TRAI tariff regime distorts broadcasting market, shifts 80% rev to distributors: Study

India’s broadcasting sector is grappling with structural distortions in pricing, distribution, and revenue-sharing mechanisms that are eroding consumer welfare and undermining broadcaster viability, according to a recent study by the Esya Centre. 

The report, based on a nationwide household survey and economic analysis, flags the current regulatory framework under the Telecom Regulatory Authority of India (TRAI) as a key contributor to market inefficiencies and declining pay-TV adoption.

The issue lies in the dominant role of distribution platform operators (DPOs), including multi-system operators (MSOs), local cable operators (LCOs), and direct-to-home (DTH) providers who effectively act as “gatekeepers” controlling consumer access, billing relationships, and channel visibility. 

While broadcasters bear the full risk of content creation and investment, DPOs control critical elements such as electronic programme guide (EPG) placement, packaging of channels, and pricing architecture, creating a structural imbalance in the value chain.

The study highlights that the current New Tariff Order (NTO) and New Regulatory Framework (NRF) have introduced a two-part pricing model comprising a Network Capacity Fee (NCF) and separate content charges. 

While intended to promote consumer choice through a-la-carte selection, the system has instead resulted in what the report describes as a “mandatory platform toll.” As many as 94% of surveyed consumers perceive the NCF as unfair, and 84.6% expressed dissatisfaction with paying this fee even for accessing free-to-air (FTA) channels.

This pricing friction persists despite strong satisfaction with content quality, with nearly 70% of viewers reporting positive experiences with television programming. The disconnect between content satisfaction and billing dissatisfaction underscores a deeper issue in pricing design, the report notes, adding that 68% of consumers remain confused about how NCF is calculated.

A key finding of the analysis is the skewed distribution of revenue within the ecosystem. On an average monthly bill of ₹300, DPOs retain nearly ₹240—amounting to roughly 80% of the average revenue per user (ARPU)—through NCF and distribution margins. 

Broadcasters, despite bearing 100% of content risk, receive only about 20% of consumer spend. The report argues that this imbalance distorts incentives for content investment and innovation.

The regulatory framework’s restrictions on bundling and pricing have further compounded the problem. Caps on bouquet discounts and prohibitions on mixing free-to-air and pay channels limit broadcasters’ ability to cross-subsidise niche or regional content. This stands in contrast to consumer preferences, with 96% of surveyed households indicating a clear preference for bundled offerings due to convenience, cost efficiency, and improved content discovery.

These structural inefficiencies are increasingly reflected in broader industry trends. Pay-TV households are projected to decline sharply from 120 million in 2022 to 84 million by 2026, while free-to-air platforms such as DD Free Dish continue to gain traction among price-sensitive consumers, with subscriber numbers expected to reach 57 million by 2030.

At the same time, the sector faces pressure on the advertising front, with TV ad revenues projected to decline by 1.5% in 2025 to around ₹477.4 billion. Nearly 50 channel licenses have been surrendered over the past three years, signaling stress among smaller broadcasters and a challenging environment for new entrants.

The report attributes these trends to a combination of high fixed distribution costs, regulatory constraints, and shifting consumer behaviour towards digital and free platforms. It warns that without corrective action, the current framework could lead to reduced content diversity and long-term weakening of the broadcasting ecosystem.

To address these concerns, the study recommends a series of reforms, including removing price caps on pay channels, allowing greater flexibility in channel bundling, and significantly reducing the NCF to improve affordability. It also calls for the abolition of carriage fees and making “must-carry” obligations unconditional to ensure fair access for all broadcasters.

Additionally, the report advocates rebalancing revenue-sharing arrangements to better align with the risks borne by content creators. Moving towards transparent fixed-fee interconnection agreements, it argues, could help restore equilibrium in the value chain and incentivise investment in high-quality programming.

The findings come at a time when policymakers are re-evaluating the future of India’s broadcasting sector amid rapid digital disruption. The report underscores the need for stakeholder consultations and economic impact assessments to recalibrate regulations and ensure sustainable growth in one of the country’s largest media segments.