Analogue-to-digital switchover hits a speed bump; broadcasters will have to wait for benefits
The much talked-about mandatory digitisation of analogue TV broadcast has hit a roadblock. The first phase of the digitisation process which covers the four metro cities – Delhi, Mumbai, Kolkata and Chennai – was earlier mandated to be completed by June 30, 2012 and has now been delayed by four months to October 31.
The delay was recently announced by the government when it found that the four metros were not yet equipped for the digital transition.
A statement issued by the I&B Ministry on Wednesday says, “The Ministry of Information and Broadcasting has decided to modify the June 30 deadline for a complete switchover to October 31, 2012. All the TRAI regulations for the digital addressable system will come into effect from November 2012.”
The Cable Television Networks (Regulation) Amendment Act, 2011, made the switchover mandatory by December 2014, in a phased manner when analogue signals will be finally switched off.
The initiative was prompted by the need to improve quality as well as make sure that all subscribers were properly accounted for.
Installing set-top boxes (STBs) in each cable viewing household is a precondition for digitisation and, according to official sources, a fortnight before June 30, it was estimated that only 30 per cent households had acquired STBs. 
As per an Ernst & Young (E&Y) report titled Digitisation of TV Distribution in India, it is estimated that India has 127 million C&S television homes, of which around 32 million are DTH, 7 million digital cable and the remaining 88 million analogue cable homes. It is said that DTH players are the most likely to benefit from this change, as they already have their digital STBs in place.
A spokesperson of Videocon d2h says, “DTH players are certainly set to gain with the advent of mandatory set-top boxes. With every consumer opting for a set-top box, DTH players stand a great chance of being chosen due to their superior transmission and unmatchable features.”
As far as investments are concerned, E&Y states that the industry will need to invest around Rs 75 billion in the process, and Phase I alone will require around Rs 11 billion. This is based on the assumption that the cost of digitisation per subscriber will be Rs 1, 500, of which around Rs 600 will be borne by the customers.
But why switch from analogue to digital? A spokesperson of Videocon D2h explains, “Digitsation is set to create a win-win situation for the government, subscribers and broadcasters. The government will now be able to collect taxes with the advent of STBs.”
He adds that subscribers will have access to much more qualitative services and will also gain by opting and paying for what they want to watch. The broadcasters will get a level playing field because the larger players won’t get preferential channel quality transmission and they would be able to generate appropriate revenues justifiable to them.
Another benefit of digitisation concerns the carriage costs (a fee to place a channel in a package or to position a channel within a genre) paid by TV channels to cable operators. At present, these costs are astronomical and include. TRAI rules recognise carriage costs as legitimate, and mandate that it should be applied uniformly.
There is likely to be some reduction in carriage fees, since digitisation is expected to give broadcasters relief. But the E&Y report states that in the long term, carriage fees are expected to continue (in one form or the other). In all probability, strong channels (and those that are included in much-demanded broadcaster bouquets) will end up paying a reduced carriage fee, while weaker ones will pay a higher sum.
