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Thursday, May 16, 2002

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a la carte versus buffet

IT HAS THUS far been a buffet; from hereon, cable television channels will become available a la carte. Parliament is to debate the amendments to The Cable Television Networks (Regulation) Act that will require cable television operators to offer their customers the option of choosing the pay-channels they wish to watch and pay for those alone. That ought to be, on the face of it, great news for viewers who, in recent months, have been harassed by frequent hikes in the monthly subscription rates. As the cable service is an area-specific monopoly, customers have had the choice of paying the rate demanded and taking all the channels, or simply having their service cut off. The technology used to deliver the programmes does not permit customers to choose their own bouquet of channels. They have no recourse to an alternative provider either.

The cable television industry has distinguished itself over the past 10 years by its spectacular growth from zero to 38 million homes and an estimated revenue of Rs 5,000 crore. That it was unorganised, unregulated and even illegal at the start renders its performance notable; as is the fact that it has been built with funds from not cash-rich corporates but thousands of risk-taking, small-time entrepreneurs. Its success though has now become a source of tension within, as its three constituents — the broadcasters, the multi-service operators and cable service providers — reach out for larger slices of the rapidly enlarging pie. Broadcasters, who get less than one-seventh of it, are demanding more, reflected in the recent hikes in subscription rates, and the urgency with which the Centre has moved to address this.

Central to the Government's policy change is a set-top box that will decode the pay-channels the customer has chosen to watch. The Government says all free-to-air channels must be offered as part of a basic service and that it will notify the ceiling for the fee that can be charged. But that does not promise much as fewer than two out of every ten channels remain free today. The rest demand fees that add up to over Rs 140 per subscriber per month. The pay-channels must come a la carte through the set-top box, says the Government. This represents the freedom of choice for the customer; but it also represents the source of a potential escalation in fees. For a start, the boxes themselves will cost from an estimated Rs 3,000 for an analog unit to Rs 6,000 for a versatile digital version. Customers seeking to watch any of the pay-channels will need to pay this sum either upfront or in instalments as rentals, in addition to the relevant fees for individual channels.

Obviously, prices for each channel will be dictated by the market, and there is now enough competition among the channels to keep prices in check. The same cannot be said of the cable service providers who have tended to hold on to their local monopolies. The charges for the basic tier service offered by them are therefore rightly to be regulated. Overall, the new dispensation will mean higher rates for customers who would like to retain access to the full menu of over 60 channels. As every hungry diner knows, the buffet is the cheapest option; but if one minds the purse, one needs to be a light, disciplined eater or viewer.

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