Hong Kong firm moots one-city CAS test

A one-city conditional access system rollout as a test-bed and simultaneous push for competition will provide better insurance against failure, the Hong Kong-based media research and publishing company, Media Partners Asia, says in a research report on the introduction of CAS in India.

"Our research shows that CAS implementation, in its currently proposed form, will not achieve the Government of India's stated aims of driving affordability and choice for consumers and building an addressable cable television industry," said Vivek Couto, executive director, MPA.

"As a result, we recommend that the Government of India should intervene to pursue its vision of a consumer-friendly addressable cable television industry. This would involve focusing on a test-bed rollout of CAS in one city and a simultaneous push for alternative subscription-based television platforms such as direct-to-home. Such an approach would protect consumer interest and contain damage to India's media and entertainment economy," the MPA report says.

The Indian Broadcasting Foundation has also put forth its viewpoint before the CAS task force and the information and broadcasting ministry, that it would be better if CAS is implemented in a planned manner, taking one city - instead of four as earlier envisaged - at a time.

Even there, the research body has argued for CAS introduction in a neighbourhood at a time in each city.

However, the I&B ministry has been insisting that the rollout should be in the four metros to begin with, focusing on 6.7 million homes in the first year of deployment.

Most broadcasters are of the view that if CAS is not implemented properly, then there would be loss of viewership which in turn would lead to a loss in revenue for the broadcasters.

"The CAS rollout in four cities is unrealistic and difficult to manage. The financial constraints at the operator level is a major obstacle in deploying the rollout in four cities. In any scenario, the cost of deploying set top boxes in the four major metros, which command up to 6.7 million cable television homes, requires large scale financing," said Couto.

According to the report, to achieve a 100 per cent penetration of the four metros with secure digital STBs, the industry will need investment running into Rs 3,600 crore (Rs 36 billion) and for unsecure digital STBs it will cost Rs 2,300 crore (Rs 23 billion).

Further, for a 52 per cent penetration with 3.5 million secure digital STBs, the industry will have to pump in Rs 1,900 crore (Rs 19 billion) and for unsecure STBs it will cost Rs 1,200 crore (Rs 12 billion).

Finally, a 30 per cent penetration, with two million secure digital STBs, will cost Rs 1,100 crore (Rs 11 billion) and Rs 700 crore (Rs 7 billion) for unsecure digital STBs.

"Even assuming a 30 per cent penetration of two million subscribers over a period of 12 months, that is by the end of July 2004, the entire industry would have to overcome significant logistical and economic challenges relating to CAS investment and deployment," said Couto.

Even deploying low-cost analog solution to 2 million subscriber homes would cost over Rs 500 crore (Rs 5 billion), and if deployed, would prove hackable.

The study indicates that digital STB rollouts in successful global cable television markets have been phased in cautiously with several rounds of trial and then only the industry could manage commercial deployments in between 100,000- 500,000 locations in the first year.

Scalable, cost-effective STB rollout to over one million subscribers has only taken place over a period of 3-5 years.

In fact, Malaysian Astro, which operates largely as a monopoly in Malaysia, has taken seven years to reach the one million mark.

Similarly, in the US, six years after the rollout of digital services, there are up to 19.2 million digital STBs installed in consumer homes, covering just over 26 per cent of a total 73 million cable homes.

In the UK, where cable operators have lost out to satellite in the race to rollout digital systems, there are only 2.1 million digital cable television customers.

In India, a decision to restrict the initial CAS rollout to a single city or area of 1 million homes after July 14 could produce a reasonable penetration of 200,000 customers (20 per cent) by end-July 2004.

This implies over 16,000 STB installations per month, which would be supported by a total investment of Rs 107 crore ($23 million) in CAS equipment. This could be more affordable for a major multi-system operator.

This plan would need to include several steps with timelines attached, beginning with a mapping of operators in the CAS area and interim deadlines before July 14, to deploy STBs.

According to the report, if adopted on this basis, the rollout would allow the government and the industry to identify potential technology glitches, minimise disruption to consumers and enable both broadcasters and operators to frame realistic business models ahead of the deployment.

Thus, the report said that, after the deployment reaches 20 percent penetration, both the industry and government should assess the impact of the phased rollout, measure the success of addressability and subscriber declaration, and subsequently frame plans to expand the deployment.