Customers of direct-to-home (DTH) services can look forward to lower bills, and the operators of such services, more healthy-looking profit and loss statements, after the Telecom Regulatory Authority of India (Trai) did away with the practice of bundling of channels by broadcasters.
Trai, India’s telecom regulator, also regulates the television distribution business.
On Monday, the regulator made it mandatory for broadcasters such as Zee Telefilms and Star India to offer their channels to DTH operators on a pick-and-choose basis from December, unlike the existing all-or-nothing approach.
Trai said that the total rate for all the pay channels picked by DTH operators should not exceed 1.5 times the rate of the entire bouquet and that the rate for no channel should be more than three times the average per-channel rate for the entire bouquet. Both these measures are targeted at ensuring that broadcasters do not price their a la carte offering prohibitively compared with their bouqet offering.
Trai has also asked broadcasters to publish their ‘reference’ rates for DTH operators with technical and commercial terms for selling them channels. It has said these rates must also be published on the broadcasters’ websites.
Customers in areas covered by the conditional access system (CAS) have the option of choosing the channels they want to watch and pay for those alone. Broadcasters have to sell their channels on an a la carte basis (or individually, and not as part of a bouquet of channels) to cable operators in these areas.
However, broadcasters were not providing this facility to DTH companies. The two firms currently offering fee-based DTH services, Tata Sky, a joint venture of the Tata group and News Corp., and Dish TV, together serve around 3.2 million customers but have to take the entire bouquet of channels from broadcasters, and pass it on to customers. Doordarshan offers an all-free DTH service, DD Direct.
“This (unbundling) is a welcome step, both from the DTH operators’ and the consumers’ perspective,” said A. Mohan, vice-president for legal and regulatory affairs at the Essel group, which owns all the Zee channels and the Dish TV network. “We will definitely pass on the benefits to our consumers who can now only pay for the channels they want to watch,” he added.
Both Tata Sky and Dish TV are reeling under losses as they compete with cable operators who service around 70 million households. Cable operators in CAS areas have the option of paying only for channels they believe will have viewership in the areas they service, and choose not to buy the rest. CAS is currently operational in parts of the four metros.
Other cable operators servicing the majority of India’s cable and satellite television homes sometimes under-report the number of customers they have for pay channels.
Currently, monthly bills for DTH customers are around Rs300. Even this is lower than what it costs the companies to provide the service and DTH operators have been absorbing losses as they waited for the law to change. “This move (unbundling) will make our profit-and-loss account look better,” Mohan said.
It will, however, significantly impact the bottom lines of the broadcasters. “We get around 25% of our revenue from DTH. This (the new rule) can reduce it by 50%,” said an executive looking after distribution at a major broadcaster who spoke on condition of anonymity.
Trai was forced to intervene after DTH operators complained that broadcasters were forcing them to carry channels that they did not want to.
Trai’s move will also ensure a smooth entry into the market for the Reliance ADA Group, Bharti Telemedia Ltd and Sun Network Ltd, which intend to start DTH services.
PTI contributed to this story.