Dillip Bhuyan , COO , Eastern Media Digital

We had enough of speed of digitalization. There are still miles to go in this vast Indian sub continent for completion of the digitalization process.
There are think tanks, intellectuals, and policy makers who must have been stakeholders in the digital mission by way of being policy makers or implementing catalysts.
Digitalization is welcome, it must be accelerated and it must happen, there is no denial. But sometimes it comes to mind, what was the ultimate objective and in which way we have travelled so far?
Let us discuss and analyze a bit, what happened and how.
The phase-wise closure of the analogue era was decided and notified. MSOs and operators were almost forced to adhere to the policy. And in general, suddenly there was a sort of competition among MSOs to seed maximum number of boxes possible in their existing and possible extended network. Though there have been little bit of compulsive reasons in certain sectors, as a whole the entire industry took active part in the process. Going a step further, the process of MSO licensing was made liberal and easy to encourage intending new entrants into the fray. Again, territories were loosened to all MSO license holders on a wherever you can do business basis. And the industry went berserk in all the angles.
The intention of authorities must have been to ensure better viewing experience for TV viewers, ensuring proper transactions to result in better tax revenues and to bring overall discipline and logic to this industry in total.
Did it really move in the intended direction? Might be, but it gives rise to some debatable queries, ending at the following observations, which depicts about who gained and who lost.
The government machinery embedded several units and officers to enforce digitalization. Officers might be working hard, but their hands are numbered and duration is limited, hence the wherever whenever you can hit kind of approach is continuing. Having no actual control on broadcasters, they are completely dependent on the state’s support to curb analog signals at the end of an MSO/operator. State officers having their own set of existing responsibilities, are not being able to devote ample quality time for this subject. CAS and SMS being the essence of the entire exercise, limited understanding of these subjects by newborn MSOs and ground officials had probably weakened appropriate communications, hence limited actions. Expectations of tax revenue gains can only take shape, when there is a proper addressability by installation of CAS and SMS. When many of the newborn MSOs do not understand the abbreviation of these two jargons or do not know the available brands and their functions. The entire exercise is in doldrums; so far tax revenues from the ground are concerned.
Broadcasters
Being perennial revenue seekers, they went on facilitating transmission of their channels to all those whoever just obtained an MSO license. Though transmission of unencrypted digital signals is an offence, pay broadcasters preferred to ignore physical verification of addressability before issuance of decoders to new MSOs. With massive installation of STBs, ground revenue of pay broadcasters increased many folds. Now they have come up with internal strictures to ensure installation of CAS/SMS Some broadcasters have been conducting periodical audit of CAS/SMS system and are silent on the differences between monthly reports submitted by MSOs and the actual fact found during the audit. They have kept these records with great care, so as to use them as weapons against any MSO, whoever tries to go out of their clutches in future. They should be happy. They enjoyed and will continue to enjoy as usual.
Big/Old MSOs
Bigger or older MSOs had to install CAS/SMS from the beginning. Their numbers in ground could be easily ascertained and they had to cough up sizeable revenue as per demand of the broadcasters. Unlike small newborn MSOs, they could not hide their numbers. As a result, the cost of signal per connection has been much more than that of the new/smaller ones. Since it has been their core business, they kept on bleeding just with a hope for a dreamy rosy future. Till now, they had to realize ground revenues in competition with their newborn counterparts. The phrase revised tariff order remains an unseen carrot for them till now. Dates of announcement of the same kept on deferring and the big MSOs kept on bleeding. They have been suffering till now.
Newborn Small MSOs
These were seen by many as goose, which can lay golden eggs. Apart from broadcasters, mainly the hardware vendors called the shots. They kept on sending promos, sales guys, and tried to sell, actually sold what not for starting digital networks. Digital head ends were available in a wild range of `7 lakh to `1 crore. Many also bought some head ends at `5 lakh and claimed to have finished digitalization. Without proper encryption, connections of many of them could not be ascertained till now. But in coming days it is not sure, how long many of them would go. It is highly apprehended that the majority would not be able to handle the sudden jump in pay broadcasters’ revenue this year and some others might not cope with desired technical standards in the days to come. They enjoyed till now, but might suffer in future.
Hardware Vendors
Almost all of them made good money – whoever could sell whatever to whomever in all possible manners. There have been complete head ends, followed by mini, partial, mirror, and to be completed head ends, apart from various kinds of set top boxes (STBs) including standard, HD, mpeg-2, mpeg-4, refurbished, Android, Chinese, Indian, hybrid etc. Vendors knew well that many of them would be replaced in future. Then they would be selling the then appropriate material all over once again. They have been happy, and would be happier again and again in future.
China’s Market
The market of China must have been benefitted in a sizeable way by way of speeding digitalization when the Indian infrastructure was not prepared to handle even 10 percent of the need. This move must have resulted in buying STBs, head ends, and other ancillary material worth much more than `10,000 crore. Allowing a little more time could have allowed some Indian business units to have at least a small cake out of it. Sellers of China understand well the factor of price sensitivity in the Indian market. Therefore, toward the fag end of digitalization, they have been pushing in cheap boxes. They know well that now the MSOs would be indulging in price war, resulting in swapping of boxes of each other. Any investor would seek the cheapest available options while doing a swapping kind of activity. The result, we keep on swapping boxes of each other just to add more and more smiles to the Chinese manufacturers at the cost of blood shedding in the Indian market.
The Government
One of the major objectives of digitalization could be better tax revenues. Even though newborn MSOs do have GST, but lack of addressability has resulted in incorrect and far low assessment of actual boxes seeded in ground. Hence, the government has been losing tax revenues heavily. The appropriate receivables remained as the unaccounted surplus amount with the newborn MSOs. Major portion of the same is likely to be spent in upgrading the head end or in swapping of boxes of nearby competitors.
The Make in India mission failed severely in this business. Many advanced countries have taken 6–10 years, to complete digitalization. With our kind of environment, probably we became too ambitious to complete digitalization, and contributed to the economy of China due to unplanned haste. If at all we were really eager to pursue and transform the Make in India slogan into reality, the government could have taken a temporary pause, encouraged, and ensured the existing Indian business entities to rise up to the occasion and then the digital mission could have been pushed really hard. In such a case, the percentage of dependence of the Indian vendors on Chinese market could have come down and the rate of retention of hardware revenue inside the country could have been better.
Indian TV Viewers
Either way, the common TV viewers had to spend for the entire exercise and there is nothing unusual about it. But every time a STB is swapped or an upgraded box gets into the home, the TV viewer is forced to pay again and again. A well-planned implementation plan with at least one more year in hand could have lessened the unnecessary extra expenditure from the pockets of TV viewers.