High carriage fees to hit digitisation

With digitalisation of the Indian cable industry yet to gain traction, analogue cable operators continue to hold sway in placement of channels with an increase in carriage fees (cash for carriage of channels) by 30 per cent over the last one year.

Industry experts said the carriage fee industry in the country has grown by a whopping 25 per cent to Rs 1,600 crore this year. New deals struck by channels with analogue cable operators, between October 2010 and February 2011, have seen rates going up by as much as 30 per cent.

While carriage fee rates for new deals finalised between Oct 2010 and Feb 2011 are highest in north India ranging from Rs 14 crore to Rs 25 crore on UHF and S bands, respectively. The rates are lowest in central India ranging between Rs 2.3 lakh and Rs 3.8 lakh per local cable network.

A study done by Chrome reveals; Chennai leads with the highest cost per contact (CPC) rates (the money a broadcaster spends in carriage fees to reach a single household in a cable network) of Rs 58 for S band and Rs 42 for UHF. In Kerala, CPC stands at its lowest at Rs 0.9 for S band and Rs 0.4 for UHF.

Pankaj Krishna, managing director, Chrome Design and Media, an agency that monitors distribution of channels in the C&S universe said, “Today with the exponential increase in the number of channels and the resulting congestion on the analogue platform, majority of distribution availability is dictated by broadcaster push.”

The broadcasting spectrum is divided into five bands, prime, colour, S and UHF among others, which together cannot accommodate more than 106 channels on the analogue platform. There are about 700 news and non-news channels on air today, including 75 new channels whose applications were cleared by the Ministry of Information and Broadcasting, recently.

The prime and colour bands (channels 1-40) are already occupied by hindi entertainment, movies and news channels who pay the highest carriage fees leaving the remaining space to be jostled out for by other broadcasters.

Experts say there is also a huge differential seen between the carriage fee investments made by channels launched prior to 2002 and those launched after that. The relatively elder channels pay only a fraction of what the new set of channels in the same genre and maybe with even richer content pay today.

According to the FICCI-KPMG report 2011, there are around 138 million television households in the country, with cable and satellite penetration standing at a robust 80 per cent. While 28 million subscribers avail of Direct-to-Home (DTH) services, a mere four million use IPTV (Internet protocol TV) and CAS (conditional access systems). A whopping 78 million households continue to subscribe to analogue cable operators. The I&B ministry has set December 2014 as the sunset date for digitalisation of all analogue C&S homes in the country.