The industry has grown almost geometrically over the last decade. Today it reaches 86 million adults; some homes having access to more than 150 channels. Over half of the 82 million TV households have a cable connection.
In urban areas, penetration is as high as 63 per cent spread across every segment. A third of cable homes are in rural India. The "Indianisation" of content is the primary growth driver.
Cable's growth has been uncontrolled resulting in the current disorganised functioning of the industry. Small local cable operators (LCOs), who provide 'last mile' connectivity, control much of the business. Only in the big metros do the multi service operators (MSOs) have control using better technology to improve signal quality and offer more channels.
As a result, only the popular national channels have broader nationwide connectivity. For example, national connectivity of Star Plus, Zee and Sony is more than 80 per cent. Star Plus has the highest channel share of 14 per cent. Other niche channels within the group account for another seven per cent audience share. The viewing audience is concentrated (over 70 per cent share) among these networks. Consequently, of the approximately 157 channels available to cable homes, 137 channels have a cumulative share of just one per cent.
The major source of revenue for channels is advertising. To reduce this reliance, channels have been trying to increase distribution revenue.
Although the large networks have already turned to pay models, they still have not been able to realise the full potential due to rampant under-reporting of cable households by LCOs. Compounding this problem, LCOs create arbitrary channel packages for households with no freedom of channel choice for consumers. CAS will radically alter the dynamics of the industry by regularising and consolidating the disorganised sector.
For the consumer, CAS provides the option to choose the basket of channels, paying only for what they view. For the broadcaster, CAS checks under reporting of cable households. Eventually helping channels to increase distribution revenue. It is unclear how CAS will be implemented:
Through ground head-end. Or, through head-end-in-the-sky (HITS), where the MSO collects feeds from all pay channels, decodes them, and then once again encodes them, using its own CAS platform. These feeds can then be uplinked and distributed nationally. If enforced, the balance of power would shift from LCO's to MSOs.
With greater organisation and accountability broadcaster revenues will improve becoming more stable and predictable. Even niche channels, such as CNBC India, will benefit. The CAS implementation process will begin modestly in metros by mid 2003 and will take few years to have national impact.