The picture’s not going to clear up anytime soon. Broadcasters and multi-service operators (MSO) have welcomed the government mandate for complete digitisation of the cable sector by December 2014, but not the local cable operators (LCOs). That’s understandable: according to a Chrome Media report, at present, broadcasters get 21% and MSO 20% of the subscription revenue of the broadcast industry (Rs 20,160 crore), while the rest (over 59%) is pocketed by last-mile cable operators who now hide actual subscriber numbers. That break-up will change drastically with digitisation, with cable operators’ share dropping to just a quarter.

Meanwhile, complete declaration of subscriber numbers and the increase in monthly payout by consumers from the current average of ₹140 to ₹200 means the MSOs will also earn incremental revenue. “We will certainly be better off on an Ebidta basis,” declares K Jayaraman, MD and CEO of Hathway Cable and Datacom.

Before that happens, MSOs will have to fork out an estimated Rs 12,000 crore collectively to upgrade to a digital network, the largest chunk of the money going toward buying set top boxes (STBs). MSOs currently offer STBs to end-users at a 50% subsidy, and that’s likely to stay. There’s already a severe shortage of STBs, so prices may rise, pinching MSOs further. And, as digitisation extends nation wide, MSOs will lose a vital income source, since broadcasters will no longer pay carriage fee. Against an available 500 channels, analog cable can carry only about 100. So broadcasters pay MSOs high carriage fees to ensure their channels find a place in that 100. Consolidation among MSOs, then, seems almost inevitable. “I expect many of the smaller MSOs and LCOs to crumble because they are not prepared to accept change,” says Ejaz Inamdar, CEO of Pune’s ICC Network.

Really, then, it’s not the LCOs alone who are worried about the onset of the digital regime. MSOs, too, are tempering their optimism with a healthy dose of caution.