The Indian government is a in a no-nonsense mood. It has asked Mumbai-based Space Television, a little known company which is the first company to apply for a KU-band direct-to-home (DTH) television service in India, to clarify its position and "adhere to the existing policy decisions."

Confirming the move, a senior government official said, "A letter has been sent to Space TV to clarify its position and its intentions (on starting a DTH service in India)."

Though Star Group's Altaf Ali Mohammed, who is said to be in charge of the proposed DTH operations for India, has denied in the recent past any such move, industry sources insisted that Star would be a shareholder in the little known company.

The government official said that along with its application, Space TV had also put in clauses which the government feels are "pre-conditions" to taking the licence.

Space Television is said to have mentioned along with its applications that the 10 per cent annual revenue sharing with the government would make the DTH venture commercially unviable. Besides, it has also asked for lowering of duties on the import of set-top boxes needed to access a DTH service and also some easing in the cap on the ownership of the DTH venture as far as foreign holding is concerned.

The government official, without divulging the full content of the letter sent to Space TV, said that if the Mumbai company's intentions are "honourable," then it should first adhere to the existing policy guidelines on DTH and not set preconditions at the time of seeking a licence for operating a DTH service for India.

Star would have to restrict its shareholding in Space Television to 20 per cent, in accordance with the policy guidelines on DTH. The total foreign investment — including foreign direct investment, and investment by Non-Resident Indians, overseas corporate bodies and foreign institutional investors — should not exceed 49 per cent. Also, a broadcasting or a cable company cannot hold more than a 20 per cent stake in a DTH venture.

A DTH platform with about 100 channels will require investments to the tune of $500 million and foreign broadcasters, including Star, rightly so have been saying that a DTH platform with majority Indian shareholding cannot be operated as most Indian companies do not have the financial muscle to muster up the sort of investment which is required for such a venture.

In November 2000, the Cabinet had given a formal nod to the reception of Ku band television signals direct to Indian homes. Various restrictions were put in as a safeguard against the creation of monopoly and cultural invasion.

Since then, however, the response to the DTH policy had been lukewarm. Till Space TV came along to apply for a licence.

The delays on the DTH front has created concern in certain sections of the government. The Planning Commission’s Tenth working group on the information and broadcasting ministry had said sometime back: “The policy on DTH has not encouraged any player to come so far and promote the growth of digital set-top boxes. This needs to be reviewed. The policies to treat DTH services as the source of revenue are counter-productive. They limit the growth of the market and defeat the very objective of reaching out to consumers.”

Click here for more headlines