The Telecom Regulatory Authority of India (Trai) on Wednesday batted for pricing forbearance in the broadcasting sector similar to the telecom segment where tariffs are decided by the companies operating in the market.
While indicating that it would like to take a light-touch approach to regulation in the broadcasting space, Trai chairman PD Vaghela said, “There should be complete forbearance and the regulator has no business controlling the tariff. We should not have a complex pricing regime.” Vaghela was interacting with Tata Play CEO Harit Nagpal during a fireside chat at the FICCI Frames Summit in Mumbai on Wednesday.
The Trai chief also asked the broadcasting industry to prepare a road map on forbearance, which he said was the need of the hour.
Vaghela’s statements acquire significance in the wake of the controversy over the new tariff order (NTO) 3.0, which saw cable operators and broadcasters spar over pricing in February. The result was a blackout that affected 45 million homes across the country, when networks Star, Sony and Zee decided to switch off signals to cable operators affiliated to the All India Digital Cable Federation.
Though the issue was subsequently resolved after cable operators began signing the new tariff agreements with broadcasters, it happened only after an acrimonious battle in the Kerala High Court.
Vaghela said that unlike the telecom industry, the broadcasting sector was difficult to regulate owing to divergent interests among stakeholders. While broadcasters and satellite TV operators have been asking for forbearance, local cable operators (LCOs), direct-to-home players and multi-system operators (MSOs) have been asking for regulation in pricing, he said.
“For us, it becomes very difficult to balance the interest of stakeholders and that is one reason why we were required to come out with this kind of an order,” Vaghela said referring to the NTO 3.0. This order came about after the NTO 2.0 was amended in November 2022, restoring the price cap for a TV channel, which is part of a bouquet from 12 to19.
While broadcasters said the subsequent hike in channel prices would be to the extent of 5-15% only, cable operators said it could go up to 60%, depending on the channel and network. This would hurt the domestic cable and satellite market, they said. “Whether we like it or not, LCOs have a problem and they have to be protected. Their subscription base is going down, their revenue is going down. That is a concern,” Vaghela said.
The reason for local cable operators to demand pricing regulation is their falling subscriber base owing to competition with OTT applications, bundled offerings, including TV channels and broadband by DTH operators, and DD Free Dish, which is a free-to-air DTH platform.
“The overall number of LCOs has reduced significantly in these last 3-4 years from 1.2 million to nearly 700,000 now, wherein many of our peers have migrated to other businesses and left Cable TV business,” local cable TV operators said in a letter to I&B minister Anurag Thakur in February.
“Our consultation paper (to handle challenges with regard to MSOs and LCOs) is ready. We will handle issues such as network capacity fee (NCF), discount structure for network capacity fee, discount on MRP of pay-TV channels, carriage fee capping, inclusion of free-to-air channels, level-playing field with regard to DD Free Dish,” Vaghela said.
With regard to a level-playing field between the pay-TV market and OTTs, Vaghela said, “We have limited mandate that means we can regulate only those service providers to whom government is issuing the licence. OTT licenses have not been given (by us) and we don’t have the mandate (to regulate them).”
Vaghela also added that TRAI would start a consultation process for regulation of OTTs in the future.
“The way technology is changing and new players are coming. One simple way would be to provide a level-playing field in form of a simple regime with regard to licensing, license fee and cross-sector holdings,” Vaghela said, adding that he would not like to bring new players under the licensing regime.