"Say Yes for CAS but No for STB".

It has been a harrowing experience for Chennai consumers of the Cable TV service after the introduction of CAS in the city. The consumers who were already reeling under a tightly controlled Cable TV operator's network which made them slaves to the operators feel as if they are now thrown from the frying pan to the fire.

Ever since the Cable TV operators were taken over by the supporters of one of the political factions of the State about 5 to 6 years back, consumers have lost the choice of their cable TV suppliers except in certain pockets today where there is a second choice. With the MSO based supply replacing the earlier Operator level Dish based Cable TV distribution, the entire industry came under the control of two MSOs namely the  SCV of the Sun TV group and Hathway of the Star TV group. It is said that SCV controls 90 % of the market. In the few areas which are fortunate to have dual operators, bitter fights amongst the two competitors are common and often result in each other cutting the cables of the rival suppliers unmindful of the inconvenience to the consumers.

The extent of frustration suffered by the consumers can be gauged by the behaviour of one of the Cable TV operator's assistant who demanded a house wife to fall at his feet for restoring a connection which she had earlier chosen to cancel. In another area, an office bearer of the Cable TV consumer's association was threatened, his motorbike burnt and household utensils ransacked.

It was therefore natural that when a system of regulating Cable TV industry was proposed, there were many in Chennai that this would regularize the Cable TV operators to the benefit of the consumers. They felt that while the operators are now charging a fee of Rs 175 to RS 325/- per month in different parts of the city, there would be an uniform around RS 200/- charge as promised by the I&B minister. Some felt that the free bouquet of a minimum of 30 channels (Hathway offers 54 channels) at RS 72/- would be good enough for them and they would be happy to welcome CAS for this reason.  However the consumers are unanimous that they are not interested in buying the Set Top Boxes at a cost of RS 3500 to Rs 4000 as offered by SCV or under a deposit cum rental basis offered by Hathway.

Hence the Consumers came up with a strange conclusion in a recent meeting "Say Yes for CAS but No for STB".

There Can be No CAS without STB

However, it is necessary for Consumers to recognize that their dream of 54 free channels for RS 72 is unlikely to materialize and there is a distinct indication that they would be forced to buy STBs even when they opt out of all pay channels as was indicated by the industry representatives in the meeting held on 3rd.

It has already been announced today (5/9/03) that the total amount payable for free channels would be around RS 98/- of which Rs 20 would be the Entertainment tax and RS 6 would be the service tax.

The reason why the operators are keen on STB introduction for all customers is the fact that if 90 % of the clients opt to stay with free channels, then their total revenue would come down from the current average levels of RS 175/- per month per customer  to around Rs 125/- per month per customer. Additionally if they opt to declare 100 % of their customer base as is expected by the Government as well as the  MSOs, and Broadcasters, their net income would go down by more than 50 % from the existing levels.  It is unlikely that many of the Cable TV operators be able to sustain their even current levels of service under the circumstances.

Secondly, some of the operators are afraid that if they may not be able to use a single cable to supply the feed for both Free and Pay channels without the termination at STB. It is not clear why they are taking this position unless the type of STBs they are likely to use are such that the descrambling of the signals has to be done at the operator's level and not at the subscriber's level. Otherwise they may be concerned with the possibility of illegal descrambling of the encrypted signals at the consumer's end without their knowledge. Whatever may be the reason, it appears that the operators prefer to have only STB regime and if possible STB without CAS rather than CAS without STB.

The consumers should therefore not be misled into thinking that there is any possibility of CAS without STB. If such a situation arises, it is likely to be a passing phase and ultimately, the Cable operator may politely discontinue the free service or provide such shabby feed that the consumer will be forced to switch over to the use of STBs.

The Cost of STBs

Hathway is offering its STB at an outright cost of RS 3125/- with a refundable deposit of RS 400/- and alternatively at a rental cost  of Rs 18 per month with a refundable deposit of RS 2600/-. An early bird offer of a refundable deposit of RS 999/- and a rental of Rs 30 per month is also being offered.

 The declared cost of STBs by SCV in Chennai is RS 4563/- inclusive of taxes. This is made available only on an outright sale basis.

Hathway has been able to announce its channel package with various packaged offers. SCV is yet to announce any such rates.

It has been announced that the FTA offer would cost Rs 98 with taxes. Even though it had been originally announced that the cost of free channels would be RS 72/-, a service tax component of Rs 8 (11.11%) and an entertainment tax of RS 20(27.7%) has been announced.

Who Should Bear the Cost of STBs?

In the entire CAS controversy, it appears that the basic question of "Who Should Rightly Bear the Cost of STB?" has not been discussed earnestly. The introduction of CAS is basically to sort out the difference between the Cable TV operators and the MSO/Broadcasters on the revenue sharing at their end. In order to facilitate the counting of correct number of connections, the Consumer is being forced to keep a "People's Meter" at his residence in the form of STB. The benefit of STB is significantly more to the Broadcaster and the MSO rather than the Consumer. For the consumer, it is like getting himself chained. It is therefore illogical that the cost of STB should be directly borne by the Consumer.

Even if we agree that ultimately the cost of STBs would be the cost of service which the Consumer has to bear, in a market which lacks competition, there is an unfair attempt to impose the capital cost of STB on the Consumer. It would have been significantly better if the STBs had been supplied free and the cost absorbed in the monthly rentals.

Some of the MSOs are trying to project as if the STBs are devices that would provide several value added services to the consumers and hence they should bear the cost just as they bear the cost of TV. This is not correct since the STBs being supplied now do not appear to be of the category that will have value added services such as "Video on Demand".  Hence the consumer benefit through STBs is minimal and there is no justification to hoist the cost of STBs on him.

If the consumer is forced to buy the STBs because he has no choice, it would be like asking the citizens to pay to get themselves chained.

Monopoly to Get Reinforced

In the early days of CAS discussion, the Government was talking of "Open Architecture" for STBs. However, like many of the promises of the I& B Minister, the industry has ensured a "Proprietary" technology for STBs. As a result STBs that are being offered now are MSO specific and are not inter changeable nor can be bought in the market.

Unlike a TV which the customer buys as his own choice amongst the many competing brands, STBs are to be supplied only by the MSOs and by today's situation there is already a virtual monopoly in the market. Once a consumer opts to buy SCV's STB, he is tied to SCV as the cable supplier and if he wants to change over to Hathway, he will have to discard the STB. There is not going to be any second hand market for the STBS. Also in case of any technical failure, the Cable TV operator is unlikely to be capable of attending to the repairs of STBs and the Consumer would be left to bear the cost of replacement.

The lack of choice in buying is yet another reason why the cost of STBs should not be hoisted on the Consumer.

Once the Consumer buys the STB, he will not only be bound to the MSO but also lose any option to resist hikes in fees that may be agreed to between the operators/MSOs and the Broadcasters. He will be like a bonded labour who has to accept whatever decision that the industry players take.

It is therefore an unjust system where the Consumer has to pay money for imposing restrictions on the service that he is supposed to buy. It is against the concept of "Consumerism" itself.

The Technology Behind STBs

The MSOs have not provided enough information on the STBs that are being supplied. Going by the information available at Hathway website, it appears that they will be supplying Humax ND1000C model (Korean) of the STB specially made for the Indian market.

The latest versions of Humax STBs with all the features that one talks of as capabilities of STBs cost around $ 700 (PVR8000).

The Humax version made available to the Indian market is a low cost version which is unlikely to have features other than the bear minimum requirements such as a receiver, descrambler and TV tuner functions.

Though Hathway is offering the STB on a rental scheme and is talking of a possible upgradation, the costs of such upgradation are likely to be prohibitive.

SCV is offering a Taiwanese model of COSHIP with one year guarantee. The  modelnot known. It appears to be a version similar to CDVBC5120. The current versions of COSHIP are priced in the range of US $200 and above and hence the Indian model appears to be a low end version only.

Considering the developments in the Broadband Internet service, the TV feeds are likely to be available in comparable quality once the last mile optical fibre connectivity becomes available. Chennai hopes to get the Reliance optical fibre connectivity soon and even SCV is itself offering such a service with a bandwidth of 1.5 MB.

TV on ADSL is also being successfully offered world over and with compression technology improvements, full screen TV quality streaming video is said to be possible at bandwidths of around 750 kb. Already, Dishnet is offering 512 kb internet connectivity in Chennai and  we are close to achieving the broad band requirements for TV transmission.

Thus the STBs being offered now appear to be an intermediary product which is likely to become obsolete soon. The Government itself is planning to introduce DTH and when it comes, it will be another alternative system available to consumers.

It therefore appears that Consumers in Chennai need to assess the opportunities available to them in the next few months before jumping to buy STBs.

                                                                     Naavi

September 5, 2003

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