Cable TV to cost less: TRAI’s tariff order allows you to choose cable channels
Digitisation of cable television distribution networks has resulted in improved capacity and quality of signals of television networks. However, concerns such as lack of choice for subscribers, and non-transparency in channel pricing and in the flow of subscription revenues across the value chain, continue to prevail. The Tariff Order by the Telecom Regulatory Authority of India (TRAI) aims to address these concerns.
The TRAI’s Tariff Order covers the following:
The broadcasters have been mandated to declare the monthly maximum retail price (MRP) for each pay channel and whether a channel is a free-to-air (FTA) or a pay channel. The MRP is uniform across all delivery platform operators;
Bouquets cannot have any FTA channels and shall not contain any pay channel with monthly MRP greater than `19. In addition, bouquets cannot have standard definition (SD) and high definition (HD) versions of the same channels;
All distribution platform operators (DPOs) have to provide a basic pack of 100 FTA channels for a maximum network capacity fee (monthly rental) of Rs 130. Additional channels beyond this will be charged in slabs of 25 SD channels at a monthly rental of Rs 20;
The carriage fee is capped at Rs 0.20 and Rs 0.40 per subscriber per channel per month for SD and HD channels, respectively. This reduces as the penetration of the channel increases in its relevant market.
The Tariff Order has, therefore, changed the structure of the broadcasting industry to B2C (sell à la carte to consumers directly) from B2B (sell a bouquet of channels to the DPOs). This will create a system that will lead to greater transparency among the broadcasters, the DPOs and the subscribers.
This system, in fact, provides the subscribers their right to choose channels. This is unlike the current scenario, where most of the deals between the broadcasters and the DPOs are on a fixed fee basis, leading to extra channels being pushed to the customers irrespective of their choice.
Furthermore, it is agnostic to the nature of delivery platforms, thereby bringing parity among the DPOs—both multi-system operators (MSOs) and direct-to-home (DTH) operators. The need for negotiations on content costs, which was earlier a norm for dealing with large broadcasters, thus goes away, leading to more transparent pricing. The ability of the broadcasters to preserve their profitability through strategic pricing of channels and the creation of a bouquet of channels, therefore, assumes greater significance. In addition, it will determine the incremental average revenue per user (ARPU) earned by a DPO (over and above the network capacity fee). Quality of service, distribution reach, packaging of add-on pay channels as well as value-add services will now become crucial differentiators among the DPOs.
While this is more time-consuming and may lead to challenges as the subscribers migrate from their current arrangements to the new ones, once the same is sorted out, the Tariff Order will be beneficial to the subscribers in terms of lowering the cost of viewership. However, as the subscribers opt on à la carte basis, new channels or the not so well-established ones may be the biggest losers, and it may lead to more consolidation in the industry.