Cable TV fee capped amid clutter

Written by Soma Das | New Delh | Updated: Dec 30 2008, 06:20am hrs
Cable TV charges may not go up immediately in areas where there is competition, even though the Telecom Regulatory Authority of India (Trai) has allowed a 7% hike in cable rates with effect from January. This is despite the fact that cable service providers have been lobbying hard with Trai to allow a 10 to 15% increase in cable rates for long now.

While some players said that they would have to pass off the burden to consumers since the broadcasters would raise their fees immediately from the beginning of the year, others felt that owing to competition, the price rise might not come into effect immediately. Most operators think whether prices go up or not will depend on local factors governing rates in the area concerned.

While the areas where there is an established monopoly may see an increase in the price, regions where there is cut throat competition may not immediately implement the hike for the fear of losing market share to rival players. Asked if cable prices will see an immediate hike, CEO of Digicable Network India, Jagjit Singh Kohli said, I doubt whether an across the board price hike will happen immediately because of the stiff competition in the market. There will be price hikes in pockets. One will have to wait and watch in other areas.

The multi-system operators (MSO) also said they had expected to be consulted at least once before the Trai announcement which would have given them an opportunity to present comparison between average landed cost of set-top boxes (STB) today and two years back. MSO Alliance president, Ashok Mansukhani, said, The industry is disappointed that Trai didnt seek empirical evidence on costs of STBs from us before deciding on slashing the security deposit and monthly rental. Personally I am a votary of free STBs but for that we must have volumes in business and volumes are unlikely unless CAS rollout is implemented.

According to Kohli, Our practical experience shows that the rental schemes on ground get much more dynamic than what Trai prescribes, because of stiff competition. As far as the 7% hike is concerned, we were expecting a higher increase.

Most other MSOs also admitted they were expecting a hike between 10% to 15% in prices.

According to an estimate of an MSO, while the free on board price of STB has reduced by 10 to 15% since early 2007, when CAS was rolled out in the four metros partially, the dollar has appreciated by 20 to 25% since then. According to another estimate by an independent observer, while the STBs were priced in the range of $36 to 47 two years back, currently the STBs cost between $34 to 44. Some cable operators even claimed that the landed cost of STBs that they import has actually shot up by 25 to 35% since last two years.