If your background is electronics, you already know that analog cables bandwidth is limited and they can carry only so many channels.
So far that was not an issue at all, but with recent flood of news channels and several varieties of entertainment channels the analog cable which is still predominant has maxed out. Not knowing this or should i say ignoring this fact, new entrants are coming into broadcasting business and loosing money competing for the limited channel bandwidth.
CAS is not manadatory except in 4 metros and there are almost 75 million cable homes running on analog cable.
Who will be the winner in this slow digitisation pace from investment point of view?
Broadcasters or MSOs or Last Mile cable operators (aka LCO)?
So far LCOs under reported their subscribers to MSOs so that they pay less to MSOs and mint money for themselves causing losses to MSOs. This was possible because analog cable doesn’t give MSOs an advantage to accurately measure the subscriber numbers.
In turn MSOs get less carriage fee for channels and broadcasters get less pay channel fee.
However with intense competition for limited bandwidth broadcasters are bidding high for their channels and MSOs are seeing their green days. Now LCOs will be the loosers if they continue to under report, so to get their proper share they have to good job of reporting the subscriber strength and take a share of that carriage fee. This will also result in MSOs getting more money from LCOs resulting in broadcasters getting their fair share of pay channel fees.
Under this new emerging scenario MSOs like WWIL are true winners. If the present slow pace of digitisation contunue, they make more money in carriage fee or if the CAS becomes compulsory, MSOs will still continue to make more money from their value added services and subscription fees from LCOs.
Government should act fast or else the carriage fee will hit the bottomlines of broadcasters forcing them to cut costs and thus sacrifice quality.
In a year or two, this present situation can easily get out of hand.
I&B along with TRAI should hike FDI limit to 74% to help cable companies to invest in infrastructure for faster digitisation program.
Filed under: Finance India, India blogs, Indian Bloggers , bigtv, digitisation, DTH, entertainment, fdi cap in cable, LCO, MSO, siticable, wwil
