Cable industry fears chaos as digital deadline nears

The government-set June 30, 2012 deadline for Phase-1 cable digitisation and compulsory use of set-top boxes (STBs) in the four metros might get extended. Independent cable operators have approached the ministry of information and broadcasting (I&B) to sort out contentious issues before making the switch from analogue to digital.

The government notification on the deadline for digital addressable system (DAS) was issued on on November 11, 2011. But, Roop Sharma, president of the Cable Operators Federation of India (Cofi), said that government delay in decision-making meant that the final guidelines came only on April 30, 2012.

This left the cable fraternity with a very short execution window, said Sharma. “As per rules, the cable fraternity should get at least six months to prepare themselves to meet the deadline. But this won’t be possible now. It is a very genuine problem faced by cable operators. Hence, an extension is inevitable.”

Jagjit Singh Kohli, MD and CEO of Digicable Network, agreed. “I think an extension will be necessary. If not six months, the industry should at least get another three months to implement Phase-1 digitisation.”

On May 10, the Mumbai High Court, acting on a petition fined by 15 cable operators, directed the national government to defer the deadline.

Anil Malhotra, COO of Wire and Wireless India Ltd (WWIL), a multi-system operator or MSO, said, “While MSOs are more than eager to implement digitisation, the final decision still rests with the subscribers. The deadline is nearing by the day. A last-minute decision to opt for a digital cable connection will very likely lead to a blackout kind of a scenario sooner or later,” said Malhotra.

Harit Nagpal, MD and CEO of Tata Sky, feared chaos of the kind that broke out earlier over the know your customer (KYC) deadline for mobile connections. “The subscribers took it seriously only after their connections were taken off the network and we saw long queues in the following days and weeks for getting the KYC procedure done. It is very likely to happen in case of digital cable as well.”

As suspense over deadline extension intensifies, large MSOs are busy putting together a business model for the digital cable era with focus on commercial arrangements with broadcasters.

In fact, operators and broadcasters held an informal meeting May 14 to discuss the matter, said a highly placed source. “Any concrete direction on the future course of action will be arrived at only after the commercial arrangements are agreed upon. Till then, it’s a wait-and-watch situation,” said the source.

Industry sources said that coming weeks will see a series of meetings involving local cable operators (LCOs), MSOs, direct-to-home (DTH) operators, broadcasters and investors. Several issues will be discussed threadbare.

Cofi’s Sharma alleged that the Telecom Regulatory Authority of India (Trai), the industry regulator, had ignored cable operators’ views while framing the guidelines, particularly those relating to the revenue sharing ratios between LCOs and MSOs which will affect LCOs’ livelihood.

Quality and interoperability of STBs to be provided by MSOs is another issue causing concern to LCOs, said Sharma. Digitisation, including taxes and other levies, will make home television entertainment more expensive, particularly for households with multiple televisions, said Sharma.

Trai data show 94 million cable customers in India in 2011, out of 147 million TV households.  Some 44.4 million homes have DTH TV. With MSO digital penetration currently at 5 million, some 90 million STBs will have to be deployed country-wide, to meet the 2014 deadline for pan-India digitisation.