Trai proposes cap on carriage fee charged by distribution networks

The proposed move will bring down overall carriage fee, one of the biggest costs for broadcasters and TV channels, especially those in the news genre


If a channel is subscribed to by more than 20% of active subscribers on a distribution platform operator’s network, the broadcaster will not have to pay fees, according to draft interconnection regulations published by Trai on its website on Friday. Photo:  Pradeep Gaur/Mint
If a channel is subscribed to by more than 20% of active subscribers on a distribution platform operator’s network, the broadcaster will not have to pay fees, according to draft interconnection regulations published by Trai on its website on Friday. Photo: Pradeep Gaur/Mint

New Delhi: The Telecom Regulatory Authority of India (Trai) has proposed a cap on carriage fee charged by distribution networks for transmitting television channels at 20 paise per channel per subscriber per month.

The proposed move will bring down the overall carriage fee, one of the biggest costs for broadcasters and TV channels, especially those in the news genre.

Further, if a channel is subscribed to by more than 20% of active subscribers on a distribution platform operator’s network, the broadcaster will not have to pay fees, according to draft interconnection regulations published by Trai on its website on Friday.

Carriage fee is paid by broadcasters to distribution platform operators (DPO) for carrying channel(s). DPOs obtain TV channels from broadcasters and deliver them to subscribers through cable TV, direct-to-home (DTH) and head-end in the sky (HITS) networks. So far, DPOs had the upper hand in deciding carriage fee, which varied depending on the size of a broadcaster. “The distributors of TV channels may offer discounts on the carriage fee rate declared by them, not exceeding 35% of the rate of the carriage fee declared,” Trai said in a statement on Friday.

As for the distribution fee, paid by broadcasters to DPOs for distributing channels, broadcasters will have to pay a minimum of 20% of the maximum retail price of their pay channels or bouquets of pay channels.

According to the draft Telecommunication (Broadcasting and Cable Services) Interconnection (Addressable Systems) Regulations, 2016, the new interconnection framework will be common to all addressable systems which include DTH, HITS, digital addressable systems (DAS) and internet protocol television (IPTV).

Television broadcasters and channels welcomed the move. “It will bring down the carriage fee substantially,” said a top executive at a leading television broadcaster who declined to be named.

Big channels such as Sony, Star and Zee will not have to pay carriage fee because they have a subscriber base that is way above 20%—around 75-80%, the executive said.

A former executive at a New Delhi-based cable TV distribution firm said the move will be strongly opposed by DPOs. “It may be a balanced approach taken by the regulator because till now distributors were charging as much fee as they wanted, but DPOs won’t find this rate comfortable,” the executive said.

The executive added DPOs on an average charge between Rs1.5 and Rs1.9 per channel per subscriber per month, “which after discounts comes down to about 90 paisa. The proposed 20 paisa cap is much lower than the current industry rates”.

The proposed move comes after Trai issued a consultation paper in May 2016 on ‘Interconnection framework for Broadcasting TV Services distributed through Addressable Systems’ and, consequently, held open house discussions.

The authority has invited comments from various stakeholders by 28 October and will accordingly issue the final regulations.

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