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Removal of genre-wise price cap and other changes in TRAI’s new tariff order

MUMBAI: The Telecom Regulatory Authority of India (TRAI) has removed the genre-wise price cap on television channels, including high-definition (HD) channels, from its tariff order that was notified on Friday following the Supreme Court’s nod.

In the draft tariff order issued in October 2016, TRAI had prescribed caps for seven genres, namely sports (Rs 19), general entertainment (Rs 12), movie (Rs 10), Infotainment (Rs 9), Kids (Rs 7), news (Rs 5) and devotional (Rs 3). The maximum retail price (MRP) of a pay HD channel was three times that of the corresponding channel transmitted in the SD format.

TRAI said it has done this to provide full freedom and business flexibility to the broadcasters to monetise their channels.

TRAI has, however, capped the price of a channel forming part of a bouquet at Rs 19 per month (excluding taxes). While the sector regulator has done away with genre ceiling for pay channels, it has stated that any pay channel having a la carte MRP of more than Rs 19 per month (excluding taxes) shall not form part of any bouquet either by the broadcaster or by the distributor of television channels.

TRAI has stood its ground on mandating broadcasters to declare MRP of their pay channels. It noted that prescribing MRP by the broadcasters to subscribers will in a manner self-regulate the pricing of pay channels and provide flexibility to broadcasters to maximise their revenue from subscription and advertisements.

The broadcast sector regulator has also separated charges payable by a subscriber for distribution network capacity and channels to provide a steady revenue stream to distribution platform operators (DPOs) which include DTH, multi-system operators (MSOs) and Headend-in-the-sky (HITS) service providers.

Responding favourably to stakeholders’ demand, TRAI decided to rename the rental amount as ‘Network Capacity Fee’ (NCF) because the distributor provides a network capacity which a subscriber utilises to receive the signals of subscribed television channels.

DPOs can charge a maximum fixed amount of up to Rs 130 per month, excluding taxes, from its subscribers towards its distribution network cost to carry 100 SD channels. Subscribers will pay additional Rs 20 per month excluding taxes for additional network capacity in bundles or lots of 25 SD channels.

Further, broadcasters can provide a discount of 30% on the bouquet of channels including 15% at the wholesale level and further 15% at the retail level.

TRAI has decided to do away with the differential pricing of channels based on geographical areas (earlier suggested in its draft tariff order). However, if a broadcaster wants to offer a lower price for a channel in a particular geographical area, he will be free do so by offering a similar discount to all the distributors of TV channels in that area subject to ceiling on the discount prescribed in the interconnection regulations notified by the authority.

In order to ensure that prices of a la carte channels are kept reasonable, the maximum discount permissible in the formation of a bouquet has been capped at 15%. The bouquets offered by the broadcasters to subscribers cannot be altered by DPOs.

In order to overcome misconception, TRAI has decided to do away with categorisation of channels as premium channels. Since broadcasters have already been given freedom to price their a la carte channels without any genre ceiling, removal of the concept of premium channel will not make any change as far as implementation on the ground is concerned, TRAI noted.

The authority has allowed broadcasters to offer promotional schemes on MRP of their a la carte pay channels. However, to prevent misuse of such schemes, TRAI has barred broadcasters from offering any promotional scheme on their bouquets of pay channels.

Further, the duration of any such scheme shall not be more than 90 days at a time and such scheme shall not be offered by a broadcaster more than two times in a calendar year.

The prices of a la carte pay channels offered under any such promotional scheme shall be considered as MRP of these channels during the period of such promotional scheme.

Distributors of television channels are also free to form and price the bouquets from a la carte pay channels of different broadcasters with a condition that the distributor retail price of such bouquet of pay channels shall not be less than 85% of the sum of distributor retail prices of the a la carte pay channels and the bouquet of pay channels formed by broadcasters forming part of that bouquet.

TRAI has permitted the distributors of TV channels to form their bouquets containing a la carte pay channels and bouquets of pay channels offered by broadcasters. However, a distributor of TV channels is not allowed to break a bouquet of pay channels offered by a broadcaster either by offering a bigger bouquet or by making two or more smaller bouquets of pay channels at the distribution level for subscribers.

The broadcasters will have to publish the MRP of their pay channels on their website, report to the authority, and inform all distributors of TV channels of it. The MRP needs also to be visible to all the subscribers in the Electronic Program Guide (EPG).

The bouquets of pay channels and free-to-air (FTA) channels have to be provided separately. There can be no bundling of pay and FTA channels together both at the broadcaster and at the distributor level. Any bouquet formed either by the broadcaster or by the distributor should not contain both HD and SD variants of the same channel.

TRAI has stated that broadcaster or distributor of TV channels should not bundle a cloned channel with the original channel in the same bouquet, and customers/subscribers should have the option to select language based on their preference.

TRAI said that the tariff order has been designed to ensure transparency, non-discrimination, consumer protection and create an enabling environment for orderly growth of the sector.

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