Sushil Kumar, Director, Darsh Digital Network Pvt. Ltd.
Broadcasters are not implementing uniform content rate for all the MSOs operating in the country. The content cost to MSOs differs from MSO to MSO and it depends primarily on the size of the network and the bargaining power of the MSOs. So the cost of broadcasting content is more to small MSOs in comparison to bigger MSOs.
Cable services were basically availed by the middle and lower-middle class of the society since cable service was cheaper in comparison to DTH till the analogue mode was prevalent in the country. But after digitization, broadcasters have done the digital deals and rate of content has been hiked for the cable service providers, that is, MSOs. The rate of the content hiked many times but the collections from the ground for MSOs are still the same since affiliates are not paying MSOs as per TRAI suggestions. Still, in Phase-II towns, most of the MSOs are collecting the subscription on ad hoc basis. Packaging is not implemented. So the cost of content has increased for MSOs and broadcasters have reduced the carriage fee; so in a nut-shell, the revenues of MSOs have gone down while other costs of MSOs have increased, such as installation of digital head-end and also the manpower required for implementation of digitization.
It becomes difficult for small/independent MSOs to compete with the bigger MSOs operating in the same market since their content cost is cheaper than independent MSOs. Broadcasters have to provide equal playing field to each and every MSO, which is not happening right now.
My request to all the broadcasters is to provide equal playing field to all the MSOs as far as broadcasting content cost is concerned. Broadcasters need to understand that just by going with the date of digitization means not that all the market got digitized in true sense. We have crossed phases I, II and III of digitization but so far the monetization of revenue from the ground has not happened. LCOs are not paying to the MSOs as per the package rate. MSOs are not able to realize the revenue as per package, still MSOs are billing the LCOs at a lump-sum rate and majority of revenue goes to the LCOs.
Broadcasters have done the billing to the broadcasters as per DAS rate but in Phase-III markets, no MSO is able to collect revenue from the ground. Broadcasters have to keep some patience because MSOs still have to establish package rate in Phase-II markets, and as far as Phase-III markets are concerned, MSOs need to establish the billing.
Broadcasters need to relax the billing in the Phase-III markets. Once the process of deployment of STBs is over, the MSOs will be able to collect the revenue from the ground and subsequently broadcasters will realize their share as well.
As far as DTH is concerned, they came in the industry with digital platform so they do not have to make any further investment as far as digital head-end set-up is concerned. One of the most important factors is that DTH players are releasing the subscription amount directly in their kitty whereas MSOs are getting it through LCOs, and that too a very minimal amount. DTH players are big companies having great economic strength as compared to MSOs. So far as services are concerned, DTH players have upgraded their system and introduced so many value-added services, such as movie on demand, music on demand, and lots of other services, but MSO platforms have still not introduced such services, as all this requires continuous investment. DTH industry has attracted FDI but in cable industry, FIIs are still not interested. DTH has got upper hand in this race against cable operators.