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DTH ops urge TRAI to regulate wholesale RIO rates before regulating retail a la carte pricing
MUMBAI: The direct-to-home (DTH) operators have unanimously raised the red flag against the Telecom Regulatory Authority of India’s (TRAI) proposed twin conditions on regulating a la carte rates of the channels at the retail level.
In response to TRAI’s consultation paper on how to make a la carte pricing more affordable, the DTH Association, which represents six private DTH operators, has said that the authority should first regulate the reference interconnect offer (RIO) rates or wholesale rates based on which the retail rates are derived.
The association noted that the interconnect agreement between broadcasters and DTH operators take place at 10–20 per cent of the published RIO rates for both standard-definition (SD) and high-definition (HD) channels.
Terming the authority’s proposed twin conditions consumer unfriendly, the association said that the Indian DTH customers get almost double the number of channels at 1/10th the price in comparison to the DTH services worldwide.
Moreover, the proposed twin conditions will compel DTH operators to increase the bouquet price since it is linked to a la carte price. The DTH operators will also be forced to reduce the number of channels in order to align the bouquet price with the proposed conditions. It will also make HD channel unfeasible. They will also have to re-calibre the bouquet every time a channel is added.
The DTH operators, it argued, would be forced to create the package keeping in mind the price of the channel and not the genre.
As per the twin conditions, a) the a‐la‐carte rate of a pay channel forming part of a bouquet shall not exceed two times its RIO rate offered by the broadcaster for addressable systems; and (b) the sum of a‐la‐carte rates of all the channels in the bouquet shall not exceed three times the bouquet rate.
The association also pointed out that the rates of HD channels, which range anywhere from Rs 16 to 141, are unregulated due to which the DTH operators will suffer loss if they have to implement the twin conditions. “It would be unjust for the DTH operators to price HD channels at disproportionately lesser price than the wholesale price,” the DTH Association contended.
The association also stated that the authority’s suggestion that the platform operators provide a discount up to 66.66 per cent while forming the bouquet rate over the sum of a-la-carte rates of channels constituting the bouquet is presumptive and without any basis. The discount offered by DTH operators to customers is in the range of 85–95 per cent on RIO rates under fixed-fee deals.
The twin conditions will also create problems for DTH operators who do fixed-fee deals as under such deals the platform has to offer maximum channels in entry packs. The DTH operators will not be able to fulfil this obligation as they will have to create small bouquets due to twin conditions.
It also stated that the authority should do away with the second condition in twin conditions while modifying the first condition as three times the wholesale RIO rate if at all it wants to regulate the a la carte rates.
The inflation hike as given to the broadcasters at the wholesale level should be allowed at the retail level as well and, accordingly, the upper limit to the minimum monthly subscription charges should also be modified, the DTH operator submitted.
Airtel Digital TV submitted that either the implementation of the twin conditions would lead to an increase in the bouquet price by 20–38 per cent or operators would be forced to remove seven costliest or 141 cheapest channels.
It also said that the twin conditions do not take into account the prevailing market reality where virtually all deals between broadcasters and DTH operators are on done fixed-fee basis.
Proposing a formal linkage between the RIO price of an SD channel and its HD equivalent, the DTH operator submitted that the wholesale price of an HD channel should be set at max a multiple of 1.2 times the price of its SD counterpart.
Videocon d2h said that the twin conditions must be dispensed with and the wholesale RIO must be regulated and priced correctly. The forbearance on retail pricing must continue.
The DTH operator also illustrated that it would have to drop 147 channels from its Super Gold Pack if it complies with twin conditions. Similarly, the rate of 31 HD channels under ROI Platinum Pack will increase to Rs 4934 from Rs 2178.
Tata Sky and Sun Direct submitted that the proposed regulation would result in a situation where the DTH operators would be in violation of the quality of service (QoS) norms that mandate that the platforms cannot change the bouquet in six months from the date of enrolment. The DTH operators will have either to absorb losses or be in breach of QoS norms.
The DTH operators also submitted that the proposed regulation would lead to loss in level playing field in digital addressable system (DAS) areas as cable operators will be at an advantage since they are providing all channels in bulk bouquets while DTH operators will have to trim their bouquets.
Content aggregator IndiaCast Media Distribution submitted that TRAI should comply with the Telecom Disputes Settlement and Appellate Tribunal’s 28 April order to undertake a fresh exercise on a clean slate and issue a fresh tariff order within six months. The aggregator lamented that the authority is imposing twin conditions on the retail tariff when the tariff at the whole sale level is still pending.
Batting for forbearance, the aggregator suggested that the distribution platforms be allowed to fix a la carte prices in such a manner that the broadcasters are not discriminated against based on percentage increase in price of the channel.
Offering a cable TV service provider’s perspective, multi-system operator (MSO) Siti Cable said that there is no requirement for regulating the retail prices as there is enough competition in the market, a fact that the authority has also acknowledged.
It also contended that the MSOs would neither be able to exploit the market optimally nor would be able to recover their cost of operations and would be forced to wind up their business in case the price is regulated by the proposed twin conditions particularly since they have to share revenue with local cable operators (LCOs).
It also said that by applying these twin conditions, the MSO would not be able to higher discount to the consumers having low payment capacity, which will not only affect consumers but also the MSOs prejudicially.
IndusInd Media and Communications Ltd (IMCL) submitted that it was fine with the twin conditions; however, it said that the RIO rate conditions for a MSO should be linked to the package bouquet offer, which broadcasters provides, and not to the old method of 42 per cent of old a la carte rates of analogue.
Headend-in-the-sky (HITS) operator Noida Software Telelinks Pvt Ltd (NSTPL) said that the applicability of the twin conditions proposed by authority could have an impact on the market only if the pricing of bouquet is linked to actual price of channels instead of the wholesale price of the channels.