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Star vouches for its new RIO, says MSOs hesitant about change

03-November-2014
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Star vouches for its new RIO, says MSOs hesitant about change

On the 30th of October, The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) disposed of the Hathway Cable & Datacom Ltd., Mumbai Vs. Star Sports India Pvt. Ltd. Mumbai case by passing an order asking MSOs to sign STAR's Reference Interconnect Offer (RIO) by 10th November 2014, As per the order, Hathway was told to sign up STAR's RIO w.e.f. 10th November 2014.

Thereafter, the MSOs met and decided that they would only offer Star channels on a la carte, as the new STAR RIO was economically unviable in their view.

However the network believes that the new transparent tariff structure with cable platforms based on uniform pricing instead of bilaterally negotiated deals, will result in openness in pricing for consumers and empower both, the viewers and platforms.

Krishnan Kutty - EVP distribution, Star India, shares the network’s view of the on -going issue highlighting the benefits of the new RIO, which he believes is realistic and achievable, initiatives for dialogues with MSO s and more.

What is your reaction to the MSOs’ decision to offer Star channels on a la carte?

We are in deep engagement with all the MSOs and are trying to understand their view. We believe many of concerns are driven by the worry about change and how it impacts them and how will they transition into a consumer-oriented model. We are confident that platforms, when they give themselves time, will come around and understand that this is for the long-term health of the industry.  We believe our new RIO is good for the industry and will benefit all stakeholders, if implemented fairly and in the true spirit of the offering.  The team is ready to spend as much time with any operator who needs to understand how the incentives and understand any concerns they have.

With anything new, there will be a time of adjustment. A lot of the issues that have been raised are driven by a worry about the change. The change will need all stakeholders to make adjustments and readjust their business models moving forward. It may have some short term costs, but we genuinely believe that this will lead to a far healthier digital ecosystem over a medium term.

What are the reasons in your view that the MSOs should adopt the new STAR RIO?

Star’s new RIO is a structure that will lead to better choice for consumers and healthier overall industry economics. We believe the true value of digitisation will get unlocked for stakeholders including consumers, with this structure. Star’s RIO is transparent, offers attractive incentives and offers operators the flexibility to create their own packages and cater to their consumer’s needs. The channel prices are very attractive, encouraging operators to create packaging tiers based on their consumer profiles.

MSOs claim the new RIO is not viable economically. What is your take on this?

The scheme has been modeled on the basis of the consumer demand for various Star channels, consumer profiling for each of the channels and the current economics of the cable industry. We believe the scheme is extremely realistic and achievable. If implemented in its true spirit, the new RIO offers similar costing range for the MSOs

How does the new STAR RIO benefit the end consumer?

Anything that enables consumer choice, will benefit the consumers. Star’s new RIO enables operators to offer packages to their consumers, based on the consumer profiles and demands. Over a long term such initiatives will result in more customised offering and products for consumers. This will pave the path for the long-term consumer benefits.

With the subscription fees of certain Star India channels such as Star Sports in particular being around Rs 17-18, there are MSOs that feel that this should be offered ad free to customers. What is Star’s view on this?   

These are the ceiling prices for our sports channels. With the significant scale of incentives being offered, we believe that MSOs have an opportunity to create attractive packages for consumers drive by sports channels. If the operator opts for incentives offered, the sports channels can become as reasonable as Rs 3 for Star Sports-2 & Rs 5 for Star Sports-3.

Is there a dialogue being initiated between STAR and MSOs to arrive at a consensus?

We have had meeting with almost all the MSOs in the DAS markets, to explain the new RIO incentive offering and its workings to all our MSOs. We have had positive discussions with a lot of operators and have been signing contracts at a steady pace.  I think the discussions that we have had in the context of this model have been the richest ones we have had for the longest time. It has been a genuine discussion about what is the best consumer offering to be created, what do consumers value and what should be the business design moving forward. There are of course concerns about the transition which we should all work towards solving.

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