On October 10 last year, the Telecom Regulatory Authority of India (TRAI) proposed the draft Telecommunication (Broadcasting and Cable Services) (Eighth) (Addressable Systems) Tariff Order, 2016. As part of the draft regulations, TRAI mandated providing all the channels on a standalone or individual basis. “Every broadcaster shall offer all channels on a-la-carte basis to the subscriber,” the regulator said. The rationale behind the move was to provide more choices to consumers who presently buy a couple of unwanted channels as part of a package or bouquet.
“Consumers must have a choice as to what they would watch. You cannot just say that if you take this channel then you take these 10 together,” said TRAI Chairman RS Sharma while addressing CII Big Picture Summit a few months back.
TRAI permitted the broadcasters to offer a package or bouquet of channels on the condition that the “maximum retail price of such bouquet of pay channels shall not be less than eighty-five percent” of the entire sum of a-la-carte pay channels forming the bouquet. For instance, if 10 different channels could be bought individually for Rs 100 then they could not be sold as a package together for less than Rs 85 i.e. at a discount of 15%.
Another stipulation brought forward by TRAI was of genre-wise price caps for the different categories of channels. The regulations were slated to come into effect from April 1, 2017. However, they are now caught up in a complex legal battle between TRAI and the broadcasting fraternity.
At the behest of Star India and Vijay TV, the Madras HC is adjudicating upon whether TRAI’s draft tariff order oversteps the regulator’s jurisdiction and violates the Copyright Act. The Supreme Court, on the other hand, has asked TRAI to refrain from notifying the regulations without referring them to SC. They have, however, been permitted to pursue the consultative process for its enactment. A study of the responses provided by the broadcasters to TRAI gives an insight into their reservations concerning the draft tariff order.
Violation of the rights of broadcasters
TRAI’s draft tariff order has come in for sharp criticism from Zee Entertainment Enterprises Limited (ZEEL). Upholding “broadcaster’s prerogative to fix MRP”, ZEEL argued that the price of a channel has to be determined by the broadcaster depending upon its popularity among the subscribers. “If there are not enough subscribers opting for the channel at that price, it will automatically lead to correction in pricing in due course,” ZEEL said.
Appreciating TRAI for proposing that broadcasters should have the liberty to set the MRP for pay channels, it tore into the regulator for flirting with the idea of genre-wise price caps and limiting the discounts on a bouquet of pay channels. “Fixing of genre wise ceiling based on historical prices and restriction on discount while prescribing the relationship between MRP of a-la carte channel(s) and bouquet of channel(s) of a broadcaster is wholly unnecessary in the current MRP price regime,” it observed.
Sony Pictures Networks India Private Limited was also left unimpressed with the genre-wise price ceilings. It noted that they were “quite low” and slashed the “retail rates by 50 percent”. On the contrary, Sony found the recommended lower MRP limit for offering a bouquet of channels to be “too high”. Guarding the freedom of broadcasters to package channels, it mentioned, “The existing regulations provide for bouquet prices to be within the range of 55-65% of the sum of the rate of all a-la-carte in the bouquet, which variation is affordable and convenience for both DPOs and the subscribers.”
Impact on plurality of media and consumer choices
Star India Pvt. Limited opined that TRAI’s draft tariff regulations are detrimental to the diversity of television broadcasters. It reasoned that the regulations would lead to the “survival of only fewer channels” as the a-la-carte system “would end up killing a large number of small channels”.
Taking a dig at the decision to limit the discount on the MRP of a bouquet of pay channels, Star said, “There is no logical reason to fix a correlation between bouquet rates and a-la-carte pricing and must be left to market forces.” In fact, TV18 Broadcast Limited went to the extent of stating that TRAI had done no proper research before limiting discounts on the bouquet of pay channels at 15%. It also countered TRAI’s claim of bestowing more choices before consumers via a-la-carte offering and preventing their exploitation.
TV18 viewed the restriction on discount of bouquets at 15% as a “means (of) restricting choice of subscribers to avail more number of channels” at a lesser price. “It is submitted that such discount ought to be allowed to increase up to 25%-30% as such discounts are only meant for subscriber and directly passed onto the subscriber for its benefit,” TV18 said adding that discounts enable subscribers to choose more channels.
Need for further genre-wise categorization
The draft tariff order gave the broadcasters the option to choose a particular genre from a list of seven, namely, devotional, general entertainment, infotainment, kids, movies, news and current affairs and sports. But some broadcasters felt that either the number of genres should be increased or sub-genre categories ought to be carved out.
Batting for an independent music genre, Times Network noted, “We are of the view that music channels should not be clubbed with infotainment channels, since music genre is a prominent genre for broadcasters and since a long time there are numerous channels that are dedicated completely to the ‘music’ genre.” Identification of a separate business news genre was another plea of the network.
Recognizing the requirement for sub-genres, NDTV placed on record one within the news broadcast space. Firstly, sub-categorize news channels into English or Hindi followed by further sub-categorization on the lines of Hindi Business News and English Business News. “Such sub-categorized genres would further help ascertain actual subscriber numbers for specific channels (for the purpose of pricing etc),” NDTV said.
Calling for the creation of an auditor to ascertain the exact number of subscribers of a channel, NDTV added, “The Auditor would also be able to co-relate the number of the subscribers to a channel as given by a DPO/MSO and verify the same. This would be an important issue vis-a-vis payment of carriage fee by the Broadcaster to a DPO/MSO.”
The standoff between the broadcasters and TRAI is likely to continue when the Madras HC sits for the hearing of Star India and Vijay TV’s petition against TRAI again on February 17. Former Finance Minister P Chidambaram is appearing before the court on behalf of the broadcasters involved.