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HomeArticlesDigitizationTRAI Tariff Order Implementation Issues may disturb the market
Saturday, 02 February 2019 08:30

TRAI Tariff Order Implementation Issues may disturb the market

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On 30 October, the Supreme Court upheld the Telecom Regulatory Authority of India's (TRAI) tariff order for broadcasting sector. The apex court dismissed a petition filed by broadcasters Star India and Vijay Television which challenged the Madras High Court order allowing the TRAI tariff order and interconnect regulation.

While most of the major broadcasters published their Reference Interconnect Offer (RIO) along with the Interconnection Agreement to meet the TRAI deadline, Star too published its channel rates on 6 November 2018.

However, there are numerous hurdles in implementing the order as the DTH operators reached court against the regulator TRAI despite the Supreme Court verdict. Following this, focus shifted to the Delhi High Court. The direct-to-home operators called the tariff order a “stringent regulation” by TRAI.The plea said that the framework or mechanism laid out by TRAI to package channels and their overall pricing is not sustainable.

 As the regulator had also asked the DTH operators to provide proper customer care centres, where consumer grievances can be managed effectively and proper timelines to consumers in the event of a complaint, the DTH operators are arming up against the regulator itself.

As per a legal expert: “The challenge by DTH operators is mainly on the basis of quality of service to be provided as laid out in the Tariff order, which DTH players say is not workable. In a sense, the battle now shifts from a broadcaster-centric issue to a DTH-centric one, even though Discovery Networks has also challenged the regulation and tariff order (in court).”

Talking about the issues on implantation side, Karan Taurani, vice-president (research) at Elara Capital, said: “With no bouquet channel being priced above Rs 19, it could negatively impact subscription revenue of broadcasters given such a price cap. Smaller and niche channels that do not have a large subscriber base may not be carried at all, impacting their business. The average revenue per user for a base of 100 channels could also move up, impacting subscription revenue from price-sensitive markets that were added following phase three and Phase 4of digitisation.” 

Home Cable Network picks faults in Star ROI:

On 6 November 2018, MSO Home Cable Network wrote to the TRAI and in its letter the operator alleged violations of the TRAI-prescribed and notified regulation(s) by Star India.

If the base pack of Star SD Bouquet (1 Hindi Base) of the RIO as published on 06.11.2018 is priced `49, that is if considered as 85% the total à la carte price of the (13) pay TV channels forming the bouquet, then the Maximum Retail Price (MRP) of Bouquet (in INR) per Subscriber per month shouldn't exceed ` 57.

Likewise all the declared / published Bouquets / packages and their compositions w.r.t to the declared MRP of the total à la carte price of the pay TV channels forming the bouquets, are deliberately in violation of the TRAI prescribed and notified (Eighth) (Addressable Systems) Tariff Order, 2017, including HD base pack and HD premium pack of the RIO as published by M/s. Star India Pvt. Ltd. In reference to The Explanatory Memorandum para 65 and an example 1 that contains and explains the objects and reasons of this (Eighth) (Addressable Systems) Tariff Order, 2017.

The letter also throws light on how the MSO also accused TRAI of keeping silent on the issue of pay TV channels for which MRP has now been declared, being shown on various illegal/non-permitted OTT IPTV platforms i.e. HotStar, Sony Liv, Zee5 and Voot.

Although TRAI consultation on OTT is in progress, OTT apps do not have any permission granted by the Central Government to provide IPTV or OTT IPTV services and they are also not registered as DPO by the Ministry of Information and Broadcasting.

According to existing regulations

“distributor of television channels” or “distributor” means any DTH operator, multisystem operator, HITS operator or IPTV operator;

“internet protocol television operator or IPTV operator" means a person permitted by the Central Government to provide IPTV service;

Many OTT platforms in the country are offering TV channels and all smart TVs and mobile phones can display them without a set-top-box. Considering low cost packages, consumers particularly the youth prefer to watch using OTT apps.

Freedish –a spoiler: Government has commenced with DD’s Freedish DTH platform introducing MPEG4 and HD channels. Also there is a plan to increase the channels to 200. Since these channels are free of subscriptions many consumers particularly low income house holds may shift to the good old DD.

LCOs are preturbed : LCOs are protesting against an unfair revenue share in the new regime. Broadcasters get 80% of pay channel revenue with only 20% left for MSO and LCO. Also the basic package price of Rs 130 gets divided as 55:45 with MSOs getting the bigger share.

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