Broadbandindia Magazine

The Telecom Regulatory Authority of India (TRAI) has revised tariff in the various sector, a step that will bring down the content cost for DTH, digital cable and IPTV operators. It has issued its tariff order for 2010, for digital addressable systems – such as Cable TV to DTH – and has insisted that customers must be given free choice of pay channels, than be forced to pick from a bunch of pre-set bouquet arrangements. The change must be made by September this year and the final deadline will be January 2011 if operators needed extra time for technical upgrade.

New subscription charges for cable TV

TRAI informed the Supreme Court it planned to cap the monthly subscription charges for cable TV services at Rs 250 across the country, except for pockets where the conditional access system is implemented. The charges would entail the subscriber to a basic package with over 20 pay channels. In an affidavit filed before the apex court, the broadcast regulator further said that the monthly bill for the basic package, which includes all Doordarshan channels and up to 20 pay  channels, had been set at Rs 200.

Another one would have a monthly charge of Rs 100 for a minimum of 30 free-to-air (FTA) channels, including the mandatory Doordarshan channels. The  authority is of the view that the retail price cap for pay cable service should be fixed at Rs 250 per connection per month with the actual monthly bill being left to the business model of the individual operator — subject to the ceiling,” said TRAI in the affidavit filed through its counsel, Sanjay Kapur.

Earlier, there were no limits on the number of FTA channels, but the monthly charge was fixed at Rs 83, while a maximum of Rs 260 was fixed for a basic package plus pay channels. In CAS areas, including South Delhi and parts of Chennai, Mumbai and Kolkata, pay channels have been charged at Rs 7 per month. As per industry estimates, there are 300 FTAs and 125 pay channels in the country at present.

Rates of pay Channels

Moreover, TRAI also said it was not in favour of allowing market forces to determine the rates of pay channels. “The principal risk of allowing forbearance (market  determined pricing) is that it could lead to an increase in price, especially for dominant/driver channels in the short run,” said TRAI, adding that it “was premature to  allow forbearance”. The regulator further said: “… A retail price ceiling — at a reasonable level — that balances the consumers’ interest with the growth potential of the industry is warranted in the case of cable TV services in non-CAS markets.”

TRAI’s affidavit has come after the Apex Court had directed it to formulate a comprehensive pricing mechanism after consulting various stakeholders. The regulator has also filed a draft copy of the proposed Broadcasting and Cable Services Tariff Order, 2010, which would be notified after the Apex Court gives its nod. Upholding the orders of sectoral tribunal TDSAT, the Supreme Court had on May 13, 2009, directed the regulator to study afresh and issue a comprehensive order on the pricing issue in non-CAS areas of the country. Later, on the request of the TRAI, the Apex Court had granted 6 months extra time in January and directed it to file its report by June 30, 2010.

No Cap on Carriage and placement fees

As far as the carriage fees charged by MSOs and area/ local cable operators from broadcasters for putting their channels on their network, TRAI said it is not feasible to place any cap on the amount of carriage and placement fee and it should be left to the players to decide among themselves. “The authority is of the view that all carriage and placement fee transactions should be part of the interconnection agreement between the broadcasters and MSOs/LCOs,” said TRAI,  adding that all such agreements between broadcasters and MSOs/LCOs should be filed before it.

TRAI further said, “Such filings of carriage and placement fees will enable the authority to monitor carriage and placement fees regularly and regulate the same  through intervention where considered necessary.” Providing some relief to the broadcasters, TRAI allowed them to raise the price of their channels and existing bouquets by nine per cent due to price inflation on the basis of the wholesale price index (WPI). “Keeping in mind all these factors and the interests of consumers, the authority is of the view that it would be appropriate to allow an increase of 9% over the existing price of the channels/ bouquets,” said TRAI in its 273-page affidavit filed before the court.

Ala carte channel price

TRAI has capped the a la carte pricing of channels for addressable systems at 35% the cost in non-Cas areas, a step that will bring down the content cost for DTH, digital cable and IPTV operators.

The earlier rate for DTH operators was fixed at 50% of pricing in non-Cas areas. The broadcast sector regulator said that the charges payable by a cable operator to a multi system operator (MSO) or to a HITS (Headend-In-The-Sky) service provider, as the case may be, shall be as determined by mutual agreement.

Addressable system

TRAI said that every service provider providing broadcasting services or cable services to its subscribers using an addressable system shall, from the date of coming into force of the order, offer all pay channels offered by it to its subscribers on a la carte basis and shall specify the maximum retail price for each pay channel. DTH players, who might be unable to offer all pay channels to subscribers on a la carte basis due to any technical reason, will have to do so by 1 January 2011.

To protect the subscribers, TRAI has also said that no service provider, who provides broadcasting services or cable services using an addressable system, can increase the charges for a subscription package for a minimum period of six months from the date of enrolment of the subscriber. However, it does not prevent any service provider from reducing the price of the subscription package within the period of six months. TRAI refrained from fixing the retail tariff for the pay channels. It said that as the market forces are operating effectively, the authority is of the view that there is no need for regulatory intervention in the matter of retail tariff fixation at present.

Also, the broadcaster will have to specify a minimum subscription period not exceeding three months for a subscriber. TRAI also said that every broadcaster shall  report to the authority, the a la carte rates for its pay channels fixed by it. They will have to publish such rates on their web site. Any changes will have to be reported 30 days prior to the change. Also, any broadcaster of a free to air channel intending to convert the channel into a pay channel or viceversa will have to inform TRAI, give public notice about the intended conversion and run a scroll at periodic intervals on the channel proposed to be converted.

Every broadcaster will have to publish full details about the channels provided by it, the nature of each channel, i.e., whether it is a free to air or pay channel, the a la carte rate of each pay channel and the bouquet rates for bouquets of channels, if any, for distribution through addressable platforms – at least once in three months, in at least two national newspapers. MSOs are still trying to figure out what they have to gain from the new tariff order. Though they have to pay 35% wherever they introduce addressable systems, the technicality of it is under question in non-Cas areas.

No cap on downlinking or uplinking

TRAI also said that no cap be placed on the number of satellite channels permitted to be downlinked for viewing or uplinked from India. The TRAI also recommended that the total networth requirement should be Rs 25 crore for the first channel, and enhanced by Rs 10 crore for each additional channel for uplinking of non-news channels.

For news channels, the total networth requirement should be Rs 100 crore for first channel, and enhanced by Rs 25 crore for each additional channel. In case of kids, scientific and educational channels, the networth requirement should be Rs five crore, while the authority recommended that for recognised universities who may come up with educational channels, there should not be any networth requirement.

Favouring a single-window clearance system for uplinking or downlinking of channels, the TRAI proposed that the applications should be processed quickly and the decision on the application should be finalised within three months from the date of submission of the application. The broadcast regulator said that the eligibility criteria for registration of a TV channel should be revised to include experience in media sector and the period of permission for uplinking or downlinking to be made uniform for 10 years.

It suggested that at the time of considering the renewal of permission of the existing permission holders, the eligibility criteria of networth of the company and experience of the top management will not apply. However, other terms and conditions like period of permission, annual permission fee, revocation of permission, renewal of permission and transfer of permission would be applicable. The TRAI further suggested that the channels, being uplinked from India but not downlinked in India, should not attract the programme code and the advertisement code of India.

Responsibility of content should be left to the broadcasters who have to take care of the rules and regulations of the target country for which content is being produced and uplinked. However, the uplinked content should not contain anything which is against the sovereignty, integrity and national security of India as well as its friendly countries. For the monitoring purpose, these channels should be required to preserve the recordings of the proceedings for at least six months.The recommendations on uplinking and downlinking had been sought by the Information and Broadcasting Ministry in view of the increasing number of TV channels.

TRAI upsets broadcasters with new tariff order

Broadcasters and cable TV operators have been upset over the sector regulator’s new tariff order for addressable systems while the loss-making DTH service providers have found something to cheer about at last.Broadcasters are engaged in meetings and are preparing to move the court in a couple of days as they feel the Telecom Regulatory Authority of India’s pricing system for addressable digital systems will shrink their pay-TV revenues. They are particularly distressed over TRAI’s fixation, for DTH, IPTV and addressable cable, of their individual channel rates at 35% of the corresponding price for analogue cable. “No other stakeholder has got any kind of relevant order except the DTH players. We are in discussions with other broadcasters to decide on what course of action we need to take,” says Star Den CEO Gurjeev Singh.

Indian Broadcasting Foundation (IBF) is canvassing other broadcasters to move the court but no conclusive decision has been taken so far. IBF president and  Dish TV MD Jawahar Goel said “We will talk in court now.”Already drained by hefty carriage fees from cable TV operators, broadcasters feel their subscription incomes could take a hit through an a la carte pricing order and a 35% cost structure which would come into effect from 1 September. Earlier, regulation provided DTH operators to pay broadcasters at 50% of their channel rates for analogue cable.”What is this tariff order focusing on? It doesn’t help any MSO or broadcaster.

Nor does it help a customer. It is tilted heavily in favour of DTH operators,” said the head of a broadcasting company.Broadcasters said the new tariff order, if implemented, would force new contracts with DTH players. “We had signed long term contracts. Now those calculations will go for a toss. If DTH is facing intense competition at the retail level, so are we. There are 503 channels beaming into the country, out of which 147 are pay. It is already a highly litigant industry. We are not doing anything to change that,” said a senior executive of a leading channel who did not want his name to be revealed.DTH operators are not going overboard to welcome TRAI’s tariff order but see several positives emerging from it.Said Bharti Airtel director and CEO – Airtel Digital TV Ajai Puri: “It is a small step in the right direction. This will marginally bridge the gap between DTH and cable. We had expected the tariff to be brought down to 20% from the analogue price. HD content also should have been part of the review.”

For DTH operators, the content cost is set to fall marginally. “We were already operating at the 35% levels while the tariff order had then put a cap on 50%. The fixed rate deals with the broadcasters were by and large in that corridor. For those channels that didn’t fall under this system, the costs were at 50%. They will have to come down now,” said the head of a DTH operator who did not want his name to be revealed.Added Videocon Group director Saurabh Dhoot: “We had asked TRAI for a 15% cap. We are a bit disappointed as we hoped TRAI would go with a 20% ceiling.” Videocon operates its DTH service under the d2h brand. Broadcasters, however, do not agree that the content cost would not fall overall. “DTH players will now start benchmarking deals with a sight on 35%.

And while TRAI has fixed our channel pricing system, there is no cap on what the DTH operators can price a la carte channels to their subscribers,” said a TV  broadcast executive.The cable TV sector is not particularly enthused. Said Digicable MD and CEO Jagjit Singh Kohli, “We were expecting a la carte pricing of channels for analogue cable. And there is nothing for digitisation in non-Cas areas. Though there is a 35% cap on a la carte content for addressable cable networks, this is somewhat neutralised by a 9% inflation allowed for broadcasters.”Hathway Cable & Datacom MD & CEO K Jayaraman, however, believes there are several positive takeaways and the stage is being set for digitization in the country. “We now have a common tariff order for all addressable platforms. There is no price cap at the retail level for us. Besides, the regulator has provided for a la carte channels but given us a protection by stating that subscribers of a la carte channels will have to pay a minimum monthly subscription of Rs 150. That provides some support to our ARPUs when we talk of addressable systems.”