September 21, 2020
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CAS Is King, The Consumer Rules

In terms of costs and choice, the rollout of the Conditional Access System is great news for cable TV subscribers.

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CAS Is King, The Consumer Rules

Today, one concern fills the minds of most households in the four metros: what will the conditional access system (CAS) mean for me? Will I not be able to watch my favourite serials from July 14? Will my monthly cable TV bill shoot up because I’ll have to pay to receive some channels? Will I pay more to receive fewer channels? Why am I being forced to go in for a set-top box when I’m perfectly happy with the current arrangement?... An inadequate understanding of the issues involved has given rise to these and other doubts, and that confusion has been compounded by a disinformation campaign unleashed by some of those who stand to lose once CAS takes off. A clinical analysis reveals that consumers–that’s you and I–are one of the core constituencies that will benefit from the rollout of CAS. In terms of costs and in terms of choice. Here are answers to some FAQs:

1 What’s wrong with the current cable TV subscription system? 

Today, most cable TV subscribers receive between 60 and 80 channels for a fixed cost–typically about Rs 250 a month. Some of those channels–such as Star’s bouquet (Star Plus, Star Movies, Star World, National Geographic), ESPN/Star Sports, Sony’s bouquet (Sony, SETMAX, Discovery), Zee TV’s bouquet–are ‘pay channels’. That is, you’re already paying to receive them, whether or not you watch them. But because the pay-channel subscriptions are built into the overall cable subscription, you don’t realise you’re paying to receive them. What’s more, broadcasters of some of these channels have hiked subscription rates by over 200 per cent in the past two years (alleging that local cable operators were underreporting their subscriber base). Such arbitrary price hikes may continue in the future as well. As a consumer, you have no choice but to cough up. You cannot, for instance, tell your cable operator that you don’t want to receive, say, ESPN/Star Sports during months when there’s no high-level sporting action to watch. And you can’t pick individual channels from Star’s bouquet: you have to take them all–and pay for them.

To understand this better, imagine there were no electricity meters–and the power companies billed each household a flat rate of Rs 2,000 per month. Your household, which has, say, three tubelights, three fans, a TV and a fridge pays the same tariff as your farmhouse neighbour, who has three ACs, two fridges, two TVs and enough lights to drain a power station. Wouldn’t you feel cheated? Would you not demand that power companies install meters and charge you only for as much power as you use? The same is the case with today’s cable subscription system: low-use consumers are paying for the leaks in the system and subsidising the cable bills of couch potatoes. 

2 How will CAS change things?

CAS makes it possible for the organised cable industry, or multi-system operators (like INCableNet, SitiCable and Hathway Cable, who provide the cable networks that your local operators bring home to you), to give you the facility to pick and choose the pay channels you want to see–and pay only for those. This is made possible by installing a set-top box (STB) in houses that wish to sign on for the pay channels. The STB will decode the encrypted signals of the pay channels you want . And since cable operators will now have the software to block those pay-channel signals that you don’t want, you won’t pay for the ones you don’t watch. The STB will in effect serve as a meter that will track your TV viewing preferences– and bill you only for what you see.

3 Must I buy a set-top box?

No. Under CAS, there will be two kinds of channels: free-to-air (FTA), and ‘pay’. You don’t need an STB to receive FTA channels: you can receive them in the same way that you now receive your complement of channels. Your life will remain uncomplicated, and your monthly cable bill will fall to about Rs 100 (more on that later). Of course, you’ll lose access to the pay channels you now get for a higher subscription fee–but that’s what you’ve opted to do.

If you wish to receive even one pay channel, you’ll need an STB. But, no, you don’t have to buy it. Most MSOs have unveiled rental schemes: you make a refundable deposit and pay a specified rental per day. INCableNet and Hathway will make available STBs for a refundable deposit of Rs 999 and a rental of Re 1 a day. SitiCable will offer it for a Rs 2,600 deposit and a 60-paise-a-day rental.

4 Where can I buy a set-top box, and how much do they cost?

You can’t buy an STB off the shelf, only from MSOs (who will make them available through your local cable operator). Since each MSO uses different signal encryption softwares, an STB that is compatible with one won’t be compatible with another. Therefore, you’re probably better off renting rather than buying. But if you must buy one, your local cable operator is your pointsman: in fact, starting this week, he will call on you to find out whether you wish to sign on to buy/rent an STB. 

Analog STBs cost about Rs 1,500-2,000, and digital STBs about Rs 2,500-3,000. (These prices could go up, post-July 31, if the government rescinds the recent sharp cut in customs duty on STBs.) Most MSOs will sell only digital STBs, which can pack in more channels and are relatively hacker-proof. They’ve also announced plans for buyback of STBs in case you’re shifting to an area serviced by a different MSO. 

5 I have two TVs and two cable connections. Do I need two STBs?

Yes. If you had two telephones, you’d have to pay tariff and call charges on both, wouldn’t you?

6 How will I be billed under CAS?

The government had given broadcasters a June 15 deadline to go public with details of which of their channels will be FTA and which will be pay–and, in the case of the latter, the monthly subscription rates per channel and the discounts offered on combo packages. And although that deadline was subsequently relaxed, most broadcasters would have unveiled their plans even as you read this,

For FTA channels. If you don’t opt for any pay channel, you’ll pay Rs 72 (the government-determined base tier tariff), plus entertainment tax (Rs 20-30, depending on which metro you’re in), plus 8 per cent service tax. Your total bill: about Rs 100-110 a month. Under the recent amendment to the Cable Television Networks (Regulation) Act, you’ll receive a minimum of 30 FTA channels, across all genres currently available–news, entertainment, sports and so on. Going beyond the requirement of the law, MSOs have promised to deliver at least 60 FTA channels–and even if some of these (Mandarin-language channels, Indonesian TV etc.) have been thrown in just to show the numbers, the FTA offering still has plenty of scope for channel surfing.

Going pay. If you want one or more of the pay channels, you’ll have to buy/rent an STB. And at the beginning of every month, your local cable operator will show up outside your door with a form that displays the subscription rates per channel and the discounts on combo packages (how’s that for transparency!). Depending on your choice, you pay the pay-channel subscription in addition to the base tier tariff (Rs 72 + entertainment tax + service tax).

If you opt for three pay channels, each available for, say, Rs 10 a month, your total bill will be: base tier tariff (Rs 100-110) + subscription for three channels (Rs 30) + STB rental (Rs 18-30). Total:Rs 150-170. For more pay channels, you’ll pay proportionately more. 

You can change your channel preferences with every billing cycle (that is, once a month). You can, for instance, sign on for a sports channel for just the two months of a World Cup cricket tournament. And you can blank out Cartoon Network for two months close to exam time, when Junior needs to give his multiplication tables his undivided attention. 

7 Won’t broadcasters jack up their subscriptions even under CAS?

No; in fact, subscription rates will fall. Until now, broadcasters have been arbitrarily increasing their rates to compensate for underreporting by local cable operators–and you had no option but to pay up. Under CAS, if you, as a consumer, find a channel ‘overpriced’, you can opt out–provided your life won’t feel empty without saas-bahu tearjerkers. Viewership figures, consequently, become transparent. And since broadcasters can ill-afford to lose viewership (which drives ad revenues, which account for much of their income), subscription rates will be determined by market dynamics, not by arbitrariness, as is the case now. Also, since channels will now be competing for your eyeballs, you can look forward to freebies, contests and other such enticements to subscribe to a particular channel. 

8 Surely it can’t just be about protecting consumers’ interest... Who else gains from CAS?

Consumers aren’t the only ones to benefit from CAS. MSOs will benefit from a more faithful reporting of their subscriber base. Until now, they were the victims of the local cable operators’ underreporting of this base. The plugging of that revenue leak is expected to give an incentive for existing players to make additional investments in providing better service (for instance, most MSOs will soon set up telephone helplines for cable customers) and also for more players to enter this arena. 

The government too will mop up more entertainment tax and service tax, since there’ll be greater transparency in respect of the number of subscribers.

9 And who loses?

Your local cable operator–if he’d been underreporting subscriptions and pocketing the money. CAS will plug that revenue leak to an extent. Additionally, he’ll now have to get transparent with channel subscription rates or face the prospect of penal action. 

The couch potato who wants all the pay channels: he’ll likely pay more per month than he does now–but then he deserves to (just like your farmhouse neighbour deserves to pay more for his power consumption). 

Broadcasters like Star, Zee, Sony etc.–to an extent. For them, CAS is a double-edged sword. They’ll benefit from a higher subscription base, but if viewership falls–as it’s expected to–their ad revenues will be hit. Also, they’ll have to entice viewers, and can’t raise subscription rates as freely as they’ve been doing.

10 What if DTH telecast takes off? Won’t all this go for waste?

There’s no certainty about when DTH will take off, or of how it’ll be priced. As of now, going by the experience abroad, it seems unlikely that DTH will match cable TV on costs, particularly post-CAS. If it does, you can of course switch: after all, if you haven’t bought an STB and only rented it, you’re not locked into cable.

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