Transcript Slide 1

A
PRESENTATION
TO
TELECOM DISPUTES SETTLEMENT &
APPELLATE TRIBUNAL
(TDSAT)
Presented by
Jawahar Goel
President
Indian Broadcasting Federation
This presentation is the personal view of
the speaker and should not be treated
as the view of the IBF.
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INDUSTRY ON A GROWTH PATH
 The Broadcasting Sector in India is undergoing a process of
sweeping changes driven by advent of new distribution
technologies such as DTH, Broadband, CAS, HITS, IPTV, etc.
 A recent report by Price Water Cooper (PWC) has projected :
 Indian entertainment & media industry is expected to
grow at 18% compound annual growth rate (CAGR).
 Reach a projected size of Rs.1 lac Crore by 2011 from its
present size of Rs.43,700 Crores.
 The Television industry is projected to grow 22% CAGR
from Rs.19,100 Crores to Rs.51,900 Crores by 2011.
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LEAKAGES HAPPENING AT LCO LEVEL
Broadcaster
12-15%
Broadcaster
Distribution
Company
2%
MSO
4-6%
Distribution of Revenues
Markets
USA
UK
Australia
Japan
India
Operator
60%
63%
65%
65%
88%
Broadcaster
40%
37%
35%
35%
12%
LCOs
76 – 80%
Leakage
Subscriber
100%
Source :SSKI Reasearch
4
Broadcaster’s Share Far Below the Global
Average
Operator
(%)
Broadcaster
100
90
12
18
28
30
30
35
35
37
40
70
70
65
65
63
60
Malaysia
Singapore
Australia
Japan
UK
US
80
70
60
50
40
88
82
72
30
20
10
0
India
Taiwan
Thailand
Source :SSKI Research
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REVENUE LEAKAGE DUE TO UNDER
DECLARATION BY CABLE OPERATORS
 Last mile Cable Operators highly under-declare the
subscribers numbers which not only means loss of revenue
to Broadcasters, but also to the Government by way of nonpayment of taxes viz Service Tax, Entertainment Tax,
Income Tax etc.
 As per the survey conducted by Centre for Media Studies
(CMS) of 9 cable operators in C and D class cities for IBF, in
most places, the actual subscriber numbers were found to
be many times more than that reported by the local cable
operators.
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CMS SURVEY REPORT OF CABLE OPERATORS
SUBSCRIBER BASE
Place
Dhanbad
MSOs*
SLR
LCOs*
Dec Sub
Base
Actual Sub Nos
as per CMS
Survey
4550
8225
18000
Ajmer
18000
34650
79010
Akola
15000
30000
38302
Amravati
18000
29000
55800
Bhiwani
5000
8000
25650
Charkhi Dadri
1600
1720
4377
Sirsa
6000
10000
28265
Dharmavaram
6000
9000
21600
Alwar
7500
9250
24468
* From different sources
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 Bulk of cable TV subscription is retained by local cable operators
(LCOs) who declare only a fraction of actual number of subscribers to
MSOs paying a portion of subscription fees. The distribution of revenue
in non-addressable environment is highly skewed in favour of
distributor of channels and the broadcaster get only a fraction of only
12-15% of the subscription amount paid by the subscriber.
 It should be made mandatory for all the cable operators to register with
Service Tax authorities and the authorities should launch periodic
campaigns to ensure that all last mile cable operators are registered and
display their registration certificates prominently so as to ensure the
proper realisation of Government revenue.
 The extent of leakage of service tax revenue in various cities is reflected
in subsequent slides. The same holds good for leakage in Entertainment
Tax revenue as well.
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DATA REGARDING LEAKAGE OF SERVICE TAX BECAUSE OF UNDER
DECLARATION (Source : NRS & RTI Data)
Delhi
No. of C&S homes (in
Lakhs)
Average ARPU (Rs.)
Kolkata
Bangalore Chennai Hyderabad Jaipur
26.08
20.97
13.93
15.57
11.82
2.25
150.00
125.00
175.00
100.00
150.00
225.00
Total C&S Revenue
(Rs. in Crs.) P.A.
469.44
314.55
292.53
186.84
212.76
60.75
Service Tax Payable
(Rs. in Crs.)
58.02
38.88
36.16
23.09
26.30
7.51
Service Tax Collected
(Rs. in Crs.)
5.57
4.99
3.29
2.69
0.58
1.15
Leakage in Service
Tax (Rs. in Crs.)
52.45
33.89
32.87
20.40
25.72
6.36
Means service tax declaration of 6.8% only
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LEAKAGE OF SERVICE TAX BECAUSE OF UNDER DECLARATION
(Source : NRS & RTI Data)
Service Tax Payable (Rs. in Crs.)
Service Tax Collected (Rs. in Crs.)
Leakage in Service Tax (Rs. in Crs.)
60.00
50.00
40.00
30.00
20.00
10.00
0.00
Delhi
Kolkata
Bangalore
Chennai
Hyderabad
Jaipur
Ludhiana
Gurgaon
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CARRIAGE FEE & PIRACY
HINDERING THE GROWTH
 Cable operators demand huge carriage fee from Broadcasters
particularly from FTA Channels
 Nearly Rs. 1400 Crores/p.a. of carriage fee is being paid just in 150
cities cable operators by channels
 When seeking for carriage fee those MSO,s demand based on lakhs of
subscriber base.
 Viewers are being deprived of favorite channels.
 News channels are forced to divert their finical resources to pay
carriage fee then to deploy in research for meaning full news reporting,
leads to low quality of news content
 Further loss of revenue to broadcasters because of rampant piracy
prevalent in cable distribution.
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SOLUTION
The cable distribution should
move towards digitalisation &
under declaration be treated as
piracy
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