When you ask some people you know how much cable television costs them, they will answer tersely: “A lot.” And by no means because it really makes “a lot” but because nowadays any amount cut from the flimsy budget of an average statistical Ukrainian seems unnaturally large. I pay a monthly four hryvnias to a Kyiv television network operator for being able to watch 20 channels.
As to the real subscription charge, it must admittedly begin from 20 hryvnias and its increase should depend both on the specific user (e.g., Discovery and MTV cost more to watch than NTV) and on how much effort has been made to deliver the signal to an individual household. Why do specialists speak about this amount? Building cable networks is quite costly. To ensure the uninterrupted broadcasting of a hundred channels, the so-called antenna field should be at its maximum. This requires as many high-priced antennas as possible, plus a system of transmitters, which entails overhead. Also expensive is to calculate up front the probable ways of utilizing the communication channels laid for cable television. For example, how can one persuade a city administration to approve, of all projects submitted for tender, the one employing the equipment and techniques that make it possible even today to use, for example, feedback for additional services? It may be difficult to conclude, without special knowledge, if the “area cable TV scheme” offered by company N will have a promising future or will stand in the way of further technological development in the city area it covers.
How much we pay for cable television also depends to a large extent on the age of the city itself. The older the city, the more problems in laying the cable. Usually, underground telephone conduits are used. Where the latter are absent, for example, in the older part of Lviv, an aerial cable has to be put up, which boosts costs. It is far cheaper to lay a cable to one sixteen-story building and distribute the signal among 128 apartments than to do the same for a two-story four-apartment block.
The subscription charge should also include copyright fees. Cable people operate according to such notions as social and basic package. Social package means the so-called mandatory broadcast national TV channels (UT-1, UT- 2, and Inter), while the basic one includes the most watched channels, so it is more expensive, although this cost constitutes only a part of the monthly charge. Ukraine has laws on telecommunications, television and radio broadcasting, on the National Television and Radio Board of Ukraine, but it lacks one on cable television. This is why this business develops wildly in this country, making use of the existing laws “on a selective basis.” True, unlike our closest neighbors, Russia and Belarus, Ukraine already has three drafts of a future law drawn up by the groups of Ivan Mashchenko, Viktor Ponedilko, and the Verkhovna Rada Committee for the Freedom of Speech and Information (worked out by a task force headed by People’s Deputy Volodymyr Oleksiyev).
In essence, the future law is expected to finally answer the main question: who will pay the copyright fee? In the West this is being done by the one who wants to receive the signal of a specific channel, i.e., by the subscriber. Ukraine is not prepared for this either economically or technically. And this is only the question for TV channels and operators. Which of them exactly?
A television channel usually has the funds it invests returned at the expense of advertisers. This is why a broadcast organization needs access to as many subscribers as possible. Cable organizations take a signal from a satellite or the air and deliver it to the subscriber, thus acting as an intermediary between the broadcaster and the subscriber. Both the channel and the operators are equally interested in each other, which leads today to a kind of gentleman’s agreement: you give us the signal, we give you the way. Under such an arrangement, neither side pays the other. We mean at least the operators who try to act legally, while the pirate ones, small and energetic companies, mostly regional organizations hardly controllable from the center, take advantage of the absence of legally binding mechanisms. They broadcast all kinds of things, making channel development chiefs pull out their hair. But the television channels themselves have already learned to find ways to combat those unable to make a deal, pressuring on the National Board and local authorities. If the law does not work, the stronger player tries to impose his own rules. For instance, NTV, following many Western channels, encodes its signal. So in our open- access networks, we can only watch those NTV programs which the company thinks it necessary to keep open for the time being until “its own” audiences have been finally formed.
It is not only Ukraine that has not yet legally regulated cable network copyright charges. As the recent Yalta-based First International Congress of CIS TV and Radio Broadcasters and Cable Television Operators showed, this is a problem common to the whole post-Soviet area. It is time that general rules of the game be drawn up, and further delays in the solution of this problem will only exacerbate the latter. For example, all these countries have long had their own advertising laws. Under our law, ads beamed over the territory of Ukraine should be paid for on the territory of Ukraine. If this commercial has not been paid for, it should be cut out, which is unrealistic under the mentioned gentleman’s agreements: we don’t cut you out, you please give us a signal. The same also applies to, say, Russian television programs on which Ukrainian operators hold no copyright. The operator should have specialized equipment to cut this program off the air and put in something of its own to fill the gap. These actions require additional investment, but to what extent do they protect this business from pirates? These problems cannot be solved separately by each isolated entity. Their global nature is as obvious as, for example, the existence of the Internet.
Again on piracy. According to some knowledgeable people who prefer to remain anonymous, piracy is the surest method to keep subscription charges at the present, rather low, level, especially in eastern Ukraine where even a charge of one hryvnia seems high. It takes years for the equipment, connection, and operation to pay off, and then only if 100% payment is made. As of today, cable TV operators get back only a monthly 80% of all depreciation and operation costs at best and 30- 50% as a rule. In other words, this business does not so far get funds for development, let alone for payoff. According to Yuri Labunsky, chairman of the board of directors of the All-Ukrainian Association of Cable Television and Televised Information Network Operators, the development of cable business in Ukraine is now problematic for two reasons: due to lack of a well- developed legal framework and low purchasing power of the population.
The introduction of realistic charges, including the cable subscription rates and payment for the relay of TV channels, could kill the idea of developing new information networks in Ukraine and impose a heavy burden on subscribers. It is normal for Europe to pay five cents per channel, i.e., a dollar for 20 channels. In this country, nobody is so far going to introduce European prices, which it is too early to take fright. Both cable and non-cable television people think it is necessary to regulate relations in this field so well that businesspeople, the consumers, and the country itself feels good.
COMMENTS
Serhiy AKSENENKO, People’s Deputy, chairman of the Verkhovna Rada television and radio subcommittee, acting chairman of the National Television and Radio Board of Ukraine in 1999-2000:
“At present, subscription charges are below what they should be. Some channels are still being relayed in piratical fashion. This especially applies to the relay of foreign channels in the regions. Most medium sized television companies entering our market demand ten cents per subscriber such that one channel will cost at least 20 hryvnias. At the same time, a TV channel won’t sign a contract with an 500-subscribers-strong operator, for everybody tires to make deals with large-scale operators or associations of operators. Yet, Ukrainian cable television operators are now interested in signing contracts because control is being tightened, not only by the National Television and Radio Board which is in charge of licensing. If an operator observes a 50-50 ratio of our own and foreign TV product and concludes contracts, he is subject to Ukrainian law. Simultaneously, under the International Convention on Cross-Border Broadcasting, the countries bound by it must ensure free reception of all signals from the signatory states, with international agreements having supremacy over domestic laws. Cable television is a developing industry. It opens up new horizons for Internet feedback and telephone communications. But, as long as this industry is not in the stream of things, the legislation will be vague.”
Oleh CHERNYSH, development manager, New Channel:
“I represent the interests of an on-the-air channel, and our interests usually bump into those of cable people when it comes to showing films running on the Russian channels relayed by cable networks operators. This can sometimes create problems, but, more often than not, this is connected with the absence of legal coverage for the development of cable television in Ukraine. No doubt, all possible avenues are now open for cable piracy. On the other hand, especially lately, everyone has been trying to observe the existing laws to the fullest, for they see that the new National Television and Radio Board, widely expected to push through the law on cable television, begins to act. As to who, television channels or cable people, have to pay, and this is a complicated issue. We are inclined to think that if subscription charges are being collected by cable operators, the latter should also pay us. For, after all, there are licenses under which a certain operator pays, for instance, to Eurosport. The ice has been broken recently in this respect: we’ve concluded some contracts on payment for relaying our signal. The amount we are going to be paid is negligible. What is much more important for us now is development of the cable network and increase in the number of subscribers.”
