Slowdown-hit DTH industry seeks government intervention

March 17th, 2009 - 6:32 pm ICT by IANS  

New Delhi, March 17 (IANS) Hit by the global slowdown and slow growth in subscriber base, the country’s direct-to-home (DTH) service providers Tuesday asked the government to bail them out and take a relook at the four-level tax system imposed on them.
“With the dollar appreciating against the rupee, the hardware cost has gone up by 10-15 percent,” Dish TV chief operating officer Salil Kapoor told reporters on the sidelines of a conference organised by the Cable and Satellite Broadcasting Association of Asia (Casbaa).

Tata Sky managing director and chief executive Vikram Kaushik shared the view: “The DTH industry can face massive losses in the years to come on account of low average revenues per user (ARPU) and also the duty that each service provider has to pay while importing hardware.”

“In a few years to come, one can expect consolidation or players winding up business,” he added.

Added Kapoor: “The industry is dogged by four levels of taxation - service tax, VAT (value-added tax), licence fee and entertainment tax. The industry will approach the government on this matter.”

Due to dollar appreciation, the hardware, especially the set-top boxes, which is imported from other countries, has become costlier. Therefore, the DTH players have not benefited much from service duty cuts.

However, the current trend has not stopped the companies from launching new offers and services.

Players like Dish TV and BIG TV are now offering multi-dwelling units (MDUs), and are exploring options with real estate developers for wiring their projects in the construction stage.

The MDU offers a single dish antenna that caters to all flats in a building through multi-switches and amplifiers.

Such a tie-up with developers will ensure multiple subscribers for the DTH operators, officials said.

At present, DTH operators are bearing the installation cost of the MDU antennas, which is ranging between Rs.1,200-1,500 per flat.

However, set-top boxes need to be installed for every television set which has to be bought by the user.

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