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TRAI wants cable firms to go digital by 2013

Major tax, customs incentives suggested

The Telecom Regulatory Authority of India (TRAI) has recommended that by December 31, 2013, analog television, which is currently offered by most cable operators in the country, should be completely phased out.

The Ministry of Information and Broadcasting had sought TRAI recommendations on digital addressable systems on June 2.

Stocks of cable service providers like Hathway Cable & Datacom, Den Networks and Wire & Wireless India zoomed after TRAI announced its recommendations.

Implementation of TRAI's recommendation could put an additional financial burden on both viewers and service providers. While viewers may have to shell out anywhere between Rs 7,500 crores (Rs 75 billion) and Rs 15,000 crores, service providers, including multi-system operators (MSOs) and local cable operators (LCOs), may have to invest approximately Rs 55,000 crore in upgrading their infrastructure.

While cable and digital TV homes account for three-fourths of the 120 million television viewing households in the country, currently, 68 million cable TV households receive television signals in analog mode, according to a KPMG-FICCI report.

As incentive towards digitalization, TRAI has suggested a tax holiday for service providers. It has also favoured bringing down basic customs duty to zero on headend equipment and set-top boxes for the next three years.

Service providers setting up digital distribution networks before December 2013 will be eligible for a tax holiday from April 2011 to March 2019. MSOs/LCOs should be given the right of way/permission to lay optical fibre on non-exclusive basis.

As part of a four-phase rollout, TRAI suggests that the four metros should be covered by March 2011, and cities with a population of over a million by December 2011. In all other urban areas, rollout of digital services should be completed by December 2012, while the rest of the country could be covered by December 2013.

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Indiatel provides detailed, customized reports on India-telecom-related topics, using published, available unpublished or field sources.

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# India's long-distance telecom business
# India's cable TV equipment market and competition
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