The Telecom Regulatory Authority of India’s (TRAI) recent draft order for broadcasting and cable services tariff has invoked mixed reactions from the industry.
According to TRAI, the draft ensures to bring a transparency, non- discrimination, non-exclusivity for all stakeholders in value chain, promises affordable TV services for customers and seeks to balance the commercial interests of broadcasters and distributors of television channels to recover their network cost and the broadcasters to recover their content cost. It also includes a proposal to put a price cap on different genres of channels for digital addressable system (DAS) platforms.
On the one hand, Dr Subhash Chandra, Chairman, Essel Group and ZEE, has come forward to laud the draft order on social media platform Twitter as he feels broadcasters has potential to bring more money to the table.
While most of the broadcasters refused to comment on genre-wise price cap, M K Anand, MD & CEO, Times Network, on the other hand, disapproves it, "Any price cap is anti-efficiency, anti-competition and anti-innovation. While the ground is quite cluttered and the market disjointed, attempts at regulation should not be pricing led. There are other mechanisms to regulate. Pricing regulation looks simple, but it distorts the market and works against the eventual interest of the consumer."
TRAI has suggested that the maximum retail price of a general entertainment television channel under the digital addressable system cannot exceed Rs 12 and that of a sports channel cannot go above Rs 19. The ceiling for movie channels is Rs 10. Kids and infotainment channel cannot be priced above Rs 7 and 9 respectively. The cap on news channels is Rs 5 while that for devotional channels is Rs 3. The ceiling on maximum retail price shall apply to all the existing pay channels as well as to new pay channels that are launched or converted from free to air channel to pay channel after the commencement of this tariff order.
TRAI has also suggested cutting down the number of genres from 11 to seven. Some of the existing genres have been grouped together to form a new genre, while some genres have been retained. Every broadcaster will have to declare a genre for each of its channels among any of the genres, including devotional, general entertainment, infotainment, kids, movies, news and current affairs and sports. The authority has not included genres like music, youth, lifestyle and regional.
Interestingly, in the Explanatory Memorandum of the order, it’s mentioned that ‘some broadcasters have submitted that they agree with genre-wise pricing, maximum and minimum defined for channel pricing with regular revision of caps from time to time. Broadcasters have also submitted that the price cap should be based on channel popularity, number of channels in a particular genre and actual viewership based on distributor of television channels disclosures.’
The draft order also put forward a proposal to allow households to pay Rs130 as monthly rental per set top box for 100 standard definition channels that are being offered to them on TV. Subscribers looking for channels beyond the basic tier can opt for other channels by paying the TV distributor Rs 20 – excluding taxes -- for each slab of 25 channels and the broadcaster the MRP of each channel. TRAI permitted broadcasters to offer bouquets if they wish to but it has maintained that the total price of the bouquet should not exceed 85 per cent of the total individual price of each of the channels in such a bouquet.
It also mentioned that the maximum retail price of a pay channel transmitted in HD format should not be more than three times the maximum retail price of corresponding channel transmitted in SD format. But if the corresponding SD channel of a HD channel is not available, the maximum retail price of such HD channel should not exceed three times the rate specified for corresponding genre.
The TRAI has introduced a category called a premium channel. Broadcasters are free to notify any channel as premium channel in their reference interconnect order (RIO). The TRAI wants the new Tariff Order or the MRP pricing regime to become effective from 1 April 2017.