The Opening: Liberalization and the Satellite Invasion, 1991 to 2000

A Currency Crisis Rewrites the Rules

The India described in the opening chapter of this series, Before the Market: Controlled Media and the Bazaar, 1947 to 1991, was a closed economy run on industrial licenses, import quotas and a single state broadcaster. That order did not end by design. It ended because the country nearly ran out of money. By the middle of 1991, India's foreign exchange reserves had fallen to about 1.2 billion dollars, barely enough to cover two weeks of imports, inflation had climbed past 13 percent, and the fiscal deficit had swollen to roughly 8.4 percent of gross domestic product. The government of P.V. Narasimha Rao, sworn in that June, inherited a balance-of-payments crisis severe enough that the country had reportedly pledged gold reserves as collateral for emergency loans.

The response came on 24 July 1991, when Finance Minister Manmohan Singh presented a budget that dismantled, in a single sitting, much of the industrial licensing regime that had governed India since the 1950s. The reforms are usually summarized under three headings, liberalization, privatization and globalization, and the single change with the most consequence for everything that follows in this series was the end of licensing, the so-called licence raj, for all but a short list of sectors. A companion New Industrial Policy the same year allowed automatic approval of foreign equity up to 51 percent in a defined list of priority industries, replacing a case-by-case approval process that had discouraged multinational investment for a generation.

The capital response was not immediate. Foreign direct investment into India averaged only about 470 million dollars a year between 1991 and 1994, a trickle by later standards, before climbing to an average of 2.7 billion dollars a year between 1995 and 1998 and peaking near 3.6 billion dollars in 1997. What the reforms changed first was not the balance sheet but the permission structure. A foreign broadcaster, a foreign soft drink maker or a foreign electronics brand no longer needed to clear the approvals that had kept it out, or kept it a minority partner, for a generation. Television would be the first surface to feel that shift, arriving well before the capital did.

The audience the coming media boom would reach was, at the decade's start, still small. The National Council of Applied Economic Research estimated roughly 4.5 million Indian households as middle class in 1995 and 1996, a figure it judged had grown to about 10.7 million households by 2001 and 2002. The 1990s, in other words, did not find a mass consumer market waiting. They began building one. Everything that follows in this chapter, the satellite channels, the returning colas, the wires strung across rooftops, was built for an audience still in the process of being formed.

A War in Baghdad, Watched in Bombay

The single moment historians of Indian media return to most often is not Indian at all. On 17 January 1991, American bombing of Baghdad began, and Cable News Network broadcast the opening of Operation Desert Storm live and continuously, the first time a major war had unfolded in real time before a global television audience. Doordarshan carried none of it. A small number of Indian households, mostly in Bombay and Delhi, watched anyway, through improvised satellite dishes and cable relays operating in a total legal vacuum, because no Indian law yet said they could not.

What those households saw was not only a war. It was proof that television could look nothing like the one channel most of the country had grown up with. Doordarshan had held a state monopoly over Indian broadcasting since it began transmissions in 1959, adding a second, metro-focused channel in 1984 but never a competitor. The Gulf War coverage did not by itself end that monopoly, and this piece treats it as one vivid, well-documented catalyst arriving alongside a set of licensing changes and a Hong Kong entrepreneur's existing business plan, rather than a sole cause. But it gave the decade's new satellite channels an audience already primed to want something Doordarshan could not offer.

That entrepreneur's plan had been in motion before the war. Hutchvision, backed by Hong Kong's Li Ka-shing and soon to pass into Rupert Murdoch's News Corporation, had incorporated in August 1990 as Quford Limited, rebranded as HutchVision Channel Services in January 1991, and settled on the name STAR TV, for Satellite Television Asian Region, by July that year. On 21 August 1991, STAR TV launched its full pan-Asian lineup, five channels including Prime Sports, Star Plus, MTV Asia, BBC World Service Television and a Mandarin-language channel, using ten of the twenty-four transponders on the AsiaSat 1 satellite to reach 38 countries across Asia and the Middle East. Indian viewers were inside that footprint from the start, and by December 1991 STAR's channels were being routinely relayed into Indian homes by the same improvised cable operators who had carried CNN's war coverage months earlier.

Doordarshan's monopoly, three decades old, was effectively over within a year of the reforms that made it possible to challenge. What had not yet happened was any Indian law governing who could operate a satellite dish or a cable wire, or any Indian-language answer to a foreign broadcaster's English-language schedule. Both were coming quickly.

The Cable-Wallah Economy and the Vernacular Wave

Between STAR TV's arrival and the end of 1994, the physical work of wiring India for satellite television was carried out almost entirely by small, unlicensed entrepreneurs, quickly nicknamed cable-wallahs. A cable-wallah bought or improvised a satellite dish, ran coaxial cable to nearby buildings, and charged households the equivalent of roughly one to three dollars a month at the exchange rates of the time for a bundle of channels whose lineup and numbering the operator alone controlled. There was no franchise agreement, no regulator and, until 1995, no statute defining what a cable television network even was. The number of local cable operators nationally is estimated to have grown from roughly 100 in 1984 to about 1,200 by 1988, 15,000 by 1992 and close to 60,000 by 1999, almost all of that growth concentrated in the years after 1991.

The household numbers moved just as quickly. Industry estimates put cable and satellite penetration at about 412,000 urban households in January 1992, rising to roughly 1.2 million by that November, an estimated 3.3 million during 1993, about 7.3 million by January 1994 and close to 11.8 million by the end of 1994, out of a total television-owning universe of about 32.4 million homes. Survey organizations disagreed on the exact count from there. The National Readership Survey put urban private-television homes at 9.3 million in 1995, while the Indian Readership Survey split its estimate into 8.4 million urban and 3.4 million rural homes the same year. By the late 1990s, industry estimates had settled around 22 million cable and satellite households nationally, a roughly fiftyfold increase from the January 1992 base in well under a decade.

The State Answers: Two Laws and a Verdict

For nearly four years after STAR TV's arrival, the cable and satellite industry operated with essentially no dedicated legal structure. A 1993 Rajasthan High Court ruling in Shiv Cable TV System v. State of Rajasthan found that cable operators fell within the scope of the colonial-era Indian Wireless Telegraphy Act, 1933, and required licensing, a signal that the legal vacuum could not hold. The government responded first with a Presidential Ordinance on 29 September 1994, re-promulgated on 17 January 1995, and finally with the Cable Television Networks (Regulation) Act, 1995, which required every cable operator to register and set baseline rules for an industry the cable-wallahs had already built.

The more consequential legal event of 1995 was not a statute but a Supreme Court judgment. In Secretary, Ministry of Information and Broadcasting v. Cricket Association of Bengal, decided on 9 February 1995, the Cricket Association of Bengal had sought to grant television rights for a tournament to a private broadcaster rather than Doordarshan, and the government resisted on the ground that only Doordarshan could broadcast within India. A three-judge bench, comprising Justices P.B. Sawant, S. Mohan and B.P. Jeevan Reddy, ruled against the government, holding that broadcasting is a form of speech and that, in the Court's words, "the airwaves are a public property and hence are owned or controlled by the Government." The Court held that government could still regulate frequencies because they were scarce, but could not arbitrarily deny access to broadcasting to an applicant willing to use available, unutilized capacity, including by satellite uplink. The judgment did not deregulate frequencies outright, but it dismantled the legal premise that Doordarshan alone had a right to broadcast within India, a premise the 1991 reforms had left technically intact even as STAR and Zee were already on the air. Doordarshan lost its exclusive hold on cricket telecast rights in the same dispute, one of its most valuable properties.

Telecommunications regulation followed a similar path from commercial reality to statute. The National Telecom Policy of 1994 had already begun licensing private operators, but the Department of Telecommunications remained both a competitor in the market and, in effect, its own regulator, an arrangement private entrants understandably distrusted. The Telecom Regulatory Authority of India was established on 20 February 1997 under the TRAI Act, 1997, to take tariff-setting and other regulatory functions out of the hands of a government that was also a market participant, the first time India had separated the roles of telecom operator and telecom regulator.

Doordarshan's own institutional status took the longest to resolve. Parliament had passed the Prasar Bharati Act in 1990 to grant Doordarshan and All India Radio autonomy from direct ministerial control, but seven years of bureaucratic resistance and employee union objections kept it unenforced. The Act was finally brought into force on 15 September 1997, and the Prasar Bharati Corporation of India was formally constituted on 23 November 1997, closing out a decade in which the state broadcaster had gone from sole legal broadcaster to one competitor among dozens, only now gaining the formal independence lawmakers had voted for at the start of the decade.

Global Brands Come Home

Not every multinational waited for 1991. PepsiCo entered the Indian market in 1989, two years before the reforms, through a joint venture with Punjab Agro Industries Corporation and Voltas that traded under the name Lehar Pepsi, a workaround built to satisfy the era's rules on foreign branding and local ownership. It was a narrow opening, and Coca-Cola, which had exited India in 1977 rather than dilute its equity and disclose its formula under the Foreign Exchange Regulation Act, did not have an equivalent route back until liberalization removed the underlying restriction.

Coca-Cola's return, when it came, was staged as spectacle. The company relaunched in India on 24 October 1993, almost sixteen years to the month after its exit, introducing the product near the Taj Mahal in Agra as the first stop in a city-by-city rollout across the country. Rather than rebuild distribution from nothing, Coca-Cola acquired Parle's leading soft drink brands, Thums Up, Limca, Gold Spot and Citra, for about 40 million dollars, a deal that gave the company more than half the Indian carbonated soft drinks market from its first day back. Pepsi answered with a youth-and-cricket positioning built around campaigns like Yeh Dil Maange More, and the resulting cola war became one of the decade's most visible advertising contests, fought increasingly on the satellite channels that had not existed the last time either company operated freely in the country.

The advertising industry the colas were now buying into already had a self-regulatory system in place. The Advertising Standards Council of India, founded in 1985 by advertisers, agencies, media owners and allied professionals, had adopted a Code for Self-Regulation years before the satellite boom gave Indian advertisers a reason to need one at this scale. What changed after 1991 was volume and audience, not the rules. ASCI's pre-existing code set the rules a much larger advertising industry now operated inside, as consumer goods, cosmetics and beverage brands moved a growing share of spending onto the new channels.

Radio was the one broadcast medium liberalization reached last. The government began licensing private FM stations from 1999, ultimately auctioning 108 frequencies across 40 cities on ten-year terms that required license fees escalating at roughly 15 percent a year and barred private stations from broadcasting news or current affairs. Only 21 of those 108 licenses became operating stations, and the first of them, Radio City in Bangalore, did not go on air until 3 July 2001, nearly a decade after STAR TV's satellite debut and just past this chapter's chronological close. Where television broke open almost overnight, radio's opening was slow enough that its real effects belong to the next era of this series.

A Narrow Gateway: India's First Public Internet

Everything described so far in this chapter is a marketing story, a business finding new ways to reach an audience. The discovery half of India's attention market, how a person found a product or a service rather than the reverse, moved on an entirely different and much slower timeline. For most of the 1990s, computer networking in India existed only for institutions. The Education and Research Network, ERNET, had connected universities and research institutes since 1986; NICNET served government offices; a Software Technology Parks network served export-oriented technology firms. None of the three was open to an ordinary household or business.

That changed on 15 August 1995, India's Independence Day, when the state-owned Videsh Sanchar Nigam Limited, under chairman B.K. Syngal, launched the Gateway Internet Access Service, the country's first internet connection available to the general public. The service was dial-up, running at 9.6 kilobits per second over an initial capacity of only 16 to 32 lines, available at launch in Mumbai, Delhi, Kolkata and Chennai, and priced at roughly 5,200 rupees for an individual 250-hour block, on the order of 165 dollars at the exchange rates of the period. It was a narrow gateway by design as much as by necessity, a service built for a small, urban, English-literate population that could afford a computer in the first place.

Before Google: Dialing for Information

For almost the entire decade this chapter covers, discovery in India had nothing to do with a screen. A household deciding which plumber to call, which sari shop to visit or which doctor to see relied on word of mouth, a printed classified advertisement, or a business directory, the same tools that had served the bazaar economy of the prior era in this series. What changed across the 1990s was not the format of discovery but a slow contest over who had the right to publish it.

Tata Press had been publishing Bombay business directories under the TataPages name since 1984, with editions in 1992, 1993 and 1994 that followed the international Yellow Pages format of advertisements classified by trade or profession. Mahanagar Telephone Nigam Limited, the state telecom operator, argued it alone had the right to publish a telephone-linked business directory. The dispute reached the Supreme Court as Tata Press Ltd v. Mahanagar Telephone Nigam Ltd, decided on 3 August 1995, a case remembered for the Court's recognition that commercial advertising is itself a form of protected speech, a principle that mattered for every printed and broadcast advertisement the rest of this chapter describes.

The decade's most consequential discovery innovation, though, bypassed print and the internet alike. V.S.S. Mani had already tried and failed once, launching a phone-based directory called Ask Me in Delhi in 1989 that could not overcome the cost of phone access at the time. In 1996, with about 50,000 rupees of capital, on the order of 1,400 to 1,500 dollars at the era's exchange rates, borrowed furniture and five employees working from a small office in Malad, Mumbai, Mani started again as Just Dial. The service asked callers to do exactly what its name suggested, dial a number and ask a human operator for the nearest doctor, restaurant or repair service. It was, in effect, a search engine built on a telephone exchange rather than an index of web pages, a full decade before Justdial built the website that would later carry its name online.

By the standard the rest of this chapter sets, discovery in 1990s India looks almost untouched by the decade's transformations. Marketing had gone from one state channel to dozens of satellite channels reaching tens of millions of homes. Discovery had gone from a printed directory to a phone-based directory, a meaningful innovation, but one still built entirely without a screen.

The Two Surfaces at the Decade's Close

By 2000, the asymmetry this chapter traces was stark enough to define the whole era. On the marketing side, a single state broadcaster with no domestic competitor had become an industry of dozens of satellite channels in Hindi, English and several other major languages, carried into an estimated 22 million cable and satellite households by entrepreneurs who had built the wiring themselves, ahead of any law that governed them. Two of the world's largest beverage companies had fought a very public war for an audience satellite television had made newly reachable. On the discovery side, the internet had existed for the general public for barely five years, reaching a still-small, urban, English-literate population through a handful of dial-up lines in a handful of cities, and the most important discovery innovation of the decade ran on a landline rather than a modem.

The pattern in how the state responded recurs across this series: regulation followed the market rather than leading it in every instance this chapter documents. The cable industry was years old before the 1995 Cable Act gave it a legal definition, Doordarshan's broadcast monopoly was already broken in practice before the Supreme Court settled the legal question in the Cricket Association of Bengal case, and Prasar Bharati's promised independence sat unenforced for seven years after Parliament had already voted for it. The businesses and entrepreneurs described in this chapter, Hutchvision, Zee, Sun TV, VSNL, Justdial, moved first. Law arrived afterward to describe what they had already built.

The next chapter in this series, Getting Online: The Telecom Revolution and the Arrival of Search, 2000 to 2010, follows both surfaces into the decade where they finally begin to converge, as mobile telephony reaches a scale cable television took a decade to come close to, and an organized search engine, rather than a phone number or a printed directory, starts to become the default way Indians look for what they need. The gap this chapter documents, a fully modernized marketing surface next to a discovery surface still running on a telephone exchange, is the problem the next era exists to close.