Broadcasters have always contested the issue of carriage fees and the completion of digitisation has promised them being rid of ‘exorbitant’ carriage fees to be paid to MSOs. Carriage fees have been largely a product of analog era and are deemed redundant by broadcasters. Star’s new RIO is being viewed as a massive stride in eliminating the carriage fee anachronism from the current equation and bringing in more transparency, discipline and structure in the broadcaster-MSO-LCO business model.
The core purpose of digitisation, assigning a unique subscriber identity to every consumer, is also something the new RIO is in alignment with and takes the transparency a few steps further. It benefits the customers and makes channel choices easier for them, since they only pay for what they watch and prevents non transparent operational practices.
Uday Shankar, CEO, Star India explains how the integral issues of carriage fees as well as the current disputes on old business models are likely to be resolved with the implementation of new RIO.
What led to the current scenario?
Uday Shankar observes that digitisation was to deliver many things. Ideally consumers would get a choice and pay for what they watch. Unfortunately it didn't happen.
“Only the first level of digitisation happened. Boxes were seeded. But the MSO business model didn’t change because firstly the MSOs were not able to discipline and align the LCOs to do it and secondly the MSO system itself was not ready to do it. Their model was too dependent upon carriage fees, which led to a bizarre situation with a digital signal and an analog model,” concludes Shankar.
The question of carriage fees
One of the other advantages of the new RIO is that in the next two to three years carriage fees will go away. Overall all the stakeholders will earn more, in Shankar’s opinion.
“In the current scenario the collections are happening but the content owners are not getting the money, despite the fact that the consumers are paying it. Currently the MSOs are getting only 25 per cent of the collection from the LCOs. The new RIO assures a more disciplined and transparent manner of operating for all,” assures Shankar.
Aiming to bring openness in pricing for consumers and MSOs, Star India announced its revised RIO on October 27 and its decision to offer all its channels to MSOs on RIO. Hathway filed an application with TDSAT arguing for parity that can only be ensured if all MSOs put Star India’s channels on RIO on the same date. This resulted in the November 10 TDSAT deadline for all MSOs to offer Star India’s channels on RIO.