In a move which simultaneously expands channel choices and reduces monthly bills for cable TV homes, the broadcast regulator on Tuesday abolished carriage fees, mandating a minimum 100 free channels at R100 and fixed price points of R100 and R150 as part of its order for mandatory digital addressable system (DAS) rollout. DAS will kick off in the four metros from July 1 and in the rest of India on January 1, 2015. All MSOs have been directed to distribute at least 200 channels from July 1 and 500 channels by January 1, 2013.
However, multi-system operators (MSOs) like InCable and Hathway, who aggregate channels from broadcasters and pass them on to local cable operators, aren?t amused by the loss of revenue and plan to move court. Broadcasters routinely pay carriage fees to MSOs for assured placement of their channels. Industry estimates peg the carriage fees market at around R4,500 crore and growing.
Trai has mandated a minimum of 100 free-to-air channels for R100 per month (R1/channel) in the basic pack for all cable homes in DAS areas. For consumers who want only a la carte pay channels bundled with the basic pack, monthly fees will not exceed R150, Trai told all stakeholders in its latest tariff order.
Under DAS, no distributor will be allowed to hawk unencrypted TV channels and customers will require digital addressable set-top-boxes. DAS is aimed at providing wider choice of digital quality channels while improving business fundamentals for all stakeholders.
?It is an imbalanced order which is trying to please everyone. This is going to further create imbalance between DTH operators and MSOs. We not only have to carry all channels under ?must-carry?, but also offer a-la-carte under free-to-air category, and then cannot expect revenue beyond three price points of Rs 100, Rs 150, and Rs 200-250. This order will demolish the cable distribution platform and needs to be checked,? said Ashok Mansukhani, president of MSO Alliance, the apex body of MSOs like InCable, Hathway, DEN, Digicable and others. ?MSOs have committed Rs 500-1,000 each crore each to pay for digitisation and were hoping to recover the investments via carriage fees,? Mansukhani added.
Government officials say they have done the best they could to address the issue of carriage fees. ?The phenomenon of carriage fees evolved due to analogue cable system (via copper wire) and the resulting mismatch in supply and demand for TV channels. Analogue cable can only show 60-70 channels whereas the supply exceeded 3-4 times resulting in carriage fees. With DAS and a supply of 500 channels, the concept of carriage fees will disappear,? said a senior government official involved in the DAS rollout.
The Trai (Tariff & Interconnect) Regulations 2012 direct broadcasters, MSO and LCO to offer five choices to the consumers. Therefore, in DAS areas, consumers will have the freedom to choose only basic pack, only basic pack plus pay channels, only free-to-air channels, only pay channels or a combination of pay and free channels.
The Trai order also directs all stakeholders to stay away from the practice of demanding ?minimum-guarantee? amounts as subscription fees. ?No pay channel broadcaster shall make available TV signals to MSOs without a written interconnection agreement. Broadcasters shall furnish details of carriage fees paid to MSOs to Trai,? it said.
In its tariff order, Trai has also outlined the revenue-sharing agreements between MSOs and LCOs. Subscription revenue from free-to-air channels will be divided in the ratio 55:45 between the MSO and the LCO, which will be 65:35 in the case of revenue from pay channel subscriptions.
