-related concerns about digitisation, be it cable digitisation, terrestrial digitisation, or direct-to-home (DTH) network. Does it serve public interest (in terms of choices and affordability)? Does it benefit the public broadcaster (Doordarshan, or DD) in terms of reach and diversity of channels? And will it enable private broadcasters to provide better programmes and more channels (and competition), which will lead to media diversity and pluralism?

Public interest vs. private interests
In thousands of advertising spots that the ministry of information and broadcasting took across English and regional TV channels to push through cable digitisation, it highlighted one point. It was that the shift from analogue to digital cable would provide a better viewing proposition to the people as it would boost picture and sound quality. The ads added that the viewers could see more channels (200-plus instead of the earlier 50-70) in the post-digitisation era.

Nowhere did these ads mention that the consumer would have to cough up an additional one-time sum to buy the set-top box to receive the digital signals. More importantly, most viewers had to pay a higher monthly subscription to receive the channels that they really desired.
Although digitisation allowed households to choose the channels they wanted and pay accordingly, the bouquets and channel bundles were designed in a manner that would mostly increase monthly expenses.

The government did not disclose that cable digitisation required the removal of the old analogue wires and substitute them with the new digital ones. This was an additional cost that had to be borne by the cable operators. Then there was the question of carriage fee. The cable operators had to pay an initial sum to the broadcasters to ‘carry’ their channels, apart from sharing the subscription fees paid by consumers who watched a particular channel or a bouquet of channels (like Zee or Star).

Not surprisingly, within a few months of digitisation in Delhi, several homes saw a standard message on several channels that said the particular channel would no longer be available as the cable operator had not paid the fees. In effect, consumer choice was restricted.
In the new digitised world, not unlike the analogue one, the operator was still the gatekeeper who decided what you could watch.

Private interests vs. private competition
So who benefits from cable digitisation? It is the cable operators, who earn more revenues. It is the manufacturers of set-top boxes. It is the broadcasters, who charge carriage fees, and can monitor the number of subscribers who watch their channel(s) and, hence, force the cable operator to share a part of his subscription revenues. It is also the governments that can now easily collect 12.5% service tax and entertainment tax (Rs 20 per household in Delhi) on monthly subscriptions.

In fact, the core argument in favour of digitisation is that it improves transparency and disclosures, and curbs malpractices within the broadcast-distribution system. In the analogue period, the cable operator was a culprit as he did not reveal the number of subscribers, and how much they paid. Not any longer.
Earlier, broadcasters had no clue how many people actually watched their channel(s). They had to pay ‘placement fee’ to cable operators so that their channel(s) remained among the first 20 which, due to spectrum inefficiencies, had better signal quality than others.

The advertisers had no idea about the viewership of channels; they went by TAM ratings, which were as flawed as they were correct. Since the government, too, did not have any concrete figures about the number of cable subscribers, it could not collect legitimate taxes from the operators. Technically, post-digitisation, everyone knows how many viewers have opted for digitisation, which channels they have paid for, and how much time they spend on each channel.

A corollary is that broadcasters can now earn more revenue, through carriage fees and sharing of subscription revenues, based on actual viewership. Since their profits will go up, they will spend more to launch programmes and channels. A fair competition is more likely to improve media choices, diversity and pluralism. And this is obviously in the larger public interest.

Past experiences don’t prove such conclusions. Within media, for example, the net profit margins of Bennett, Coleman and Company, which owns The Times of India, Economic Times, Times Now and ET Now, were almost 20% in 2010-11, which dropped drastically to 11% the next year (2011-12). But despite this fall, the group’s net profit was over Rs 500 crore in 2011-12. One cannot conclusively argue that the money it earned had improved the quality and diversity of its print products and TV channels.

One should add that the carriage fees charged by broadcasters from cable operators can distort competition. The operators may refuse to pay small broadcasters, who will have to remove their channel(s) from being aired. Remember the messages on your TV screens from broadcasters that their channel would no longer be available because the cable operator had not paid them.


Public broadcaster vs. public disaster
This brings us to the question of the role of public broadcaster, DD, in the digitised world. Although DD has its bouquet of digital channels, through its DTH network and the ‘must carry’ provision that forces cable operators to beam its channels, the government has decided to digitise its terrestrial transmission by 2017. By this deadline, even rural homes that only watch DD for free will have to buy set-top boxes to receive the new digital signals, as opposed to analogue ones.

In recent past, DD’s overall viewership has come down as urban and well-to-do rural households shifted to private DTH networks and cable (including digital cable). Although the I&B ministry has disputed TAM ratings on DD’s viewership, its own figures presented in parliament concluded that fewer people watch DD News, for instance, compared to private news channels like Aaj Tak and Star News (now ABP News). So, if it asks viewers to pay for set-top boxes, they may switch off completely, or switch to a private distributor, who will offer more channels.

Some critics, therefore, argue that the ministry should not proceed with terrestrial digitisation. Instead, the money it is likely to collect through taxes from cable homes that have or will become digitised should be used to subsidise DD’s DTH endeavour. Let us not forget that the government has the potential to earn an average of Rs 600 per year per subscriber – this will be the collection in Delhi based on 12.5% service tax and Rs 20 entertainment tax per month.
Given the fact that India has about 75 million cable homes, this translates into potential annual revenues of Rs 4,500 crore. Over the next four years, if this money is spent on giving DTH set-top boxes and antennae free to all the poor households (or BPL families, who have TV sets), DD can have a readymade audience for its DTH services, which is a better technology than digitised terrestrial feed. In such a scenario, the poor viewer can watch DD channels free for the rest of her life. And the government saves its expenditure on terrestrial digitisation; instead it spends on expansion of DD’s DTH platform.

Clearly, the benefits of ramming cable digitisation down the consumers’ throat is debatable.

So is the logic behind digitisation of DD’s terrestrial transmission. More importantly, neither the government nor experts can confidently conclude that public interest will be served. 

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