Broadbandindia Magazine

The new tariff rules by Telecom Regulatory of India (TRAI) could lead to a major tariff war between cable operators and the direct-to-home (DTH) operators with the Trai considering a reduction of the existing pricing formula for broadcasters on DTH, which is likely to bring down DTH bills by half. The new formula means cheaper content on DTH platforms compared to cable services, triggering a price war between cable and DTH operators.

As per the current formula, DTH operators have to pay broadcasters at the rate of 50 % of the tariff fixed in non-cas area. Trai is now looking at a revised formula, to be fixed at 35 % of cable tariffs in non-cas area.

This means monthly bills for 25 million DTH consumers may come down and spur faster DTH rollout. Such a move will trigger a price war as cable operators will be forced to reduce charges to compete with DTH. Reducing DTH tariffs will also mean loss of revenues due to declining average revenue per user.

Trai should look at de-linking DTH content pricing from cable tariffs. Currently, the Trai order is tilted towards boosting DTH revenues and reduce losses. The broadcaster are crying foul at this latest directive as their income would get reduced by 15%.The DTH operators in India are already multi-national players with large bounties.The government should lend a thought to the revenue implications of the small cable operators strewn all over India. They are already struggling to maintain ground in front of big DTH players, this move will further weaken their stands and encourage customer fallouts from cable.

Ramesh Jalan
Publisher
E-mail: rameshkumarjalan@rediffmail.com