Focus 2009: DTH players seek rationalisation of taxes

By afaqs! news bureau , afaqs!, New Delhi | In Media Publishing | December 21, 2009
Taxes are acting as entry barriers to consumers and operators, say industry leaders

The DTH (direct to home) industry is seeking tax rationalisation from the government for the industry to grow and to speed up the digitisation process. The industry captains say that the taxation on the sector in India is possibly the highest across the globe.

"When the licenses were issued by the government, there was no tax and we rolled out the product at a particular price. Today, we pay service tax, entertainment tax and VAT. We haven't passed it on to the consumers," said Rajiv Khattar, president, projects, Dish TV. He was speaking at the session on 'Spotlight DTH' at ASSOCHAM's 3rd global media and entertainment summit, Focus 2009.

The players are optimistic that the Unified Goods and Services Tax or GST scheme will help resolve some of these issues but they want the license premise to continue for some time.

"The DTH industry has added 8-10 million subscribers this year," said Ajai Puri, director and chief executive officer, Airtel DTH. In addition to tax rationalisation, he emphasised the need to align content costs into the revenue models of players.

At the session, the industry leaders denied indulging in any price war with the cable operators. They also said that the issue of interoperability will be resolved in next six-eight months, as conditional access module (CAM) comes into the market.

Currently, all operators provide a common interface slot in their set top box (STB). With the introduction of CAM, any DTH consumer will be able to shift operators without changing the STB. It remains unclear whether the operators will charge for CAM, and if they do, how they shall go about it.

Even in the face of increased competition within players and the potential of high end in the sky (HITS), the DTH sector remains attractive to investors. "DTH sector as a whole in India has a really bright future. There is a lot of opportunity, both in terms of number of subscribers and penetration levels. While globally, there is a slowdown in terms of subscribers, India is a country of growth for DTH over the next five years," said Mohit Ralhan, head, media and telecon, Baring Private Equity Partners (India).

"The growth of the DTH industry has put tremendous pressure on the cable industry to go digital," said Alan Dishington, general manager, India, NDS Services Pay TV Technology. He added that government intervention in form of a CAS mandate and an analog switch off date is required to give a major push to digitisation.

Roop Sharma, president, Cable Operators Federation of India, moderated the session.

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