New Delhi: With new channels being launched with monotonous regularity, limited bandwidth for distribution is fast emerging as an issue for the Indian television industry. With the demand supply situation tilting in favour of cable operators, multi-system operators or MSOs are also charging higher carriage fees than ever before that are impacting the industry’s operating costs adversely. Chintamani Rao, CEO, of Times Now say that distribution has emerged as the single largest issue on the broadcast industry’s mind. “Carriage fees are killing the broadcasters. They are the most significant part of cost for channels and we need to solve the issue on priority.” Barun Das, CEO Zee News agrees with Rao and says that carriage fees are among the top three costs for a broadcaster and are hitting the industry hard.
According to a report presented by Jawahar Goel, president Indian Broadcasting Federation and managing director Dish TV to TDSAT, the broadcasters pay nearly Rs 1400 crore to cable operators in just 150 cities. Industry experts say that as more channels clutter the airwaves, it is possible that the carriage fee rates may rise further.
Not surprisingly, television channels and cable operators are at loggerheads. The MSOs say that carriage fee are just a four-year old phenomenon. They have had to make significant investments in laying down networks and in digitalization. They did not have any broadcaster to support them then. Jagjit Singh Kohli, CEO, Digicable that has over 10 million subscribers, says that the present rates only reflect the market conditions. And it is only fair for MSOs to charge the higher rate. He also points out that the MSOs have been making losses for the last few years. “They have only now begun to break even and most of them are still running losses,” he says.
MSOs say that they have had to invest in laying optical fibre networks and digital head-ends. Digicable for instance has laid 200 km of optical fibre network in Delhi alone. It costs Rs 10 lakh to Rs 40 lakh per km to lay underground fibre depending on the city because of right of way issues. Similarly, digital head-ends can also cost between Rs 2.5 crore and Rs 7 crore depending on the technology. At the moment, there are over 60,000 cable operators in India for 78 million cable homes. 6000 of these are MSOs who aggregate the content at their level and pass it on to LCOs or local cable operators.
Broadcasters say that things could have been balanced in case cable operators were not under declaring the subscriber numbers. SSKI Research points out that LCOs under-report the subscriber figures to the extent of 76-80%. The MSOs then add to the problem by under-reporting the figure by a further 4-6%. By the time the figures reach the broadcaster, a further 2% under-reporting has been done by the broadcaster’s distribution company. As a result, the total revenue accruing to the broadcaster is in the 12-15% range. Globally, the average of revenue share for broadcasters is between 35-40%.
Earlier, digitalization via Conditional Access System or CAS was seen as the solution to under-reporting. However, the government has withdrawn the order to roll out of CAS. This is adding to
the distribution capacity bottleneck. In analogue mode, a cable operator has the capacity to carry 70 to 80 channels. However the numbers of channels are increasing every day. So till the time complete digitalisation takes place, the situation will remain grim.
Kohli also points out that pay channel broadcasters themselves have been blocking the effort and have been influencing public policy on the matter. “There are four pay broadcasters that are blocking the efforts for CAS. Before blaming us, the broadcasters should ask the right questions. We have already invested millions in set top boxes anticipating the roll out for CAS. Now these boxes are just lying with us.”
Meanwhile, the I&B ministry has already given licenses to 33 new news channels this year. More than 190 applications for various other channels are pending with the ministry. They may be granted clearance as a matter of routine says the ministry. With no digitization in sight, bandwidth is only likely to get scarcer. And with it, distribution woes for broadcasters will only get worse.