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Only connect?

  • 14/02/2004

Only connect? “It is the market which drives the change,” says Nasir Tyabji, professor for science policy at the Jawarharlal Nehru University, New Delhi. He explains: “The market converts each technology into a commodity. The efficiency of a technology is also reflected in its market returns, rather than the actual efficacy of the technology. In a large number of cases, when we talk of technology determinism, it is actually market determinism.” He narrates an anecdote. “We have this story about an everlasting light bulb which was developed. But it was never allowed to enter into the market because it would have wiped out the market for ordinary light bulbs.”

P V Indiresan, former director of the Indian Institute of Technology, thinks contrariwise. “Certainly the technology decides the market. Real technology comes when somebody is mad about a brilliant idea, or by accident, as happened in the case of the X-ray.” As he recollects: “When the photocopier was invented, people questioned its purpose because we had ample amounts of carbon paper. Look at where that invention stands today. Markets may support the innovations in technology, but the inventions come by themselves.”

Others take the middle path: “It is both the market and the technology which drive change. Technological innovation will happen anyway,” says Tim Kelly, director, Strategy and Policy Unit, International Telecommunication Union (ITU), Geneva. (ITU is a global organisation that brings governments and industry together to coordinate the establishment and operation of global telecommunication networks and services.) “Take for example the short messaging service (SMS),” says Kelly. “It is actually a primitive technology which existed on mobile phones since quite a while back. But it has been only five to six years ago that it was marketed and used success-fully. People used it because they needed it.” D K Ghosh, executive director and board member, Siemens Public Communications Network Private Limited, says: “There is always a synergy between the innovation and market forces.” Consider, says Ghosh, the mobile phone: “In the beginning, it was only for voice transportation. Soon it was also used for data transport. The Internet developed separately. But the Internet on the mobile was the inevitable next stage. As the benefit of personal connectivity was demonstrated to the public, the demand for it grew rapidly and now there are a billion-odd mobile phones, marginally higher than wire-connected telephones (landlines).”

“The invention of newer mobile technologies that enable speedier transport of voice, data and video is a wonderful example of technologies and markets interacting dynamically. The shelf life of each invention is reduced as the pace of invention accelerates. Markets drive technological innovation as inventors respond to perceived or felt market needs, but technological innovation also creates markets of its own. The PC was not invented by Bill Gates; he merely realised its potential. Needs create innovation and innovation creates needs,” says Ghosh.
One thread One common thread that links both technology and markets is regulations. But can we really regulate technology? No, feels Sam Pitroda, chairperson and CEO of WorldTel Limited, UK and hailed by many as the ‘father’ of the indigenous telecom boom. “There is no way you can regulate technology. It is a process that keeps changing. What you are trying to regulate today is not worth regulating tomorrow.”

The world over, regulations for the TV and telecom sectors came almost immediately after their potential became clear. Regulations for cable TV in the US began in the 1960s and 1970s, when the Federal Communications Commission (FCC) placed restrictions on operators on offering movies and sports programmes. Other countries where cable TV spread also started regulating the sector. “Perhaps India and Taiwan are the only nations where the cable and broadcasting industry is not regulated,” said Pradip Baijal, chairperson of the Telecom Regulatory Authority of India (TRAI) in a recent interview. TRAI was recently appointed the regulator for the broadcasting sector as well.

The world over, if you are an TV operator and you want to offer pay services, you choose one of the many available encryption technologies for CAS and then offer your service to potential subscribers, says Manfred Müller, Head of Strategic Marketing, SCM Microsystems GmbH, a company which markets smart card reader technology for conditional access system modules. The main companies for CAS include Irdeto, Viaccess, NagraVision, Conax, Cryptoworks and Betacrypt (see map: Let the CAS market pan out). “The European landscape looks like a patchwork: each country has one major player and some smaller ones. The US is dominated by Motorola and Scientific Atlanta, which have their own CAS. In Korea, where this all is at the very beginning, all major CAS players are trying to enter the market,” Müller points out.

TRAI has recently released a consultation paper on issues related to broadcasting. Baijal says TRAI will examine cable operators’ monopoly and create competition, as it did in the telecom sector. Any decision taken will keep the consumer as a top priority. “We will look at all options, including DTH,” says D P S Seth, member, TRAI. Creating multiple operators within the same area is an option TRAI is looking at. As of today, in most areas, cable operators enjoy a monopoly. So, they could hold consumers to ransom when the CAS controversy boiled over.

How justified was government in pushing through CAS? “Instead of giving us choices, government imposed CAS on us,” says Surjit Bhattacharya, scientist at the National Institute of Science Technology and Development Studies, New Delhi. “It was a big mistake. Why tell what technology to use? The government could have made its intentions of regulating the sector clear, and left it for the players to choose the technology.” (see diagram: CAS or DTH; see table: Talk to me) “ CAS is more a political decision than a technical one,” says Indiresan.

The market size
Estimates of market size vary between 60 million and 110 million cable-watching households in the country. There are another 100 million to 150 million terrestrial TV-watching families likely to become part of the cable TV market by 2005-07. It is this industry government looked to control. But its initial attempts have failed. No one is happy with CAS: consumers, because they were forced into adopting it, and cable operators because it has still not been implemented. “Why should we be forced to buy these set-top boxes when, the world over, it is the norm that the consumer only pays a rent for them?” asks Vivek Kalra, a consumer in New Delhi. “In any case DTH is already here. Instead of giving us choices government is imposing CAS on us” (see box: DTH at your doorstep).

As of today, Indian cable rates are perhaps the lowest in the world. An average Indian consumer pays about Rs 150-200 per month for the 60-odd channels s/he receives. Cable operators say that the consumers cannot keep enjoying these benefits for long. “Broadcasters keep increasing rates for their channels. Till when can we keep rates so low?” asks Sunil Sharma, a cable operator in New Delhi. A cable operator pays per subscriber charges to the broadcaster for the pay channels. But broadcasters say cable operators under-report the number of customers they serve; thus, they lose out on revenue. “It is the broadcaster that needs to be regulated. World-over it is the norm that you generate revenue either through per subscriber charges from your channels or from advertising. Take, for instance, Canada. If the customer is paying for a certain channel, the advertising on that channel is severely restricted. Here the broadcasters collect the per subscriber charges from us as well as the advertising revenue,” says Sharma.

Experts feel that to clear the mess, government needs to stay technologically neutral, and frame customer-friendly regulations in the broadcasting sector. “We are already moving in that direction. After looking at regulations from other countries we will decide on what course of action to take. But it may take more than the stipulated three months,” reveals a TRAI official. Almost all stakeholders have welcomed the appointment of TRAI as the regulator. The body can take a leaf out of its own book, and fall back on its experience in regulating the telecom mess.

Not too long ago
But till a few months ago, the Indian telecom sector was a big mess. Cellular operators and the basic service providers were involved in a huge fight over the issue of wireless in local loop (WLL). The regulations were all confused. Wrote Arun Shourie, Union minister for communications and information technology: “In India the cordless phone you use within your house works on the network of a Basic Service Provider

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