DPOs wary of NTO 2.0 as tariff hike could hit customers hard

The DPOs say that they will initiate talks with broadcasters on creating new packages to reduce the burden on end consumers as much as possible

e4m by Javed Farooqui
Updated: Oct 22, 2021 1:51 PM

The distribution platform operators (DPOs) are a worried lot after the announcement of the new tariff by the broadcasters. The DPOs fear that the unbundling of driver general entertainment and sports will hit them hard, although the regulation looks favourable for them on paper.

The DPOs say that they will initiate talks with broadcasters on creating new packages for customers. The crux of the discussions will be to reduce the burden on end consumers as much as possible. The DPOs are unanimous in their views that the tariff hike by broadcasters will be difficult to implement on the ground.

“Increasing price on the ground is very difficult. A small price rise might happen, but it is not going to be significant. The broadcasters and DPOs have to sit together and find a way out, otherwise, it's going to be difficult for everyone in the value chain. We have to figure out how to manage the ground situation,” a senior official at a Cable TV company said.

The official said that the new pricing will force consumers to settle for fewer channels even as their overall subscription payout goes up. “More than the price rise, the number of services will come down. Prices will hardly increase by 5-10%. If consumers are getting 300 channels, it might come down to 200 channels. If that happens, then the broadcasters will be the biggest losers. However, if the broadcasters don't give some leeway to the DPOs on bundling their bouquets will become irrelevant,” he said.

He also said that à la carte is always bad for broadcasters, as their customers will churn and viewership will go down. “Their main revenue which comes from advertisements will get hit. DPOs are secured because customers will continue to pay whatever they are paying. Besides NCF, we will also get a commission on à la carte and bouquet offerings. While this is good for DPOs, we don't want our customers to face that trouble. Customers will get irritated if they have to select 20 or 30 or 40 channels. They just want a bouquet of channels at a particular price without any hiccups.”

UCN Cable Network Director Ajay Khamankar said that the NTO 2.0 doesn't seem to be benefiting the consumers as they will have to pay more while getting lesser channels. “We don't see any benefit for consumers from NTO 2.0 because they will get fewer channels at a higher price. We will offer all the channels and bouquets to our consumers, but they will get irritated because they will have to make the selection once again as all major channels are on à la carte. Our backend systems will also see a heavy load. Customers will end up paying Rs 200 just for eight channels across Hindi GECs, regional and sports genres. Over and above that, they will have to pay NCF, and then they have to select other bouquets. It will cost not less than Rs 400 per month and in that too they will have to let go certain channels,” he elaborated.

Khamankar said that consumers will take only certain channels and unsubscribe from other channels. This, he added, will have grave implications for the ad revenue of broadcasters. “Earlier, consumers were getting more channels for an affordable price. NTO 2.0 will prove detrimental for linear TV. Today, people have a choice, and they can switch to OTT also. People who have a low budget will move to DD Free Dish. Satellite TV will get sandwiched between OTT and DD Free Dish. It's a challenging time for the industry. For us, customer churn is a big concern because OTT is unregulated. I feel the prices will go up by 30%.”

DEN Networks JV partner Ravi Singh said that the MSOs have started planning for implementing NTO 2.0. Like Khamankar, he also questioned as to exactly will benefit from NTO 2.0. “TRAI amended NTO for the benefit of customers, but the burden of higher prices will come on the consumers. Today, consumers get 200-250 channels for Rs 300-400. The number of channels will reduce, while the rate will go up. Everyone in the ecosystem is complaining that they will get impacted and even consumers will have to pay more, then who exactly will benefit from NTO 2.0?”

Singh further stated that customers are not satisfied with just five channels, they want the entire bouquet at a reasonable rate. “We have to rework the packages. We are negotiating with the broadcasters on pricing. We might look at offering certain popular channels to our consumers. Our earnings will take a hit further. Already, our carriage fee income has reduced even as there are challenges around rates.”

Media consultant Peeush Mahajan, who is associated with Punjab's leading MSO Fastway Transmission, said that the majority of customers prefer DPO bouquets. He also said that it is early days to assess the impact of NTO 2.0. “Today, 80-85% of the consumers opt for DPO bouquets. We will have to reorganise the bouquet after leaving out the driver channels. There is already a lot of disruption in the market because of the OTT platforms. Nobody knows how the consumers are going to react. A lot of customers opted for DD Free Dish after NTO 1.0.”

According to Mahajan, customers will leave out certain driver channels to keep their TV bills under check. “After NTO 2.0 is implemented, what might happen is people might take two driver channels and leave out other driver channels. The consumers will get divided into three parts. The high-income group will continue to pay a higher amount. The middle class will readjust and might leave one or two driver channels. Then there is the lower-income group that will get impacted the most. We will have to evaluate the extent to which they get impacted. Rates are going to go up, but it will not be more than 10-15%.”

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