Can the celebrations begin? The digitisation of cable television in India is well under way. Delhi, Mumbai and Kolkata are fully digital. The next 38 towns are almost "75 per cent through," says N Parameswaran, principal advisor, consumer affairs, at the Telecom Regulatory Authority of India (Trai), India's broadcast regulator. By the end of December 2013, he expects all 38 towns, in phase two, to be 100 per cent digital. The third and fourth phases, due to end by December 2014, should also go largely as scheduled, he says.
For once, nobody disputes what Trai is saying. "It has been done so fast, 20-21 million homes have been seeded [with digital set-top boxes] in one year," says Sameer Manchanda, managing director of DEN Networks, a cable TV distribution firm. Jagdish Kumar, CEO of Hathway Cable, and Gurjeev Singh Kapoor, chief operations officer of Media Pro Enterprises (a distribution joint venture between Star India and Zee), agree with Mr Manchanda. They aren't the only ones. A quiet sigh of achievement is reverberating across the industry.
Globally much smaller markets than India have taken anywhere between five and 10 years to digitise. The process of digitisation began when direct-to-home (DTH) TV first came to India in 2003, but it was mandated only in 2011. Since then, essentially in two years, between 20 million and 21 million homes out of a total of 153 million have been digitised. Add those homes that are already digital, thanks to cable TV or DTH, and more than 70 million - or just about half of Indian TV homes - are now digital.
What this means is that none of the money that comes from these 70 million-plus homes leaks out. So everyone - the cable TV company, the operator and the broadcaster - makes more money. Almost everyone agrees, though not on record, that pay revenues have gone up by 15 to 20 per cent simply because the declaration of homes has increased. Once 100 per cent digitisation is complete, it is estimated Rs 10,000-12,000 crore will get added to the industry top line in three to five years. The total Indian TV industry revenues (advertising plus pay) stood at Rs 40,000 crore in 2012. These numbers, however, are pathetic, considering that India is the world's second-largest television market in terms of homes. For its size, it is grossly under-monetised compared to other emerging economies. Brazil, for instance, is roughly twice the revenue size of India, although it has less than half as many TV homes.
The financial benefits, however, are some way off. This good news notwithstanding, there are a lot of creases that need to be ironed out. Mr Manchanda says digitisation should be seen as a three-step process. The first step is to get digital boxes into homes; this has seen 100 per cent success. The second is the filling of the know your customer, or KYC, forms. The local cable operator has to get these forms filled and submit them to the multi-system operator, say Hathway or DEN. Trai had set a deadline of December 15. It expects this process to be over by the end of the month. The distribution, filling and collection of KYC forms are a logistical nightmare in a market like India. Therefore, a delay of a few weeks here and there is fine, say most insiders. "The third step in digitisation - the billing and packaging by channels that consumers choose - can begin when the KYC process is over," says Mr Kapoor.
The other creases? There are battles for revenue share. And then there are city-specific problems - such as in Hyderabad, where litigation has complicated things. Or Chennai, which is still embroiled in a power struggle between Arasu, the state-owned cable company, and Kalanithi Maran's Sumangali Cable Vision. But no one seems unduly worried by these issues. The next big problem that they are dreading is the approximately 77 million homes in the second and third phases.
When do we start seeing the results in terms of better revenues, more variety and happier consumers? Mr Kumar thinks that "2014-15 is the year in which we should see the fruit of all this". Maybe. It could even be 2016-17 before the complete financial and programming impact of digitisation becomes evident. As Sanjay Gupta, Star India's COO, told this newspaper earlier this year: "Digitisation is the biggest change that television in India has seen since cable and satellite took off in 1991." It indeed is.
The process of getting thousands of cable operators to be transparent and show where each and every one of India's 750 million TV viewers lives, what they watch, what they pay, and how it should be shared is a Herculean task. It is as complicated, perhaps, as enrolling them for the unique identity scheme. In 2011, when the law was amended to make cable digitisation mandatory, cable operators and multi-system operators raised a furore. There were chaotic open houses that I attended, where it seemed that the programme could never take off. That a stage has come where a fully transparent, tax-paying cable industry that will give consumers more choice could become a reality is a huge step in the right direction. It is a happy thought for everyone - consumers, broadcasters, cable operators, regulator and cable firms - to begin the new year with.