You are here: Rediff Home » India » Business » Columnists » Guest Column » Ajit Balakrishnan
Search: The Web
  Discuss this Article   |      Email this Article   |      Print this Article

My friend Dilip, the cable operator
Ajit Balakrishnan
 · My Portfolio  · Live market report  · MF Selector  · Broker tips
Get Business updates:What's this?
September 29, 2006

One day, back in the Bad Old 1980s, Dilip, a young man from our neighbourhood in Bombay, knocked on the door of my apartment with an intriguing proposition: did I want to watch movies round the clock for less than fifty rupees a month?

He had talked the building manager into letting him put a video cassette player in the manager's tiny office, strung cable from there through the lift shaft up to each of our apartments and was now offering movies. It was great having something to watch other than Doordarshan.

Then, Saddam Hussein invaded Kuwait, the Americans rushed in and we could watch on CNN. Somebody showed Dilip how to put together a satellite dish for peanuts and now he too could show CNN. Neither the Iraqis nor the Americans won, but the true winner was CNN and satellite television.

But whenever I passed Dilip I could see his young shoulders sag. "Everyone wants a connection," he said, "but where do I find the money to buy the equipment and cables?"

"Why not go to a bank?" I asked him.

"I did, but the bank manager insisted on real estate as security, and I have none to offer."

A few weeks later, I saw Dilip, his shoulders sagging even more and a big bulge in his pocket. "That's a gun," he said when he saw me staring at the bulge. "I have started receiving threatening calls from rival cable operators. They want to move into my territory. They have hired goondas to cut my wires."

"Can't you go to the police instead of carrying a gun?" I asked.

"What do I tell the police? There is no law that says that this area of Bombay belongs to me. Anyone can muscle in."

Dilip hung in there for a few more months, finally gave up his business and went to college in the United States. The man who had muscled in on Dilip's territory does not carry a gun. He doesn't need one. He has joined and become a prominent member of a local political party that has plenty of strong arm enforcers.

I can't help thinking of my friend Dilip, the cable operator, when I see the ruckus about the new Broadcast Bill.  It is a set of rules to divide up the spoils of the business that Dilip and 30,000 entrepreneurs like him have built while the government was busy protecting Doordarshan's monopoly.

And the list of people wanting a share is long: municipal and state governments, who tax cable operators; broadcast channel owners; telecom companies who can make money carrying TV programmes on their wires; the Indian space establishment seeking satellite lease revenue. . .

And the party painted as the villain is the Cable Operator. His sins are seen as many: consumers say he foists channels on them that they don't want to see. Broadcasters and local governments say he understates the number of households he services and thus denies them revenues.

Once a Bill knocks around in Delhi for a while, as the Broadcast Bill has, many other agendas are tacked on to it. Thus, the less successful channels have inserted a clause putting a ceiling on the market share that any one channel can have.

Local TV production companies have put in a requirement for a minimum level of India-produced programmes.  Elaborate rules have been proposed for dealing with the rights for that great Indian obsession, cricket.

What could be wrong with all this? 

The very name of the Bill tells a story. To name this a "Broadcast"  Bill is the equivalent of naming, say, the Information Technology Act, "The Carrier Pigeon Act" . The notion of "broadcast", of a central entity sending out programmes for a passive mass of people to receive, is on its way out.

Channels are proliferating because consumers want "narrow cast", specific channels that suit their niche interest and want it at times that suit them, not at times that broadcasters fix.

Television through satellite and cable TV reaches just 25 per cent of our population. The first goal of any regulation must be to take this to at least 80 per cent. Only a vibrant cable sector can manage the credit risks and low costs needed to take TV to the bottom of the pyramid.

Now I realise why my mind has been wandering back to the Bad Old Eighties. Faced with technological turbulence and the threat of foreign company dominance, we passed laws that aimed to protect "the public interest" but ended up creating rent-seeking opportunities for interest groups. Then too, the mistake we made was to enact unclear legislation and give extensive rule-making authority to bureaucrats, as in the proposed Broadcast Regulation Bill. What resulted was the nightmare of the Licence Raj that we are still trying to disentangle through "reforms".

Why go back to the Bad Old 80s? Why not regulation that addresses the real issue: creating a competitive marketplace at each level of the digital value chain.

This means a competitive marketplace for set-top boxes (no proprietary systems), satellite leases (no preference to state-owned satellites), cable operator franchises (clear, tradable titles), and last-mile connections (leave the field open for IPTV, Wimax and other emerging technologies).

Prices will then come down through competition, not government price control, and TV will reach all our citizens and not just the well-off.

Ajit Balakrishnan is the founder and chief executive officer,
Comments welcome at

Powered by

More Guest Columns
 Email this Article      Print this Article

© 2008 India Limited. All Rights Reserved. Disclaimer | Feedback