Indian TV rules impeding growth

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NEW DELHI -- Despite glowing predictions for a robust Indian entertainment industry through 2012, the country's digital television adoption rate of about 6% is modest relative to China's performance, according to two major studies published here.

A PricewaterhouseCoopers/Federation of Indian Chambers of Commerce and Industry study predicts the Indian entertainment industry will earn almost $29 billion by 2012 -- boosted by a rapid growth in the numbers of digital consumers.

But a second Indian report published Monday suggests that growth might be even greater were it not for Indian regulatory obstacles that have kept its 100 million TV households behaving like an "underperforming pay TV market."

Digital TV penetration in China stands at about 20% of 340 million households but "in most respects, India still offers a better environment than China," said John Medeiros, deputy CEO of the Cable & Satellite Broadcasting Association of Asia, which published the report on the digital arena.

In CASBAA's study of the regulatory effectiveness and investment and sector value in 14 Asia Pacific countries and "benchmarks" the U.K. and the U.S. -- India ranks just above lowest-ranked territory, China. Hong Kong scores the highest in digital TV penetration at almost 100%, on par the U.K.

If the Indian government does not adopt a "digital vision," Medeiros said, India's projected digital TV penetration growth rate of about 6% until 2015 will pale relative to China's, which could result in 35% of all households watching digital TV by 2015, up from 13% in 2006.

"China has mandated a central planning policy to go digital," Medeiros said. "This cannot be compared with India, where central planning cannot and should not be implemented. India has to adopt a lighter regulatory touch."

A recent analysis by the Telecom Regulatory Authority of India said that the government's target of 3 million broadband connections set for the end of 2005 was not met at the end of 2006, when 2.2 million connections were recorded.

Among the restrictions CASBAA recommends India relax are the freeze on pay TV rates, ceilings for channel pricing and the government's "must-provide" rule specifying a minimum number of channels that must be included in any pay service. "This is forcing content providers to cater to mass audiences at the expense of potentially dynamic niche markets," the report said.

Another report Monday from PricewaterhouseCoopers shows the Indian television market growing at about 18% a year through 2015.

"We reckon this figure could easily go up to 20%-25% if regulations are relaxed," Medeiros said.

Added CASBAA CEO Simon Twiston Davies: "Digitization needs interest from domestic investors more than just hoping for foreign investments. But with current restrictive regulations, new players are not attracted towards digital cable and are hence investing in the second best option, Direct to Home services."

Medeiros said that industry analysts indicate that investments of about $15 billion are required for Indian cable TV upgradation to digital.

The report was released just ahead of a CASBAA roundtable about pay TV and convergence to be followed on Tuesday by the first CASBAA India Satellite Forum in New Delhi.
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