What will cable TV digitization actually cost you

India is home to roughly 147 million cable TV households today, up from 400,000 in January 1992 and 94 million in 2011 (as per a recent Assocham report). The “idiot box” is so popular in the country that it is one of the only devices known to have penetrated pretty much every income group.


Given such numbers, it was no surprise that news of a mandatory transition from analog to digital was greeted with skepticism. As awareness of the new regulation spread and people started talking about the need for set-top boxes, it became clear that the move would be far from smooth. Right at the outset, affordability emerged as one of the factors that could scuttle the entire plan of making set-top boxes mandatory. Added to this, existing issues related to the arbitrary boundaries imposed by local cable operators and their non-standard hardware and service offerings have come to the fore again.


The original deadline for Delhi, Mumbai, Chennai and Kolkata to switch over was July 1, 2012. Now well past this date, the plan continues to be plagued by issues of cost, the haphazard layout of cable networks, and a general lack of awareness. We are inching closer to the new deadline, November 1, 2012, and these issues are no closer to being resolved. We spoke to a number of stakeholders and consumers to see where things stand at the moment. 

Old TV pile

Several issues have been coming in the way of smooth transition



We discovered that consumers are often being charged arbitrarily for set-top boxes by their cable TV operators. Many operators charge as much as Rs 1,500, but we did uncover instances of STBs being offered for free. This not only annoys subscribers, but also deters those who are waiting for prices to be regulated in the hope that STBs will become cheaper. Even if the price of a set-top box is standardized, it could be too much for some subscribers.


One cable service in Andheri, suburban Mumbai, told us that the cost of an STB is Rs 1,200, and subscribers will get 230+ channels. He also added that the company would provide a one-year warranty for the box, after which they would service it at a price. Another operator a few kilometers away informed us that he was pricing his STB at Rs 900 and offering 250 channels. Without committing to any warranty period, he stated that repairs would cost Rs 300.


An operator in Vashi, Navi Mumbai, told us that he was offering set-top boxes at Rs 1,300 each, with 140 channels in “digital quality”, which does not necessarily translate to HD. He also declined to commit to any warranty period for the box, instead saying that users would have to shell out between Rs 300 and Rs 400 for any repairs. One of the largest operators in Vile Parle, closer to the heart of the city, told us that he was offering STBs for Rs 1,500 with 180 channels. When asked what the quality of channels would be, he promptly said “HD”, but added that the STBs came with only a 6-month warranty and that repairs for any defect cropping up after that period would be charged for accordingly. When asked how other operators in his neighborhood could offer STBs for free, he explained that they charge an extra Rs 25–30 extra per month for five years, so you eventually end up paying as much.


When asked about the cost factor, consumers were of the opinion that it would only be a problem if the quality of the broadcast doesn't change. If they promise better quality transmission HD content, then the cost is acceptable.


The services, in some places were found to be unaffordable



One homeowner we spoke to said “I think it’s a good move as people often steal a cable connection which causes inconvenience to others. Instead, by paying the same price, people get good picture clarity, their choice of channels and also the option of recording shows if they miss them.” Another user was of the opinion that “Digitization is for the better, as the downtime that used to occur due to cable failure or no electric connection at the operator's office, etc, is completely eliminated.” Most cable subscribers told us that apart from the cost of installation, their monthly cable bills come to Rs 300–400. 

What to expect?


One of the benefits of digitization has been access to more channels



Primarily, digitization promises to improve the quality audio and video that a customer receives. Digital TV services also allow for more channels and services such as movies on demand. 

Airtel Digital TV is one of the popular players in this space. As an Airtel spokesperson explained, "Digitalization is a welcome step towards bringing in a high-quality viewing experience for consumers in India. The proposed move effectively translates into a wider choice of TV channels for customers along with offering superior quality of transmission, increased value added services, and transparent pricing. Moreover, the untapped market potential for operators offering digital content is huge with over 100 million homes to be converted to a digital platform in 3 years time—the largest in the world at this point."


Digitization will also help curb the under-reporting of subscribers by local cable operators, which is a common tactic for avoiding taxes and fees. According to same Assocham report, local cable operators report only around 15 percent of their paying customers to Multiple System Operators (MSOs)  and broadcasters, as a result of which their value diminishes and the government loses out on service tax."


The prices subscribers are forced to pay, are also currently not standardized. According to this report, a market survey that was commissioned by TRAI and conducted by reputed research firm MDRA revealed that the average monthly cable bill for a subscriber varied from Rs 149 in Kochi to Rs 322 in Shillong, despite the fact that the services that were being offered were largely the same.


The problems with digitization

TV test pattern

Slow rate of adoption triggered the delay



In stark contrast to the slow rate of adoption of digital TV technology in the country, a host of Direct-To-Home (DTH) players have managed to corner large audiences across Indian towns and cities. This has clearly shown that there is room for improvement in the market, and that consumers are prepared to pay for superior services.


The process of rolling out digital TV was split into phases at the time that the regulation was being formulated. Mumbai, Delhi, Kolkata and Chennai were to be the first to switch over, with a deadline set for July 1, 2012. TV transmissions through regular cable were meant to have been terminated on that date.


However, just days away from the stipulated deadline, it was decided that the rate of adoption was too slow, and that too many people, especially in Chennai and Kolkata, would be left in the dark if analog TV was terminated. Now deferred by four months, the current deadline for the four metros to make the transition is November 1, 2012. While good for consumers, the delay in the implementation has been a setback for the industry.


A smoother transition is the need of the hour..



According to Airtel, "Digitization is an important and critical policy intervention to provide high quality video content to customers. The delay in implementation is disappointing and expensive… That said, we will continue to support the government's digitization agenda as it is in the best interest of our customers, and look forward to its successful implementation at the earliest.”


Image credit: Getty Images

Published Date: Jul 31, 2012 06:01 pm | Updated Date: Jul 31, 2012 06:01 pm