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What you should know about RIO

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What you should know about RIO

The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) on October 30, 2014 directed all Multi-System Operators (MSOs) to put Star India channels on Reference Interconnect Offer (RIO).

A few days prior to this, Star India had announced that they had come out with a revised/amended RIO that offered MSOs new incentives on the basis of the number of Star India’s channels carried, the penetration of their channels and Logical Channel Numbering (LCN), which refers to the ease of access that customers have to Star’s channels.

The TDSAT judgement however gave MSOs the option to either sign the old RIO or the amended one that Star India has to offer. MSOs had to decide by the November 10 deadline set by TDSAT, failing to do which will lead to the disconnection of Star’s signals. Further announcement of decision from them is awaited.

We take a look at what the amended RIO entails and get back to where it all started.

What is the new RIO?

RIO refers to the broad technical and commercial terms and conditions, which a MSO needs to sign, and follow in order to avail signals from the particular TV broadcaster. While the earlier RIO of Star India offers channels at their original prices and a la carte, the amended RIO is incentive based. This replaces the bilateral deals that used to be struck between the network and the MSO platforms to offer the channels in packages to consumers.

The amended RIO lets MSOs choose the channels on the basis of the consumer profile and demand for particular Star channels in that specific area. So while MSOs offer area specific packages, consumers pay only for the particular channels they opt for. Star India hopes that these incentives to MSOs will result in a trickledown effect that will benefit the end consumers.

In an earlier interview published on exchange4media, Krishnan Kutty, EVP distribution, Star India had said: “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.” When asked about the high rates of Star India channels, such as the sports channels, he said that if the MSO opts for the incentives offered, the sports channels could become as reasonable as Rs 3 for Star Sports-2 and Rs 5 for Star Sports 3.

What are the incentives?

The three incentives in the new RIO are: First, incentives based on penetration slabs for each channel on the MSOs distribution platform. The penetration slabs include greater than 10% to less than or equal to 30%, greater than 30% to less than or equal to 60% and greater than 90% for which each channel of Star has a discount depending on the penetration level. There are also separate penetration incentives for Star India’s regional channels such as, Star Pravah, Suvarna, Star Jalsha, Asianet, Asianet Plus and Vijay TV. For the regional channels, the penetration incentives are offered only for a penetration greater than 90% with incentives ranging from 15% to 42% for different channels.

The second is the channel count incentive offer based on the number of channels carried with regards to the channels penetration. This incentive is divided into three parts i.e. channel count incentive for penetration greater than 10%, additional channel count incentive for penetration above 90% and additional channel count incentive for offering Sports channels with penetration greater than 10%.

Lastly, the LCN incentive has slabs for each of the channels offered by the MSO, which is based on a specific genre and language. There are two slabs that the network is offering, depending on the positioning of a particular channel in its genre and language slots. MSOs that select slab 1 in terms of LCN will receive avail a 7% incentive, while those that select slab 2 will receive a 3% incentive for the particular channel based on their rates.

These three incentives are then put together to bring about a collective incentive for each particular channel. This incentive is discounted on the rates, which were set on April 1, 2014 to MSOs per subscriber per month. For instance, if the three selected incentives collectively come to 24% for Star Plus it will be discounted on the Rs 9.05 rate that it is currently offered to MSOs per subscriber, which will be effectively discounted to Rs 6.88 per subscriber.

How did it begin?

Star took this step as TV broadcasters felt there were transparency issues in dealings with MSOs. Broadcasters Star India and Taj Television (distribution arm of ZEEL) had filed complaints with TDSAT against MSO operator Hathway Cable & Datacom (Hathway) a few months earlier. This had even resulted in Taj Television blocking its signals to Hathway. However, on September 26, 2014 TDSAT passed the judgement and directed Hathway to offer Star India channels on RIO w.e.f. October 1, while directing it to pay RIO rates to Taj Television from August 14. Complying with the TDSAT order Hathway started offering Star India channels on its RIO from October 1.

The conflict between the two parties continued as there were media reports regarding Star India accusing Hathway of misinforming customers over the increase in the channel prices and blaming the network for it. The MSO denied it and said that since it was offering the channels on RIO basis, Star India’s 30 channels would cost them Rs 204. exchange4media also previously carried a report regarding accusations against Hathway of causing disruption and the shifting of channels by a broadcaster, to which Hathway had denied the accusation and stated that they were following the TDSAT order of removing Star TV channels from packages and offering them on a la carte basis (Hathway accused of causing disruption to channels). However, upon further investigation we found these channels were the Star Sports channels and were not available on the sports list and were available at channel number 860 onwards on the Hathway platform.      
Even as this was happening, independent MSOs felt there were problems with the differential pricing offered by networks to MSOs that were part of the parent company or on-aligned MSOs. As a result, some MSOs were offered heavy discounts resulting in the same channel packages being offered to certain parties at half the rates.

Claiming 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, while directing Hathway to pay Star India Rs 27 CPS (cost per subscriber) from October 1 to November 9. It still remains to be seen how this will impact Star India and the broadcast business.        

Most marketers were of the opinion that it was a positive move for the TV broadcast industry.
Marketers give a thumbs-up to Star's new RIO


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