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Home > Business > Special

CAS: Painful for couch potatoes

Anusha Subramanian | May 29, 2003

If you are a couch potato, you'll feel the pinch sooner than later. Barring a last-minute political hitch, be ready to fork out several thousands for a little set-top box to make sure that you watch TV channels that are pay.

When conditional access system is rolled out across the four metros on July 14, consumers will have to make an extra investment in set-top boxes to watch pay channels.

CAS is a proprietary encryption process that scrambles a video signal to make it incomprehensible for anyone without a set-box to watch a channel. A microchip smart card in the set-top decodes the feed and allows the subscriber to access exclusively those channels that he has paid for. All the free-to-air channels, however, will not require a set-top box.

Under CAS, viewers can pick and choose their choice of channels. The question that arises is what kind of a set-top box should a consumer opt for-- analog or digital. Industry experts say while an analog box is cheaper, digital box is a better option.

An analog box costs around Rs 3,000-3,500 but it is prone to hacking and makes upgradation more expensive for the consumer. Further, the box can carry only 80 channels, of which 50 could be free-to-air channels, and the consumer is restricted only to 30 pay channels.

Adigital set-top box on the other hand costs around Rs 5,000-7,000 and is easier to upgrade. High-end digital set-top boxes can also offer value-added services such as tracking of programme specific viewership, internet access, net telephony, and tele shopping.

Experts feel analog will be a regressive step since the future is digital. It is also possible to provide free-to-air channels in the analog mode and the pay channels in digital mode, simultaneously, in the same network if the cable operator wishes to provide digital quality to consumers for pay channels.

Okay, while digital boxes emerge as the ideal choice, the next question that arises is who will bear the cost?

A recently released KPMG report on the entertainment industry suggests that while the consumer is logically expected to pay for the set-top box, depending on the benefits to the players (whether the broadcaster, the multi-system operators or local cable operators), there could be a subsidy given to the consumer as prevalent in certain countries.

According to one industry source: "If we can have several finance companies financing TV sets, washing machines and two wheelers, they surely won't mind adding set-top boxes to their list to capture even a fraction of the market. If the box is available, people will buy or hire purchase or simply take it on rent.

"But, primarily, since cable operation is a very localised service, these boxes will be made available by the cable operators/MSOs which may even have buy-back options for people leaving their networks and moving out. It is a different matter that large MSOs which have countrywide operations may choose to set up a local dealer network for distributing and financing these boxes."

Zee has announced that it will be offering set-top boxes for Rs 50 a month. Siticable, the cable arm of Zee Telefilms Ltd, also announced a scheme under which digital set-top boxes can be obtained by a consumer by paying a fully-refundable security of Rs 3,990 and a rent of Rs 1 a day.

As fixed deposits with public sector banks carry an interest rate of 6 per cent, the opportunity cost of the security works out to Rs 239.4 a year or Rs 20 a month. With a daily rent of Rs 1, the monthly cost of ownership thus works out to Rs 50-51.

The other scheme announced by the company is where consumers can get a set-top box on the payment of a refundable deposit of Rs 2,990 and a daily rental of Rs 1.50. Under this scheme, the cost of the set-top box works out to be Rs 59.95-61.45.

Consumers can also avail of a six-month rental waiver under both the schemes if they book the product before July 14.

Other MSOs such as INcable Net and Hathway Cable and Datacom are still working out the pricing, rental and financing details. It is understood that they are in talks with financial institutions for the same. ICICI Ventures is reported to have evinced interest in financing set-top boxes.

There are several concerns regarding hiring or outright buying of set-top boxes. Every MSO will tie up with a single vendor and their affiliates will offer set-top boxes of the MSO concerned. Consumers can only choose the make of the box they want to buy or hire.

Secondly, if a person shifts from one area to another, the same set-top box will not function, unless the new place comes under the same MSO ambit. In such a case, there are no clear guidelines whether or not there will be a buy-back scheme.

Neeraj Bhatia, vice-president, Hathway Cable and Datacom, says, "We will be offering warranty and buy-back schemes to our consumers in case of any problem or shifting from one place to another. However, the scheme will be at depreciated prices."

Another concern also stems from the fact that multiple television households will have to buy one set-top box for each TV. Any additional TV set connected to the set-top boxes will feature the same channel and viewers cannot switch over or surf a new channel.

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