Home / Opinion / Columns /  Time for broadcasters and Trai to bridge trust deficit

The Bombay High Court order on the Telecom Regulatory Authority of India’s (Trai) new tariff order (NTO) 2.0 that was challenged by broadcasters was eagerly awaited.

The high court had pronounced the judgment last week, but the 157-page order followed on Tuesday. The detailed order has clearly established the constitutional validity of Trai and its power to fix TV channel tariffs. It said that Trai has the regulatory power to fix prices in public interest and that though broadcasters have a fundamental right to freedom of speech, the right is not absolute.

In balancing such rights, if there is a drop in circulation or viewership to some degree, it would not be seen as an infringement of fundamental rights.

The high court also upheld the cap of 12 for an individual channel in a bouquet and the first twin condition, which translates into a discount of up to 33% for a bouquet.

However, it has thrown out one of the clauses, the second twin condition that was introduced in the 2020 amendments to the regulations and tariff order. This entails a complex formula to determine the a la carte price of pay channels in a bouquet.

The high court found the second condition (Clause 3 b of the NTO 2.0) arbitrary and one which violates Article 14 of the Constitution. A broadcast industry expert said that because of it, even the 12 cap on channel price in a bouquet was unreal.

However, first, a bit of a flashback to what the NTO did and why broadcasters challenged its implementation. When Trai first implemented the NTO in 2019, it created havoc in the TV industry, which was used to bundling of channels. The NTO made it mandatory for TV networks to price their channels individually and offer them a la carte to consumers.

Though it was intended to allow consumers to choose individual channels and pay only for them, thus bringing down their cable bills, it ended up escalating their monthly outgo. Broadcasters priced their popular channels at 19 and less popular channels at a very low price and then bundled and offered them at a steep discount. This led to consumers opting for packs rather than buying a la carte channels, defeating the purpose of the NTO.

The widespread criticism drove Trai to amend its earlier order and change the cap on the price of channels. NTO 2.0 irked broadcasters as it pushed them to drive their prices down, affecting their subscription revenue.

The Indian Broadcasting Foundation (IBF) challenged the amendments, saying it infringed on broadcasters’ rights to do business freely.

Media analysts surmised that NTO 2.0 would lower the DTH and cable bills of subscribers by up to 14% from the current levels. Others hailed it as a customer-centric move as the bouquet discount had been capped at 33%, leading to lower prices for flagship channels.

Obviously, it hurt the broadcasting industry’s revenue and subscription growth. Regulators in developed countries do not fix channel prices or disallow bundling, some said.

After the high court order, it remains to be seen whether the broadcasters will take the matter to the Supreme Court or whether Trai will move the apex court because a part of its tariff formula has been rejected.

The IBF is considering its next move. While some feel it is necessary to get clarity on the price formula, others wonder if they could utilize this window to revise channel prices, which have remained stagnant for two years even as content cost has escalated.

For many years now, there have been severe trust issues between the broadcasters and Trai. TV networks maintained that Trai only looked after the interests of the cable distribution industry and treated them unequally. A cable industry expert said that the broadcasters want an unregulated market, which is neither possible nor desirable, and they must accept the fact that in the absence of a broadcasting industry regulator, Trai will continue to play a dual role.

More recently, the sector regulator has also seen a regime change. Trai’s new chairman, P.D. Vaghela, was appointed in September 2020. A Gujarat cadre IAS officer, he will be in charge for three years or till he turns 65.

It would be in the interest of consumers if Trai and broadcasters resolve their differences and work towards strengthening the industry.

Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pre-ssing issues related to all three. Or just fun stuff.

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