In the last one year, the broadcast industry believed to have spent Rs 1,000 core on implementation of the NTO
Industry body, the Indian Broadcasting Foundation (IBF) on Friday expressed discontent against the new tariff order (NTO) by the Telecom Regulatory Authority of India (TRAI). The TRAI had introduced fresh changes to the tariff order by lowering the maximum ceiling on the price of TV channels to Rs 12, as against the earlier price of Rs 19, besides a bunch of other regulation, on January 1. “Even as the broadcast industry was apprehensive about NTO, we all had put in our efforts to make it a success. Broadcasters invest huge amounts in creating content and by capping the channel price to this extent, TRAI is hampering revenue stream. This, in turn, will have an adverse impact on the creation of content,” NP Singh, CEO, Sony Pictures Networks India and president, IBF, told reporters.
Broadcasters are understood to have spent over Rs 1,000 crore for the implementation of NTO, in the last one year. According to industry estimates, only 25% of the subscription money comes back to broadcasters. Uday Shankar, president, The Walt Disney Company Asia Pacific, and chairman, Star India, and The Walt Disney Company India, pointed out the contradiction in the NTO. “If the regulator is so concerned with bringing down the price for the consumer then why has it allowed the cable operators, distributors to charge as much as Rs 160, in the name of network capacity fee (NCF), for something the free dish is giving for free? The same channels are available for free on Freedish. The contradiction is ludicrous,” he said.
Currently, popular Hindi general entertainment SD channels such as &TV, Colors, Star Plus, among others are priced at Rs 12. Moreover, the price of HD channels hasn’t been finalised and remains unclear. For example, HD channels such as &TV HD, Colors HD, Sony SAB HD among others are priced at Rs 19. The reduction in a-la-carte rates will force broadcasters to take a Rs 7 cut in price. For Punit Goenka, the NTO comes at a time when the industry had just begun to stabilise. “The regulation has tried to govern everything that a competitive market working with multiple content creators, where the consumer interest is protected by design,” Goenka noted.
As per industry data, post the rollout NTO, last year, the average revenue per user had increased to Rs 271, per month from the earlier Rs 220 per month. For broadcaster’s the rollout of the new tariff order would result in a 35% drop in revenue. Currently, there are 209 million TV households in the country. Of these 33 million TV households are DD owned FreeDish subscribers. This leaves the country with a total of 176 million TV households. “About 94% Indians are aware of the NTO, and the monthly churn tells us that people are exercising their rights to choose channels,” Sudhanshu Vats, Group CEO, Viacom18, said.
According to industry estimates, about Rs 25,000 crore is collected as a network capacity fee (NCF) per month. Further, the distribution platform owner will also earn a 20% commission from a broadcaster, per subscriber. Furthermore, of that Rs 25,000 crore which is collected as NCF, about 70% that is Rs 19,600 crore is paid to local cable operators (LCOs), which leaves the DPOs with the rest of the amount. It is believed that the DPOS another Rs, 1,000 crore – Rs 2,000 crore as carriage fee, per month. As per IBF, these amendments will severely impair broadcasters’ ability to compete with other unregulated platforms and adversely affect the viability of the pay-TV industry.