MUMBAI: The latest consultation paper (CP) from the Telecom Regulatory Authority of India (TRAI) has created quite a stir in India’s broadcasting sector. Titled ‘Tariff-related issues for broadcasting and cable services’, the CP is essentially an admission from the regulator that its new tariff order (NTO) failed to deliver the desired results.
Mulling amendments to the existing regulatory framework, TRAI has sought stakeholders’ views on 27 questions, with a focus on discount cap for bouquets, ceiling price of channels in bouquets and the concept of a channel bouquet itself.
Interestingly, TRAI had on numerous occasions, post NTO implementation, stated that consumers’ cable bills had in fact reduced and transparency been injected into the sector. Reality on ground, however, has been quite different with cable bills shooting up for most households and several complaints landing up at the chairman’s desk.
“Now post NTO, subscribers realise that they are forced to pay more for fewer channels. This is only because TRAI, as regulator, forgot its original role of working for the sector in a balanced manner. It wanted to either side with consumers or DPOs thereby harming the sector in the process,” said an industry watcher on the condition of anonymity.
Industry estimates suggest 80 per cent of TV consumers have made their channel selection under the new tariff order. It is also evident from analyst calls post Q1 results for FY20 that broadcasters believe the industry has settled down post the NTO implementation.
In such an environment, experts feel, changes to the existing tariff order could cause more disruption than the previous occasion creating an ‘existential crisis’ for a large section of the industry.
With 10 million subscribers having dropped off from cable and DTH services post NTO implementation, further changes to the order will only multiply that number.
The CP, lacking an evidence-based approach, relies on assumptions, say critics. On numerous occasions it takes a position without referring to or alluding to any interactions with consumer groups or making public complaints received by TRAI against DPOs.
· TRAI’s CP highlights misuse of flexibility in pricing but overlooks the fact that India is a price sensitive market and that broadcasters have priced their channels keeping content costs in mind.
· There is an illusionary concept of popular and non-popular channels, which TRAI seems to have used to justify that consumers are not making informed choices.
· TRAI does not acknowledge the fact that under the NTO, DPOs have gained the most by charging maximum NCF (i.e. Rs 130) to consumers which is evident from the increase in their profits and the power they enjoy in terms of billing consumers.
· For instance, DPOs charge Rs 130 NCF for 100 SD channels and Rs 20 for the slab of next 25 SD channels. If a subscriber even opts for a single channel above mandatory 100 channels, the bill then increases by Rs 20. This also highlights the fact that a DPO doesn’t incur any additional cost whether he carries a single channel or 25 channels.
· The comparison of the wholesale price of channels in previous regime and retail price of the new regime in Annexure I, clearly demonstrates that overall a-la-carte prices of approximately 82.8 per cent channels have decreased. TRAI has not factored in the rate (i.e. DRP) of a-la-carte channels that DPOs offered to consumers in the earlier regime.
· TRAI has talked about skewed a-la-carte and bouquet pricing whereas it is evident from the CP that discounts on bouquets in the previous regime ranged between 80-90 per cent, while they have been reduced to as low as 33 per cent in the current framework as can be seen in Table 3.1.
· TRAI seems to have made the assumption that a-la-carte is the preferred choice and thus talks about their poor uptake. There is no substantial evidence to suggest that consumers prefer a-la-carte over bouquets.
· TRAI views TV channel viewership numbers in terms of consumers wanting to subscribe to watch a channel or not.
· TRAI assumes that the right of consumers to select and pay for what they want to view is elusive and the reason behind it is huge discounts in bouquets.
· TRAI asserts that the sheer number of bouquets offered has created confusion in the minds of subscribers. However, a large chunk of these bouquets from each broadcasters cater to different geographical regions.
· TRAI assumes that subscription data obtained from DPOs indicates that almost all the channels have been made available to subscribers as part of bouquets using skewed mechanism, undermining the fact that consumers have made informed choices and selected bouquets containing the channels they want at a discounted rate. Also, those who wanted channels on a-la-carte have also made their choices.
· TRAI gave flexibility to broadcasters to form bouquets so that they can make small bouquets of same genre or some popular channels to make selection of channels easier for consumers, which is again contradictory.
· TRAI’s CP uses terms such as “unwanted channels”, “niche/premium channel”, “popular channels”, “non-driver channels”, “driver channels”, “piggyback” which do not hold any legal basis.
There is also a section within the industry that believes TRAI should conduct a household survey to understand the implementation of NTO and its impact before altering the current tariff order. There are those that predict TRAI’s move will boost telecom companies putting them in a position to provide triple play resulting in both call shifting and cord cutting.
Over the years, one of the fundamental problems plaguing India’s broadcast sector has been regulatory overreach. In a sense, TRAI has always approached this sector with the mind-set of a telecom regulator. TRAI has gone from freezing price of channels for 10 years to overhauling the framework in the last two years. The new regime, which finally kicked in on 1 February 2019, resulted in disrupting the entire ecosystem causing value erosion. Another radical move to the existing system will only trigger more chaos.
