Cable home: The viewer is free to pick and choose her channels, although she'll now pay more

Let not the noises that the government makes about the introduction of the Conditional Access System (CAS), which allows the viewer to select and pay for only those channels she chooses to watch, lull you into complacency. The thousands of rupees required for the set top box (STB) that enables CAS-about Rs 2,500 for analogue STB and up to Rs 8,000 for digital STB-will ultimately be out of the pocket of the consumer. In other words, your monthly outgo for watching the telly is slated to go up.

You could, of course, opt out of an STB and manage with a yet-to-be-defined bouquet of free-to-air (FTA) channels, which would be available to all subscribers. However, the most popular channels like Star, Zee and Sony are not FTA, but pay channels, which means that you have to pay for receiving the signal. And the broadcaster has been left totally free to charge what he feels like for these offerings. In the current pre-CAS scenario, this payment is collected through your cable operator and you are, therefore, not even aware of what it costs to watch each channel.

There would obviously not be too many takers for the FTA band, likely to be priced anywhere from Rs 40-200. The numbers are still being crunched. According to a Merrill Lynch report of October 2002, 5.2 million of the estimated all-India cable homes of 40 million are housed in the metros. The penetration of these boxes, in Mumbai, which accounts for the largest number of cable homes at 2 million, and Delhi, which accounts for 1.4 million cable homes, is projected to be as high as 80 per cent. Factoring in a much lower penetration in the other two metros, Merrill Lynch has estimated that the cost of STBs in the metros would be Rs 955 crore (assuming Rs 2,500 per STB). This will have to be taken from the pockets of the consumer.

The price sensitivity of the average Indian would ensure that about 60-75 per cent of the STBs installed in the first year (estimated at 1-1.25 million) are analogue, according to the Secretary General of the Consumer Electronics and TV Manufacturers' Association (CETMA), Suresh Khanna. India could well end up becoming a dumping ground for outdated analogue STBs, which are being phased out around the world. There is another downside to analogue. Compared to digital STBs, these are much more prone to hacking. And that could very well defeat the ostensible objective of CAS- Transparency.

The cable operator could still under-declare the number of homes connected. The broadcaster would cry foul again and we would be back to the cycle of arbitrary rate hikes for the long suffering consumer, who would now have lighter pockets.

A gushy research report from ICICI Securities says that the implementation of CAS would be ''significantly positive'' for top-notch players across the media spectrum. It expects the leading broadcasters, top-content providers and corporatised multi-service operators (MSOs) like Siti Cable, Hathway, and Incable, to benefit from the increased revenue flowing from truer subscriber declarations. In the first phase of implementation of CAS in the metro cities, ICICI expects the broadcasters' share to increase to 17.6 per cent of the total revenue pie of Rs 9,600 crore, from 6.4 per cent currently. MSO's share would increase to 9.7 per cent from 3.4 per cent.

There is, however, a strong case for the government mandating digital STBs. That requires a will, which the Information and Broadcasting Ministry seems to be lacking. ''In the longer term, analogue turns out to be the more expensive option (as it would need to be junked). The future is digital," says Jawahar Goel, Head of Siti Cable. A high-end digital STB would offer much more than pay channels. A smart operator can use the device to enhance revenue streams by offering services like internet, e-shopping, video, audio, the works.

As in any exciting saga of muddling, there is a twist to the story. If one of the premier pay channels decides to go the FTA way to retain viewers, a domino effect on all other channels may follow. ''I do not think more than five-to-six channels will remain pay,'' says Vikki Choudhary, President, National Cable and Telecommunications Association. Either way, it will be a revenue-positive exercise for the cable operators and the broadcasters. Meanwhile, you'd better put STB in your 2003 expenditure plan.

-Vandana Gombar

TRADE TWIST
Quick Loss
The gains India made in Doha last year are in danger of being lost.

Former Union Commerce Minister, Murasoli Maran (centre): What are they going to do now?

For the developing world, especially India, it was being touted as one the major achievements at the WTO Doha ministerial meet in November last year. The proposal was simple: Indian generic drug manufacturers would be allowed to supply a range of drugs at competitive prices to other developing countries facing public health emergencies. But one year down the line, these gains seem to be fast disappearing. The recent Implementation Draft (Paragraph 6) on trade-related intellectual property right (trips) has not only made it mandatory for both the exporting and the importing countries to issue compulsory licences before any exports are made, but also to ensure that all drugs are labelled, so as to prevent excess shipment. Points out a senior Commerce Ministry official: ''It would take one or two years to obtain a licence and by that time the public health urgency of the importing drug may be lost.''

What's worse is that the US government is now trying to limit the "scope of epidemic'' by restricting it to a few diseases-thereby diluting the Doha mandate substantially. Lastly, what could be ruinous for Indian industry is the proposal mooted by the US to eliminate all tariffs on consumer and industrial goods by 2015, as part of its recommendation on Trade and Development. India's only hope is the Cancun negotiations next September, where it could get a chance to correct the ''wrong''.

-Ashish Gupta

EXPORTS
A New Surge
India's exports are on a roll. And suddenly the government's target of achieving a 1 per cent share of the global trade seems achievable.

Shipments: Stacking up

L. Mansingh is grinning from ear to ear. For good reason. Between April and October this year, exports surged an impressive 14 per cent to $28.23 billion (or Rs 1.35 lakh crore), which means if the rate of growth keeps up, India may actually achieve its dream of garnering 1 per cent of the world trade, or $80 billion by 2007. Most of India's traditional export items such as gems and jewellery, textiles, and engineering goods have not only recovered from last year's slump, but are actually growing between 14 and 32 per cent. ''We are on target,'' beams, Mansingh, the Director General of Foreign Trade.

But the question for Mansingh and India is, can this growth be sustained? And if yes, then for how long? Most trade experts believe that this growth could well be short-lived because India's biggest trading partners are in trouble. While the US economy seems to be sliding back into a recessionary mode, growth in most European Union countries has plateaued with Germany already reporting negative growth. And Japan, another major trading partner, seems destined to remain in a recession.

So, if this be the case, what should Indian traders do? The easy answer is to look at growing markets such as China, Malaysia, Singapore, Thailand and a few countries of Latin America. Of course, becoming more competitive is another option that Indian exporters should work on..

-Ashish Gupta