Photo: iStock
Photo: iStock

Opinion | Trai’s attempt to review tariffs raises concerns

The new tariff order may kill the linear TV industry, especially the small channels

A few days ago, broadcaster Discovery Communications filed a writ petition in the Delhi high court against the Telecom Regulatory Authority of India’s (Trai’s) new consultation paper on tariffs regarding broadcasting and cable services. The petition seeks a stay on the consultation paper issued on 16 August, saying that it lacks objectivity, transparency and fairness of approach. Discovery argues the consultation paper is based on the assumption that television broadcasters are responsible for manipulating and distorting pricing of channels, thereby affecting consumer choice.

To be sure, on its part, through the new consultation paper, Trai is attempting to review the six-month-old new tariff order (NTO), which allowed consumers to choose their channel on an à la carte basis with broadcasters having to declare the maximum price of each channel separately. However, a few months into the NTO, several research studies found that instead of lowering the monthly cable and DTH bills for the consumers as was intended, the new framework provided by Trai led to an increase in monthly charges.

In the last 15 days, a lot of criticism has come Trai’s way with broadcasters raising concerns about the new consultation paper. In an interview to The Economic Times, Trai chairman R.S. Sharma defended it saying that it was an attempt to fine tune the NTO framework to ensure transparency in how the consumers are choosing channels they pay for.

However, broadcasters say Trai’s move favours the distribution platform operators (DPOs) such as cable and DTH services. They feel that under the new tariff order the distribution platforms have gained the most as they get a fixed network capacity fee (NCF) of 130 for 100 standard definition (SD) channels and 20 for the next slab of 25 SD channels. “Even if the consumer takes only one more channel, he pays 20," said a broadcast company executive declining to be named. Media consultant Chintamani Rao is more upfront: Broadcasting in India has always been a standoff between broadcasters and DPOs, and the DPOs have always been winning. Trai, as well as the ministry of information and broadcasting, have always seen their role as controlling broadcasters, never the DPOs, he said. DPOs have other advantages, too. “It is an open secret that if you have to be part of the first 100 free-to-air (FTA) channel bouquet of a DPO, you have to pay a carriage fee," said Rao. Besides, they are pushing their own bouquets onto the consumers. On the other hand, the new consultation seeks to review broadcasters’ bouquets to check misuse of flexibility in pricing. Broadcasters argue that India is a price sensitive market and they have priced their channels accordingly keeping in mind the production cost involved. “The regulator doesn’t understand the creative sector, intellectual property rights (IPR), copyright. By regulating the channel pricing, it is not allowing broadcasters to monetize their IPR," said a channel executive. Also, Trai assumes that à la carte is the preferred choice among consumers, although it offers no research by way of evidence, broadcasters say. They argue that at present no distributor platform has the capability to offer complete à la carte channel choice involving various permutations and combinations for each and every consumer. Besides, the new tariff order robs a consumer of his chance to discover new content as he was getting a surfeit of channels for a very low monthly fee.

A former TV channel executive working for a production house believes that the new tariff order and the new consultation paper, which aims to review bouquet discounts, may kill the linear television industry, especially the smaller channels. “In any industry, when you invest in building an infrastructure, you use it to launch new products. There is nothing wrong if weaker channels piggyback on stronger ones. That’s how most businesses run," he said.

However, he’s quick to add that business woes are irrelevant to a consumer. “He should get actual choice and be able to pay only for what he watches. If Trai feels it has gone wrong with its NTO and wants to make a correction and bring more transparency, it should be allowed to do so," he said. Rao agreed: “The revised (or new) tariff order seeks to make amends, but Trai has not acknowledged the mess it created. If cable bills come down through Trai’s effort, that is unquestionably a good thing."

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