Bridging digital divide

With digitisation and increase in FDI cap, TV sector to see more investments and jobs. Zia Haq reports.

Hathway Cable, India's biggest cable television carrier, plans to offer 10 more high-definition channels in Bangalore once all its subscribers go digital by installing a set-top box.

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Apart from better picture quality, viewers can expect other treats as well, such as more niche channels and cable broadband.

The digital sweep is expected to unleash a broadcast revolution in India where watching television is a national pastime, and which follows only China and the US in the number of television households.

The second phase of digitisation in 38 cities – after the four metros -- has been able to target 87% of television homes so far, according to information and broadcasting (I&B) ministry.

In December 2011, a law was passed to digitise the television sector by 2014. Cables use an outdated analog technology.

In September 2012, when the foreign direct investment cap was raised to 74% from 49% for the broadcast carriage services providers, a digital overhaul became all the more necessary for investment in the sector to flow and jobs to grow.

But none of that is possible with opaque analog technology. For one, it has helped cable operators dodge taxes by hiding subscribers.

"Digitisation in Delhi alone will push up the annual entertainment tax collection from Rs. 75 lakh to Rs 5 crore," says Supriya Sahu, joint secretary, I&B ministry.

Announcing the revised FDI norms, commerce minister Anand Sharma had said: "Keeping in view the convergence between telecom and broadcast sectors, the FDI cap has been made uniform across broadcast services. For mobile TV, where there were no norms, 74% FDI would now be permitted."

The move was strongly supported by the industry.

With analog, broadcasters have no way of knowing consumer habits and bandwidth being limited they must pay higher fees to cable companies.

Such high payouts prompted BBC English entertainment and BBC CBeebies, a children's channel, to exit India in 2012.

"A key outcome of…digitisation will be bigger production budgets and investment in differentiated genres and multilingual content," says the FICCI-KPMG Indian Media and Entertainment Industry Report 2013.

With digitisation, the report adds, the industry could grow at 18% in next five years from the Rs. 37,000 crore in 2012. The share of subscriptions in the total revenue will likely touch 77% in 2017 from 66%.

Data shows cable networks have retained 80% of their clients as digital cable subscriptions are cheaper than DTH.