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CAS deferment puts multi-system operators on a sticky wicket

Latha Venkatraman

Mumbai , Feb. 27

FOR multi-system operators (MSOs) news of deferment of conditional access system (CAS) is detrimental for their survival.

"CAS should have been implemented yesterday because the existing distribution system is no business model at all. There are absolutely no margins in the existing business," said Mr K. Jayaraman, Managing Director & CEO, Hathway Cable & Datacom Pvt Ltd.

According to him, MSOs like Hathway have invested heavily on encryption, set top boxes, head-end equipment and upgraded their networks to digital. TRAI, the regulator for the telecom and the broadcast sector, has suggested that CAS be deferred for another three months.

In such a scenario, will CAS ever get implemented - the answer to that query should be yes as far as MSOs are concerned.

Also, threats from other forms of distribution are imminent, according to Mr Jayaraman. "Two alternative sources are emerging - DTH and broadband," he said. According to him, DTH form of distribution would appeal to consumers in the SEC A and B group. Just as SEC A homes were seen as takers of the set-top boxes in the conditional access system, these homes would also opt for DTH, Mr Jayaraman said.

As of now three players - Star with Tatas; Zee and Prasar Bharati - are in the fray. Broadband is yet another form of competition for CAS.

Telecom major Reliance Infocomm has set up a nationwide broadband fibre optic network covering over 60,000 km over 600 cities and towns in India. Bharat Sanchar Nigam Ltd (BSNL) has also made a foray into the broadband segment.

HITS (Headend in the Sky) is yet another technology, which is a combination of cable and DTH, could pose a threat to the existing distribution system. For MSOs the threat is assuming greater proportion because of the delay in the implementation of CAS. "Had CAS been implemented on time, we would have had a time lead of a few months. That is lost with the deferment of CAS," Mr Jayaraman said. The worst hit will be the small cable operators as their function becomes redundant in these emerging distribution systems.

MSOs have been diversifying into related businesses including Internet services through cable, primarily to negate the impact of investments in CAS infrastructure.

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