MRP cap should be extended to linear channels on OTT platforms: MSOs tell TRAI

The All India Digital Cable Federation has sought a Rs 12 cap on all pay channels irrespective of genre

e4m by exchange4media Staff
Published: Jun 29, 2022 8:34 AM  | 4 min read

The All India Digital Cable Federation (AIDCF) has urged the Telecom Regulatory Authority of India (TRAI) to extend the MRP cap to linear channels that are available on over-the-top (OTT) platforms. The federation has sought a Rs 12 cap on all pay channels irrespective of genre.

"Linear channels shall be offered to OTT subscribers at MRP declared in RIO of the addressable platform," the AIDCF said in its submission while responding to the TRAI's consultation paper titled 'Issues related to New Regulatory Framework for Broadcasting & Cable Services'. Currently, the OTT industry is outside the purview of price cap regulation that extends to cable, DTH, and HITS platforms.

Providing rationale behind the demand for extending MRP to linear channels on OTT platforms, the AIDCF said that the cable and direct-to-home (DTH) platforms are seeing a consistent decline in their subscriber base due to the change in consumption habits of the consumers.

The AIDCF also alleged that the shift of customers from traditional TV platforms to OTT has a cascading impact on the business of cable and DTH platforms, unlike broadcasters who also have a major presence in OTT. "It is important for TRAI to appreciate that some broadcasters are not impacted like other stakeholders by the reduction of the market size as they have a presence in the OTT/Online market as well," it stated.

To support its argument, the federation quoted TRAI data about the migration of customers from cable/DTH to OTT. It noted that the total active pay DTH subscriber base has decreased from 70.99 million to 68.89 million in the last one year. Likewise, the number of total active subscribers of major MSOs/HITS operators having more than 1 million subscribers, has decreased from 47.58 million to 45.55 million.

"MSO industry is witnessing a churn of 2.5% per month, and any increase in price will lead to the annihilation of the industry," the AIDCF said. It noted that top broadcasters have increased the prices of their driver channel by 30% to 60% which will force customers to shell out more for accessing these channels.

AIDCF, which is the apex body of leading multi-system operators (MSOs), said that the Rs 12 MRP cap will ensure transparency and safeguard the interest of consumers from perverse pricing. It also submitted that any channel that is priced above Rs 12 should not be permitted to be part of a bouquet and must be mandatorily ad-free.

Apart from capping the MRP of linear channels across all distribution platforms, the AIDCF has also suggested that the distribution fee should be kept flat at 35% by clubbing it with the 15% incentive for both a la carte channels and bouquets. This, the AIDCF contended, will ensure that the distribution platform operators (DPOs) are not arm twisted to meet unreasonable penetration targets set by the broadcaster.

"RIO published by some broadcasters have linked the 15% discount based on the minimum penetration of the driver a la carte channels along with the bouquet of non-prominent channels, in order to push them on to subscriber and increase the subscriber costs," the federation submitted.

AIDCF also suggested that the broadcasters must be made to adhere to ad-cap as the customer is already paying for the channel and is still subjected to the ads. It also pointed out that the same content is provided ad-free on the OTT platform.

The federation has also come out in support of twin conditions which it argued will create linkage between bouquet and channel MRPs. "Yes, there should be a ceiling on the discount on the sum of a-la-carte prices of channels forming part of bouquets while fixing MRP of bouquets by broadcasters so that unwanted channels are not pushed to subscribers increasing the cost to subscribers. There should be a linkage of Bouquet price and the sum of a-la-carte price so that the pricing is not skewed in favour of bouquets," it added.

It also suggested that there should be a cap on the inclusion of any single channel in the bouquets offered by the broadcasters. "Any single channel shall not be part of more than 10 bouquets offered by the broadcasters."

The AIDCF has also proposed that the DPOs should have the freedom to choose channels from broadcasters' bouquet which was prevalent before NTO -1

Further, the federation said that the 60% discount on Multi TV from second TV onwards, which has been mandated by TRAI on DPOs, should also be extended to broadcasters. "If any discount is mandated to be given by DPOs on Multi TV to subscribers then that same shall be extended by the Broadcasters to DPOs."

Lastly, the AIDCF has requested the TRAI to bring an additional consultation paper to address other issues that impact DPOs and in particular for considering the 16 issues listed in its letter dated 18th January 2022.


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