Even as the Telecom Regulatory Authority of India (TRAI) has rolled out a brand new tariff order which aims at lowering the prices, that might be a long shot. “The successful implementation of the new tariff order depends on two things – comprehension and implementation, only then prices will reduce. Even as post digitisation the network capacity has increased from 106 channels to 350, the infrastructure to carry the increased number of channels hasn’t been built,” Pankaj Krishna, CEO, Chrome Data Analytics and Media, told BrandWagon Online. As per TRAI, broadcasters are required to publish revised MRP of a-la-carte channels and bouquets on their website by January 15, 2020, and distribution platform owner (DPO) are required to publish revised MRP of a-la-carte channels and bouquets on their website by January 30, 2020. “Consumers will be able to benefit as per the amended provisions with effect from March 1, 2020,” stated TRAI.
While TRAI has reduced the ceiling on channel pricing to Rs 12 from the earlier Rs 19 in the case of al-a-carte, most of the Hindi general entertainment SD channels such as &TV, Colors, Star Plus, among others are currently priced at Rs 12. Further, there is no clarity on the price of HD channels. For example, HD channels such as &TV HD, Colors HD, Sony SAB HD among others are priced at Rs 19. Hence, the reduction in a-la-carte rates will completely depend on broadcasters and their willingness to take a Rs 7 cut in price. According to Krishna, post the rollout of the new tariff order (NTO), the average revenue per user had increased to Rs 271, per month from the earlier Rs 220 per month. The current tariff order is aimed at bringing down, however, that will be a challenge,” he added.
As per the new order, a consumer will have to pay a minimum of Rs 160 per month for 200 channels. These 200 channels while will not include those 75 DD channels, will have a range of other channels such as news, music and other genres and need not necessarily include premium channels such as GECs both Hindi and regional, sports and English. Therefore a subscriber who will have to pay Rs 160 for 200 channels, may have to pay an additional Rs 150 for a pack of 10 pay channels of her choice, which might cost her Rs 150, add to that 18% GST – a total of Rs 370.
Compared to this, currently, a monthly pack of Premium Sports channel is being sold at Rs 340.43 on Tata Sky includes channels such as Hindi GECs like Colors &TV Star Plus, besides movie channels such as &flix, Star Movies, among others. It should be noted that 90% of the users prefer DPOs’ pack over broadcasters’. Presently the total number of a-la-carte subscribers is at about 20 million, as per industry estimates.
As per Paritosh Joshi, principal, Provocateur Advisory, an independent media, and communications consultant, the role of TRAI is to not have a tight fist control on the broadcast industry, instead, it should let the market forces decide the course. “There are several issues in the new tariff order, especially when it comes to bouquets. For example, bouquets can’t be created on a national level. In regional markets such as Bengal or Tamil, Star Jhalsa will take precedence over Star Plus or Star Vijay in Tamil,” he explained.
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. 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. “ Assuming that a broadcaster has 10 subscribers for a channel and the channel is priced at Rs 12. This would mean that it will have to pay a 20% commission on 1200 users amounting to Rs 240 to DPOs,” said a senior official from one of the top broadcast company, on condition of anonymity.
However, a representative from one of the top multi-systems operators (MSO) noted, off 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 a very limited amount. “NCF should remain in existence for MSOs to be able to run their business,” he said, on condition of anonymity.
The TRAI in the new tariff order has also tried to manage the issue of carriage fee. The authority has mandated that MSOs, HITS operators, IP TV service providers will not have the 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 fees payable by a broadcaster to a DPO in a month for carrying a channel in the country. The issue here is direct-to-home (DTH) players like TataSky, DishTV have a national beam, and it’s presence is not restricted to geography. Similarly, MSOs such as DEN Network, Hathway, The Hinduja Group which runs IndusInd Media and Communication have a pan India presence. “Whether the cap on carriage fee applies to the players remains unclear. What may happen now that broadcasters may be asked to pay more fee for regional markets,” said one of the leading broadcasters. As per industry estimates, currently, DPOs earn in the region of Rs 1,000 crore – Rs 2,000 crore as carriage fee, per month.
For Joshi, the broadcast industry is once again gearing up for a chaotic time. Last year, post the roll-out of NTO, BARC had stopped providing audience measurement data, for a period of about 8 weeks, leaving the industry in a tizzy. As consumers gear up for a new change in the TV channel pricing, will they finally benefit from it, only time will tell?