Broadcasters misusing discount flexibility: DPOs in reaction to TRAI consultation paper

DPOs like DEN Networks, GTPL Hathway, Siti Networks say broadcasters are trying to push unpopular channels with few popular channels by offering bouquets at highly discounted rates

e4m by exchange4media Staff
Updated: Sep 30, 2019 8:55 AM

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TRAI

The considerations by TRAI to reintroduce the 15% discount cap on channel bouquets has been opposed by broadcasters but the suggestion by the regulatory body has found support from some Distribution Platform Operators (DPOs).

DEN Networks has said that the flexibility available to broadcasters to give discounts on the sum of a-la-carte channels forming part of bouquets has been misused and accordingly there is a need to revisit the proviso to Clause 3(3) of Tariff Order 2017 that has not been enforced by TRAI till date.

The proviso to clause 3(3) of the Tariff Order reads: “Provided further that the maximum retail price per month of such bouquet of pay channels shall not be less than 85 per cent of the sum of maximum retail prices per month of the a-la-carte pay channels forming part of that bouquet.” The non-implementation of the said proviso has permitted broadcasters to offer bouquets at a discount as high as 80-90 per cent of the sum of a-la-carte channels forming part of such bouquets.

Explaining it further, their statement read, “This flexibility of giving discounts without a cap, created a non-level playing field for the distributors because the bouquets were priced on a discriminatory basis. However, DPOs, in accordance with the new regulatory framework, are required to offer bouquets not at a price which is not less than 85 per cent of the sum prices of a-la-carte channels and the same not being enforced by TRAI for the broadcasters’ bouquets is in violation of Article 14 and 19 (1) (g) of Constitution of India. Further, it may be noted that the broadcasters tried to push unpopular channels with a few popular channels by offering bouquets at a highly discounted rate which goes starkly against the ethos of the new regulatory framework introduced by the Authority, viz. consumer choice.”

As a remedial measure, DEN Networks is in favour of implementing the 15 per cent discount cap. “Some of the broadcasters are indulging in heavy discounting of bouquets by taking advantage of the non-implementation of the 15% cap on discount which has created a non-level field vis-à-vis other broadcasters. The broadcasters who have a large number of channels in their repertoire are engaging in a practice of forming a large number of heavily discounted bouquets (with minor changes) to push popular channels with non-driver channels. The non-implementation of the 15 per cent cap on discount clubbed with the ceiling of Rs 19 on the price of MRP of a-la-carte channels forming part of such bouquets is responsible for pushing unwanted channels along with popular channels. In order to protect the interests of subscribers and distributors, it is suggested that the authority may re-introduce the cap on discount on the sum of a-la-carte channels forming part of the bouquet. Moreover, the broadcasters should be directed not to put same channels in multiple bouquets.”

DEN Networks also says that there is no need to revisit the discount permissible to DPOs as of now, “to maintain parity, the same shall also be made applicable to DPOs at a retail level”.

GTPL Hathway, too, believes that the flexibility available to broadcasters to give discount on the sum of a-la-carte channels forming part of bouquets has been grossly misused by the broadcasters. “The same has also been acknowledged by the authority. It is pertinent to mention that the broadcasters have not only offered huge discounts as high as 90 per cent on their bouquets but also have created confusion in the mind of consumers by offering numerous bouquet(s) comprising of few popular and bulk of non-popular channel(s) with a clear intent to push their non-popular channels.”
Explaining further, GTPL Hathway has said that by bundling unpopular channels with popular ones and creating heavily discounted bouquets large broadcasters have not only carried an entry barrier for new players in the broadcasting space since they have taken up all the available channel carrying capacity of the DPOs but also have made the existence of smaller broadcasters vulnerable. “The authority is aware that quite a few small-time broadcasters have discontinued operations/services post-implementation of the new regulatory regime,” GTPL Hathway has said. Thus, they too are in favour of putting a discount cap.

Dish TV, too, in its reply to the TRAI consultation paper has said that there has been a propensity to push low rating channels or new channels into a bouquet. “The current offerings of the broadcasters clearly evidence that channels having very low rating as well as having very low a-la-carte prices have been placed by the broadcasters in the bouquets with some popular channels, thereby pushing these unpopular channels.”

One of the remedial measures, Dish TV suggests, is to lay down a linkage between the bouquet and the a-la-carte prices of the channel. “This will result into the broadcasters declaring a reasonable rate so that bouquet prices are competitive and enable consumers to choose a-la-carte too. In fact, in the absence of the linkage, the regulation has not been tested in its complete format.”
Dish TV further pointed out that the discount at the DPO level should be in proportion to the discount being allowed at the broadcasters’ level. “At present, since the linkage or discount formula has not been implemented at the broadcaster level, the corresponding formula at the DPO level should not be implemented. It is stated that when the linkage has not been implemented at the input level, the same can never be implemented at the output level.”

Expressing similar sentiments, Siti Networks too has said the flexibility of offering discount on sum of a-la-carte channels forming part of bouquets has been used by broadcasters to push their channels to consumers. “In some cases, a bouquet of four to five channels is priced slightly higher than the price of a single a-la-carte channel in that bouquet. This has restricted the subscribers to opt for a-la-carte channel and rather go for the bouquet option due to visibility of more channels at a very marginal price. It is suggested that the discount offered in a bouquet by the broadcaster should be capped at 15 per cent to ensure the right pricing of a-la-carte channels. The original provision of 15 per cent was sufficient to ensure that the channels are priced at a reasonably fair price to offer the channels in a bouquet which should be enforced again to ensure the fair pricing of a-la-carte channels.”

TRAI posted a consultation paper Tariff related issues for Broadcasting and Cable services last month to review the New Tariff Order which was implemented this year. While broadcasters have vehemently opposed the move to enforce a discount cap on bouquet pricing by replying to the consultation paper, some of the distribution platform operators DPOs have found it absolutely apt.

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