Over-regulation is stifling growth in the Indian television sector, says a comparative study conducted by the Hong Kong-based industry advocacy group, CASBAA, in 16 countries. “In spite of the vast size of the market and its creative capabilities, India's TV sector remains stifled. This is a direct consequence of an overregulated and uncompetitive analog cable distribution infrastructure, which limits the growth of the creative economy and helps to promote revenue leakage across the value chain through under-reporting,” it states.

Average profit margins across the value chain have fallen from 25 per cent in 2003, pre-industry regulation by the Telecom Regulatory Authority of India, to 13 per cent in 2010. This means that the free cash flow needed to invest in new talent and content is depleting, the report says.

Since 2004, TRAI has capped retail and wholesale pricing of cable and pay-TV services. Between 2004 and 2010, the average annual prices at which pay-TV services were available grew less than 2.5 per cent.

“This is illogical, given the ground realities from 2004 to 2010 when the number of channels available to system operators more than doubled to 727 and the average number of TV channels available to the consumer doubled to more than 120,” says the report.

In 2005, TRAI implemented a “must provide” requirement that channels supplied to one platform must be supplied to all others on non-discriminatory terms. This limited consumer choice and quality, and discouraged content innovation and investment, says CASBAA.

Unlike the rest of the world, competition in the Indian TV market is solely based on price. Content has been largely commoditised. This limits returns while eroding any sense of quality for the consumer. There is also limited incentive and commercial value for the industry to develop new content focused on educational/factual genres, movies, on demand entertainment, or content serving niche communities of interest (similar to women's channels or ethnic channels in the US).

The enormous capital cost of digitisation, as well as the challenge of execution, requires an overhaul of the existing regulatory framework, says the report. Media consultancy, MPA, estimates the cost of digitisation at over $15 billion across all TV networks.

In most markets, regulators have settled for a flexible and open framework to boost growth of the creative economy.

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