Govt backtracks, to make CAS voluntary

After being operational for nearly three years in select parts of Delhi, Mumbai and Kolkata and over six years in Chennai, the Conditional Access System (CAS) for television is being given a quiet burial, at least for the rest of the country.

After deliberations with various stakeholders, including broadcasters and cable operators, the information and broadcasting (I&B) ministry has decided to make the roll-out of CAS voluntary across the country, instead of being mandatory as originally planned.

"CAS is not an essential commodity that it has to be made mandatory just because a section of the industry wants it," a senior I&B official said on condition of anonymity.

"It is also a political decision," the source added. "The government can't be seen to be forcing people towards a particular system of consuming television when there are viable choices available in the market like DTH, cable via HITS or digital cable. So, we are planning to make it voluntary and will be looking at legal requirements to do so," he said.

CAS is a digital cable delivery system for broadcasting services via set top boxes (STBs). It was enforced in parts of the three major cities on January 1, 2007. In 2003, it was implemented in Chennai selectively, after which it covered the entire city.

CAS was implemented through a notification in 2007 after a Delhi High Court order -- in response to a petition from multi-system operators (MSOs) -- directed them to implement the service in parts of Delhi, Mumbai and Kolkata.

The government, however, did not extend CAS to other cities, even though the Telecom Regulatory Authority of India (TRAI) had recommended that it should be rolled out countrywide. The government contended that it had not taken a final view and was consulting various stakeholders.

The government's move may impact the business plans of several large cable companies, especially MSOs like InCable, Hathway and WWIL that have invested over Rs 2,000 crore in servicing existing CAS areas.

"We do not understand voluntary CAS. Unless consumers or the cable operators are asked to move to a digital cable provided under mandatory CAS, no one will switch off their poor-quality analogue cable service," said A Mohan, executive vice president and head of regulatory affairs, Essel Group, which operates cable firms (WWIL), a DTH venture (Dish TV) and the Zee bouquet of channels.

"This move will also scuttle the government's plans to convert analogue cable infrastructure into digital by 2014," he added.

MSO operators say they may explore legal options if the government opts for a voluntary roll out. "If the government does not give a time-frame for the voluntary roll-out of CAS, legal recourse is still available to us," said a senior executive of (MSO) Alliance, the industry body on whose petition CAS was enforced in 2007.

Broadcasters like STAR, Zee, ESPN and so on will, however, be happy, since they consistently supported a voluntary system.

"We have supported a voluntary roll out of CAS all through because the pricing of channels is determined by market forces. In CAS, prices were fixed at ridiculously low rates. The fact is investments in different channels like sports is much higher, so they command a higher price, which we are not getting in CAS," said a senior executive of a well-known sports channel.

Experts, however, say apart from bringing in other benefits like curbing piracy and stopping under-reporting of cable homes by the cable operators, a move that impacts subscription revenues, CAS was enforced to provide consumers access to cable services at an extremely affordable monthly outgo as opposed to the highly fluctuating cable charges (ranging from Rs 50 to Rs 450 in the cities).

Trai had set the price of all genres of cable channels at Rs 5 in the CAS areas. Consumers could watch cable service for less than Rs 80 per month, as opposed to Rs 300 to Rs 350 before CAS was enforced. Despite this, CAS notched up sales of only about 600,000 STBs, whereas the three cities have around 8 million cable homes between them. Overall, there are 80-85 million cable homes in the country, of which nearly 15 million homes are now connected by the DTH.

"The 'stickiness' of a mandatory CAS customer is obviously much more so than in voluntary CAS. Also the digitisation drive across the country would slow down dramatically, which is not good," said Timy Kandhari, head of the media and entertainment practice of PricewaterhouseCoopers.