Four months on, HITS a miss with cable players

In what may come as an embarrassment for the information and broadcasting (I&B) ministry, the much-touted Headend In The Sky or HITS policy, cleared by the Cabinet in November 2009, has found no takers so far. The I&B ministry, which is now forced to take a relook at various provisions of the policy, has reportedly sought the involvement of the Telecom Regulatory Authority of India (Trai) in the matter, a move that could virtually put its rollout on hold.

HITS, the satellite-based cable distribution platform, was envisaged by the I&B ministry to undertake digitalisation of the existing analogue cable services in the country at a faster pace. However, no company has actually applied for a licence so far, according to sources in the ministry.

While Subhash Chandra?s Essel Group, the first such licensee, has decided to suspend HITS operations and is mulling exiting the business, other cable companies have not applied citing reasons such as high entry fee, steep performance bank guarantee and net-worth criteria, among others.

?This would perhaps be the first time in recent years that a major policy for the broadcast sector cleared by the Cabinet has been referred back to Trai within four months of coming into effect. Once Trai initiates a consultation process, the entire HITS initiative may go on the backburner for the cable industry,? a senior executive of a leading cable firm said.

According to Trai, HITS could digitalise cable transmission in the whole country with a capex of Rs 1,215 crore and a recurring cost of Rs 50 crore per annum, as against the capex of more than Rs 15,000 crore required for conventional terrestrial digitalisation.

For subscribers, the biggest advantage of HITS platform would have been high-quality digital transmission with value-added services available throughout the country at one go. And cost of set-top box would have been reduced due to economy of scale.

In reality, however, it has been just the opposite for Essel Group?s HITS venture, Siti Satellite. The company said it lost Rs 100 crore in the last few months itself to keep the HITS platform operational. In a letter to the I&B ministry earlier this month, Essel Group cited the high entry fees, absence of a favourable tariff plan and restrictions on the use of DTH infrastructure for HITS as some of the pressing reasons for suspending its HITS operations.