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 towatch my favourite serials from July 14? Will my monthly cable TV bill shoot upbecause I’ll have to pay to receive some channels? Will I pay more to receivefewer channels? Why am I being forced to go in for a set-top box when I’mperfectly happy with the current arrangement?... An inadequate understanding ofthe issues involved has given rise to these and other doubts, and that confusionhas been compounded by a disinformation campaign unleashed by some of those whostand to lose once CAS takes off. A clinical analysis reveals thatconsumers–that’s you and I–are one of the core constituencies that willbenefit from the rollout of CAS. In terms of costs and in terms of choice. Hereare 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 fixedcost–typically about Rs 250 a month. Some of those channels–such as Star’sbouquet (Star Plus, Star Movies, Star World, National Geographic), ESPN/StarSports, Sony’s bouquet (Sony, SETMAX, Discovery), Zee TV’s bouquet–are‘pay channels’. That is, you’re already paying to receive them, whether ornot you watch them. But because the pay-channel subscriptions are built into theoverall cable subscription, you don’t realise you’re paying to receive them.What’s more, broadcasters of some of these channels have hiked subscriptionrates by over 200 per cent in the past two years (alleging that local cableoperators were underreporting their subscriber base). Such arbitrary price hikesmay continue in the future as well. As a consumer, you have no choice but tocough up. You cannot, for instance, tell your cable operator that you don’twant to receive, say, ESPN/Star Sports during months when there’s nohigh-level sporting action to watch. And you can’t pick individual channelsfrom Star’s bouquet: you have to take them all–and pay for them.

To understand this better, imagine there were no electricity meters–and thepower companies billed each household a flat rate of Rs 2,000 per month. Yourhousehold, which has, say, three tubelights, three fans, a TV and a fridge paysthe same tariff as your farmhouse neighbour, who has three ACs, two fridges, twoTVs 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 foras much power as you use? The same is the case with today’s cable subscriptionsystem: low-use consumers are paying for the leaks in the system and subsidisingthe cable bills of couch potatoes. 

2 How will CAS change things?

CAS makes it possible for the organised cable industry, or multi-systemoperators (like INCableNet, SitiCable and Hathway Cable, who provide the cablenetworks that your local operators bring home to you), to give you the facilityto 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 tosign on for the pay channels. The STB will decode the encrypted signals of thepay channels you want . And since cableoperators will now have the software to block those pay-channel signals that youdon’t want, you won’t pay for the ones you don’t watch. The STB will ineffect serve as a meter that will track your TV viewing preferences– and billyou 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 themin the same way that you now receive your complement of channels. Your life willremain 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 younow 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, youdon’t have to buy it. Most MSOs have unveiled rental schemes: you make arefundable deposit and pay a specified rental per day. INCableNet and Hathwaywill make available STBs for a refundable deposit of Rs 999 and a rental of Re 1a day. SitiCable will offer it for a Rs 2,600 deposit and a 60-paise-a-dayrental.

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 themavailable through your local cable operator). Since each MSO uses differentsignal encryption softwares, an STB that is compatible with one won’t becompatible with another. Therefore, you’re probably better off renting ratherthan buying. But if you must buy one, your local cable operator is yourpointsman: in fact, starting this week, he will call on you to find out whetheryou 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 recentsharp cut in customs duty on STBs.) Most MSOs will sell only digital STBs, whichcan pack in more channels and are relatively hacker-proof. They’ve alsoannounced plans for buyback of STBs in case you’re shifting to an areaserviced 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 onboth, wouldn’t you?

6 How will I be billed under CAS?

The government had given broadcasters a June 15 deadline to go public withdetails of which of their channels will be FTA and which will be pay–and, inthe case of the latter, the monthly subscription rates per channel and thediscounts offered on combo packages. And although that deadline was subsequentlyrelaxed, most broadcasters would have unveiled their plans even as you readthis,

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 totalbill: about Rs 100-110 a month. Under the recent amendment to the CableTelevision Networks (Regulation) Act, you’ll receive a minimum of 30 FTAchannels, across all genres currently available–news, entertainment, sportsand so on. Going beyond the requirement of the law, MSOs have promised todeliver at least 60 FTA channels–and even if some of these (Mandarin-languagechannels, Indonesian TV etc.) have been thrown in just to show the numbers, theFTA offering still has plenty of scope for channel surfing.

Going pay. If you want one or more of the pay channels, you’ll have tobuy/rent an STB. And at the beginning of every month, your local cable operatorwill show up outside your door with a form that displays the subscription ratesper channel and the discounts on combo packages (how’s that fortransparency!). Depending on your choice, you pay the pay-channel subscriptionin 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, yourtotal bill will be: base tier tariff (Rs 100-110) + subscription for threechannels (Rs 30) + STB rental (Rs 18-30). Total:Rs 150-170. For more paychannels, you’ll pay proportionately more. 

You can change your channel preferences with every billing cycle (that is, oncea month). You can, for instance, sign on for a sports channel for just the twomonths of a World Cup cricket tournament. And you can blank out Cartoon Networkfor two months close to exam time, when Junior needs to give his multiplicationtables 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 beenarbitrarily increasing their rates to compensate for underreporting by localcable operators–and you had no option but to pay up. Under CAS, if you, as aconsumer, find a channel ‘overpriced’, you can opt out–provided your lifewon’t feel empty without saas-bahu tearjerkers. Viewership figures,consequently, become transparent. And since broadcasters can ill-afford to loseviewership (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 youreyeballs, you can look forward to freebies, contests and other such enticementsto subscribe to a particular channel. 

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

Consumers aren’t the only ones to benefit from CAS. MSOs will benefit from amore faithful reporting of their subscriber base. Until now, they were thevictims of the local cable operators’ underreporting of this base. Theplugging of that revenue leak is expected to give an incentive for existingplayers to make additional investments in providing better service (forinstance, 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, sincethere’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 andpocketing 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 theprospect of penal action. 

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

Broadcasters like Star, Zee, Sony etc.–to an extent. For them, CAS is adouble-edged sword. They’ll benefit from a higher subscription base, but ifviewership 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 freelyas 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 bepriced. As of now, going by the experience abroad, it seems unlikely that DTHwill match cable TV on costs, particularly post-CAS. If it does, you can ofcourse switch: after all, if you haven’t bought an STB and only rented it,you’re not locked into cable.