Dish TV raises set top box prices post customs duty hike

Televisionpoint.com Correspondent | Mumbai
Dish TV, the direct-to-home (DTH) venture of Essel Group, is going for a Rs 100 price hike in its set top boxes (STBs) triggered by the increase in customs duty on import of STBs from zero levels to 5 per cent. The price step-up will be effective from July 20 and a bare STB will now be priced at Rs 1,590 in place of Rs 1,490.

Salil Kapoor, chief operating officer, Dish TV, says, "We have decided to increase the box price by Rs 100 across all offers, as 5 per cent customs duty has been imposed on import DTH boxes. Despite having a subsidy-based business model, we have been absorbing various taxes. But, we have to pass on this extra burden to the subscriber."

Kapoor added, "This exemption that was granted earlier should have been withdrawn only after the domestic manufacturing capability was in place. Right now, against a demand of roughly 10 million boxes, the local supply will be just a few thousands which in no way will help the growth of the industry."

"Box paucity or increase in cost will further impact the CAS implementation pace. The revenue generated from the 5 per cent customs duty will be to the tune of Rs 80-90 crore. But, the indirect benefits like digitization and therefore extra income to government due to taxes from growth in DTH have probably not been taken into account." he says.

"These indirect benefits are much higher than the revenue that will be collected on account of this duty. We have full faith that the Informaton & Broadcasting Ministry will take it up with the Finance Ministry," Kapoor rounded off.

The other top DTH player Tata Sky, has also said that it will increase the price of a DTH connection by Rs 130-150, translating into a 5 per cent increase in the entry cost for a subscriber.

Vikram Kaushik, managing director and chief executive officer (CEO), Tata Sky, says, "In view of the unexpected burden due to the levy of customs duty on STBs, Tata Sky is constrained to pass on the cost to the consumer. The increase will be applicable for the fresh stock cleared for sale to the trade."

The first company to launch DTH service in India, Dish TV is now competing with four players – Tata Sky, Airtel digital TV, Reliance's Big TV and Sun Direct – in a highly subsidised model.

Dish TV, which is proceeding with mobilising the second Rights Issue tranche, claims that its market share is 42 per cent among private DTH operators, which has come down from 53 per cent in 2007.

The Cable and Satellite Broadcasting Association of Asia (CASBAA) has expressed concerns over the levy of additional duties on imported STBs. The move on STBs may prove detrimental for consumers, who will now need to pay more for digital services such as DTH and digital cable TV subscriptions.

Simon Twiston Davies, CEO, CASBAA, says, "The broadcast industry still needs government support in the form of a reasonable tax environment if it is to grow further. Only then can Indian media and communication companies truly deliver genuine choice at a genuinely competitive market price."

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