Mumbai: The cabinet committee on economic affairs (CCEA) on Thursday cleared an ordinance for digitization of cable television networks. The ordinance seeks to amend section 4A of the Cable Television Networks (Regulation) Act to push even free-to-air channels through a set-top box. The ordinance will draw the curtains on analog cable in the country. Currently, 80% of analog cable distribution is under-reported, say media analysts.

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Cable companies will have to convert their analog systems to digital in the four metros by 31 March 2012, according to the ordinance. It also mandates cities with a population of one million to adopt digital cable by 31 March 2013. The entire country will go digital on 31 December 2014.

“We are the only country offering cable services without a box and serving the cheapest entertainment for less than $4 a month," said Yogesh Radhakrishnan, managing director and chief executive of Media Network and Distribution (India) Ltd, which operates distribution platform Prime Connect.

This will enable the cable industry to provide triple-play facilities to customers and improve their average revenue per user, said Ashok Mansukhani, president, Multi-System Operators Alliance, an apex body of large cable operators.

However, he said this was subject to a regulatory safety net to ensure that tariffs, revenue share, contractual arrangements and billing issues are addressed prior to issuing the notification.

“FDI (foreign direct investment) should be harmonized for all digital providers to 74% as agreed to by the government," Mansukhani said. “Fiscal and tax incentives need to be offered till after the digitization deadline."

Gurjeev Singh, chief operating officer of Star–Zee distribution company Media Pro Enterprise India Pvt. Ltd, said, “It would help if the industry had a more realistic deadline. This isn’t a walk in the park. You need millions of boxes to meet this kind of requirement, and 13 March 2012 is just a few months away,"

Last-mile cable operators are expected to shut since they will not be able to bear the cost of digitization. Experts say it will require 25,000-30,000 crore to digitize the country’s cable distribution.

According to a report by the Federation of Indian Chambers of Commerce and audit firm KPMG the television industry, comprising subscription and advertising revenue, was estimated at 29,700 crore in 2010 and is expected to touch 34,100 crore by the end of 2011. It estimated 2010 subscription revenue at 19,400 crore, of which only 20% went to broadcasters.

Liz Mathew in New Delhi contributed to this story.