NEW DELHI: On the eve of a meeting of the information and broadcasting ministry and the multi-system operators (MSOs) on conditional access system's (CAS) implementation in the metros, the Cable Operators' Federation of India (COFI) and others have made a strong pitch for a uniform rollout and having a policy to control the pricing of the pay channels.
In a memorandum to the ministry, COFI has said that CAS is necessary to 'regulate and control distribution of pay channels' in the country.
Pointing out that Pakistan recently had implemented a regulatory framework to control the distribution of pay channels COFI has said the issues tackled are exactly the same as faced in India and is meant to achieve the same
aim -- consumer interest.
Though Pakistani legislation and way of functioning can be questioned and debated in a democracy like India, however, they make interesting reading.
The regulations drafted by the Pakistan Electronic Media Regulatory Authority (PEMRA), according to COFI, are as follows:
Instead of controlling cable operators' rates, it has controlled the rates of pay channels that form the very basis of subscription rates for customers.
The rates have been kept less (Pakistani Re. 1 per channel) for foreign broadcasters than the local ones, since foreign channels are distributed in dozens of countries and collect revenue from all of them, while their expense for content and running of channel remains constant.
Rates for local Pakistani pay channels have been kept at Rs. 2 per month per subscriber to give a boost to the local channels.
The above are only the maximum ceilings on channel price to keep them uniform. However, distributors have been permitted to offer discounts on this price to make their packages attractive.
Sports channels have been permitted to collect Rs. 2 per subscriber per month, considering their high cost of production and acquisition.
Rate for channels have been worked out based on the premise that generally it requires Rs. 250 million per year to run a satellite channel.
Forced bundling on the part of broadcasters/channel distributors is not allowed. Cable operators, however, have been permitted to market bundled channels.
While working out the subscription, additional expenses incurred by cable operators in the form of taxes, local levies, pole charges and also inflation at the rate of five per cent was taken into account.
It has been made mandatory for a cable operator to adhere to the technical standards and establish "Customer Service Centres" to provide good quality signal and service to the subscribers.
Protection has been given to cable operators, considering the large employment created by them, while arriving at channel pricing so that their interest is safeguarded in the wake of growing competition from new technologies like DTH and MMDS.
The rates have been kept low so that their overall effect will be an increase in number of subscribers and revenues generated remain in the plus side of their existing collections.
Income from advertisement has been taken into account while working out the channel price.
It was assumed that if prices were brought down to an acceptable level, the operators would be left with no reason to resort to piracy and hide subscriber count.
PEMRA refused to accept findings of AC Nielsen and Ernst & Young's report that showed cable TV growth likely to be 35 per cent in 2003 and operators' gross profit to be 38 per cent on the premise that the report did not take into account various factors that reduced the profitability of the cable operators. A subscription of Rs. 150 per month was considered very low and unviable. It also criticised this survey report because it did not take into account functioning of hundreds of small cable operators in the non-MSO areas and rural areas.
It was also considered that internationally the recovery of channel subscription is made from not more than 35 per cent of the subscribers.
Satellite channel owners will invest a percentage of their revenue within Pakistan on research and development of electronic media and other broadcast related activities.
Foreign channels should carry Pakistani content also.
Subscription will be made to the channels on a monthly basis.
Tariff determination will be reviewed after a period of 18 months.
All channels must be licensed by PEMRA to be able to distribute within Pakistan.
DTH service by satellite channel distributors is not permitted. A separate license is required for DTH service.
In a debatable posturing, COFI has submitted to India's I&B ministry, "We feel similar regulatory measures are also required in our country where we should tackle the problem at its root cause by controlling the pricing of pay channels."
