TRAI amends new tariff order to bring down monthly TV bills

MUMBAI: The Telecom Regulatory Authority of India (TRAI) has given a rude shock to the broadcasting sector on the first day of 2020 by amending the new tariff order (NTO) and interconnection regulations. These changes will have huge ramifications for the sector that had slowly begun to recover from the twin shocks of NTO in the first half of 2019 and the ad slowdown.

Faced with consumer criticism, the TRAI has decided to put a cap on the a-la-carte price of channels as well as place reasonable restrictions on the formation of bouquets. The TRAI has also prescribed that distribution platform operators (DPOs) must provide 200 channels for a network capacity fee (NCF) of Rs 130. The amended provisions will come into effect from 1st March 2020.

In the amended tariff order, the authority has prescribed twin conditions to ensure that the price of a-la-carte channels does not become illusionary.

The twin conditions are as follows: i) the sum of the a-la-carte rates of the pay channels (MRP) forming part of a bouquet shall in no case exceed one and half times the rate of the bouquet of which such pay channels are a part; and ii) the a-la-carte rates of each pay channel (MRP), forming part of a bouquet, shall in no case exceed three times the average rate of a pay channel of the bouquet of which such pay channel is a part.

The authority stated that the twin conditions have been prescribed to address the issue of huge discount in the formation of bouquets by the broadcasters vis-a-vis sum of a-la-carte channels.

By way of data, the TRAI demonstrated that broadcasters are offering discounts upwards of 40% on bouquets. By offering huge discounts, the authority stated that broadcasters are forcing consumers to opt for bouquets as popular channels are priced close to the channel cap of Rs 19. This, the TRAI noted, impacted consumer choice.

The authority stated that it will continue to keep a close watch on the formation of bouquets after application of twin conditions, its impact on the market, and will take further suitable measures if the situation so warrants.

Additionally, the authority decided that only those channels which are having MRP of Rs. 12 or less will be permitted to be part of the bouquet offered by broadcasters. Earlier, the broadcasters were allowed to include channels that were priced Rs 19 or below in the bouquet. However, the TRAI added that the freedom of broadcasters to declare MRP of their channels should continue.

The TRAI noted that the unfair pricing strategy of the broadcasters has lent credibility to the viewpoint that Rs. 19 ceiling, should be brought down to control the unfair market behavior in order to protect the interest of consumers.

The regulator has also imposed reasonable restrictions on the number of bouquets offered by broadcasters. The number of bouquets of pay channels shall not be more than the number of pay channels offered by a broadcaster.

The regulator stated that NCF related issues were another area of concern for consumers. TRAI has examined various provisions in detail and accordingly mandated provision of 200 channels in maximum NCF of Rs. 130 excluding taxes per month. Earlier, DPOs had to provide 100 SD channels for an NCF of Rs 130. The All India Digital Cable Federation (AIDCF) members had started offering 150 SD channels for Rs 130.

In addition, it has also been decided that channels declared mandatory by the Ministry of Information and Broadcasting (MIB) will not be counted in the number of channels in the NCF. DPOs have also been mandated that they will not charge more than Rs. 160 per month for giving all channels available on their platform.

On the issue of huge charges taken by DPOs in the form of NCF for a multi-TV home, the TRAI has decided that in case of multi-TV home where more than one TV connection is working in a home in the name of one person, will charge maximum 40% of declared NCF for second and additional TV connections. Authority has also permitted DPOs to offer discounts on long term subscriptions which is for 6 months or more.

TRAI also considered the concern of broadcasters regarding huge carriage fee being charged by DPOs. In order to address the concern of huge carriage fee, the authority has mandated that MSOs, HITS operators, IP TVservice providers will not have target market bigger than State or Union Territory as the case may be. In addition, a cap of Rs 4 lakh per month has been prescribed on carriage fee payable by a broadcaster to a DPO in a month for carrying a channel in the country.

Given that prescribed carriage fee for a High Definition (HD) Channel is two times that of the SD channel, the carriage fee cap for HD channel has been prescribed at Rs. 8 lakhs per HD channel per month for a DPO. This cap shall be the maximum amount (cumulative sum) that a broadcaster may be required to pay to one DPO per channel irrespective of the target area declared by a DPO.

This, the TRAI stated, will enable a level-playing field among various DPOs viz HITS, IPTV, MSOs and DTH operators.

The authority has also considered giving more flexibility to DPOs to place the TV channels on Electronic Programme Guide (EPG) and mandated that channel of a language in a genre will be kept together while placing channels on EPG. Such EPG layout is to be mandatorily reported to the TRAIand no change in this can be done without prior approval of the Authority.

This, it stated, will address the concerns of the broadcasters to a great extent to protect them as it will not allow DPOs to frequently change the LCNof the television channel in case they do not agree to their mandates.

The TRAI claimed that amendments carried out through the consultation process has left the basic contours of the new regime untouched and the Broadcasters/DPOs will continue to enjoy the flexibility in carrying out their businesses. The review exercise has been limited to certain consumer-friendly measures and to balance the interest of stakeholders. The revisions strive to ensure that the objectives of the existing framework get fulfilled to a great extent.

It further stated that the amendments provide appropriate time to stakeholders for implementation. Broadcasters are required to publish revised MRP of a-la-carte channels and bouquets on their website by 15th January 2020 and DPO are required to publish revised DRP of a-la-carte channels and bouquets on their website by 30th January 2020. Consumers will be able to benefit as per the amended provisions with effect from 1st March 2020.

The authority is of the view that the amendments will usher in better consumer offerings, more flexible tariff schemes and more choices for consumers. Overall, the amendments are expected to result in healthier & structured growth of the Broadcasting and Cable Services sector.

The TRAI also defended the existing tariff framework noting that it is quite successful in establishing harmonised business processes in the sector, level-playing-field, bringing-in transparency in TV channel pricing, reducing litigations among stakeholders and providing equal opportunities to smaller MSOs. As a result, there is a pronounced reduction in disputes among stakeholders as well as entry barriers.

“The transparency has ushered better tax compliance thereby improving government revenue. However, the intended choice to consumers to select what they want has got scuttled due to various issues during the implementation,” the TRAI stated.

The TRAI had issued two Consultation Papers viz: l)’Tariff related issues for Broadcasting and Cable services’ on 16th August 2019; and 2) ‘Issues related to Interconnection Regulation, 2017’ on 25th September 2019 to address several key issues related to the NTO.

Some of the major issues among them were cap on maximum discount permissible to broadcasters while forming a bouquet, number of channels permitted in Network Capacity Fee (NCF), applicable NCF for multi TV homes, flexibility to Distribution Platform Operators (DPOs) in offering long term subscription plans and carriage fee payable by broadcasters to DPOs.