Budget 08: Set Top Box Prices Unlikely To Drop

One of the biggest problems that MSOs have been facing, ever since CAS (Conditional Access System) was introduced was the cost of the STB (Set Top Box). Starting at initial prices of Rs 10,000 at one time their price has now dropped to Rs. 3000. While this may seem like a fair-drop, it is not so. According to industry sources, this is also quite an expensive deal as most of the boxes that have been imported from S.E Asian countries from factories that have been specifically setup to cater to the Indian market.

To counter this and to further bring down the price of the STB to as low as Rs. 1,000 the Finance Minister announced in today's Union Budget that ''I propose to fully exempt from duty specified parts of set top boxes...''

A closer look at the Customs notification though, reveals the details:

84.2. Specified parts of set-top boxes, namely SMPS power board and IR module, for use in manufacture of set-top box, have been exempted from customs duty.

This move has been made with the intention of encouraging local manufacturing and in turn bringing down prices due to increased competition. Keeping this in mind we asked a couple of local manufacturers if this new change would have any impact on the costs. The answer we got was a simple … No! They felt that the cost of manufacturing in India had already dipped by a great extent and this change would have, at best, a marginal impact.

It remains to be seen, how this situation will play out. 2008 is going to be the year of the STB, as apart from DTH/CAS, we will also see countrywide roll-outs of IPTV from companies like BSNL/MTNL, Bharti and Reliance. This will increase demand greatly and in fact the Govt. may be forced to revisit this issue by giving even greater concessions.