The 'Dark Fibre' Files: The Grey Market Deficit

Television emerged as one of the biggest gainers in a post-liberalisation India during the '90s. From 41 television sets and one channel in 1962, the country has come a long way, with over 130 million homes with televison. Cable TV has spurred an unprecedented revolution for the entertainment and advertising industry. As a country where more than half the population lives on a daily income of less than USD 1 but swears by its Indian Premier League, India has also emerged as the Asian giant in pay TV piracy. The Cable and Satellite Broadcasting Association of Asia, in a pan-Asia survey, pegged the net loss of revenue to the television industry due to pay TV piracy at USD 1.1 Billion in 2008. In its annual report published last year, it estimates that over 21.64 million cable TV homes went unreported, either on account of theft or leakage by local cable operators. This is almost one-fouth of the 8.5 million existing cable TV connections across the country. The report also suggests that 65 percent of the total loss of USD 1.76 Billion due to cable TV piracy in Asia comes from India alone, followed by Thailand at USD 180 Million.

According to Shashi Kumar, the General Manager of Hathway Cable TV Private Limited, a Multi Service Operator, 'All cable operators report only 10-15 percent of their total subscriber base. Obviously, the piracy figures in this industry will be very high.' A cable operator in Bangalore, on the condition of being anonymous, discloses, 'We are providing cable TV connections to over 800 homes. But we declare only 250, because that is the minimum number of connections that the MSO wants. There are not enough margins in the business to sustain accurate reporting.' The average cost of setting up a cable operation now runs into crores of rupees and the business is not lucrative if it is entirely clean. The average price for a digital cable connection charged by an MSO to the local cablewallah is between Rs. 180-200, the charge to the end consumer is Rs. 250 per connection per month. This does not seem to spell profit for the cable operators. 'An amplifier alone costs Rs. 3500 per unit and serves about 20 homes. The cost of the RJ6 cable is Rs. 4300 a bundle. How can we be expected to do business on a profit margin of Rs. 50 per month? If the margins were higher, perhaps operators would not leak connections,' adds the cable operator.

While Multi Service Operators seem to be fed up of the situation, there is not much they can do about it. 'There are already 5-6 national level MSOs. And then there are new entrants into the market every month. Despite knowing that the cable operators are under-reporting connections, we continue to work on minimum level subscriptions because the market is extremely competitive. If we take action against a cable operator, we would lose out on whatever business we have to a new player,' adds Shashi, while describing the operations of their company.

The industry is now looking at growth in the number of Direct To Home subscribers as a deterrent to piracy. Estimates suggest that by 2015, over 40 percent of subscribers in the pay TV universe is likely to comprise DTH owners, up from the current five percent. Frightened of repeated instances of signal piracy on their networks, broadcasters are now investing in signal encryption technology, to ward of the pirates. However, till DTH television becomes the norm rather than the exception, one can expect more tussles between the broadcasters, Multi Service Operators, regulators and cablewallahs, in the world of pay TV piracy.