Indian pay-TV conversations are dominated by digital at the moment, or, more specifically, what happens in major metros now that the first deadlines have come and been met and the next milestones loom. “The hard work begins now... as cable MSOs [multi-system operators] look to collect fees from LCOs [local cable operators] and implement billing and tiering,” says Media Partners Asia (MPA).Bolstered by the momentum of the digital addressable system (DAS) mandate, India’s cable industry ended 2012 with an installed base of 14.6 million digital set-top boxes, MPA says. The majority of digital cable subs additions have come from the top five MSOs, which have managed to seed eight million digital boxes in phase-one markets – Delhi, Mumbai, Kolkata and Chennai. On a pan-India basis, these MSOs have installed over 12.5 million digital cable boxes. Hathway leads with about 24% market share. Hathway has placed all digital subscribers on its mid-tier pack (Rs220/US$4 a month); customers have the option to shift up or down later. Immediate competitor DEN is catching up, capturing a larger share of new subscriber adds after the analogue switch off last year. DEN expects most of its phase-one subscribers to opt for the premium pack (Rs270/US$5 a month). The formal billing process for DAS areas started in December last year. Since then, MSOs have deployed ground staff with basic know-your-customer forms, which will help collect customer profile data and channel preferences. With box seeding in the top three metros nearly complete, the broad consensus among larger MSOs is to peg and collect a net subscription ARPU of Rs85/US$1.58 a month from LCOs, including discounts for multi-TV homes. As MSOs access customer information, they should gain more control, providing a basis to increase their ARPU share to Rs100/US$1.86 per set-top box, starting from April 2013, MPA says, adding that the “overall billing operations for phase one should stabilise by then” and that the impact of higher subscription revenues through set-top box deployment will be reflected in MSO P&L for the quarter to end June 2013.The government is pushing the DAS phase two with weekly review meetings, workshops and awareness drives, and “is keen to ensure that there will be no further delays,” MPA says. However, “there is very limited ground movement” on set-top box deployment in phase two cities. The cities of Gujarat, for instance, are only at 20%-30%. “Furthermore, there is no alignment of interests between certain states and the central government,” MPA says, pointing out the recent proposal by MPs in Maharashtra to “keep prices uniform for all subscribers and set a maximum retail price for cable services across the country”. This proposal is “contrary to the central regulatory policy”, which follows the Telecommunication Regulatory Authority of India’s policy to ensure no rate regulation under the digital systems. Meanwhile, industry bodies continue lobbying for of key measures, including granting the cable industry infrastructure status and reducing customs duty on the import of major hardware equipment necessary for digital progress. Hopes were dashed in the most recent budget, when customs duty hikes of between Rs125-Rs175/US$2.27-US$3.18 per box were introduced as part of a government drive to support domestic box production. And the industry fears more could be on the way.<i>ContentAsia</i> Issue one 2013