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Saturday, 02 February 2019 10:25

LCOs in a Quandary New Regulations pose a threat to LCO Business

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We have welcomed TRAI’s New Regulatory Framework for the Broadcast Industry because we have been waiting for a regulatory regime for our industry since 2004 when TRAI was handed over the responsibility of this sector. Progressive regulations are highly required to benefit all stakeholders creating a level playing field and steering the industry on a path of progress and profitability.

However, the incomplete regulations being enforced now are likely to create more hurdles, particularly for the LCO community. Some of their fears and apprehensions which need immediate attention and resolution /clarification for the smooth implementation of the New Tariff Order are given below.


1. Revenue Share for LCOs is too less.

LCOs fear their revenue share will further reduce after implementation of the new framework making their business unviable. LCOs still command majority of the last mile networks and since they are not at a level playing field with the MSOs for any kind of negotiation and always prone to discrimination and exploitation, their assured share of fall back (45% of Network Capacity Fee or FTA fee of Rs 130/-) is too less to make their business sustainable. They must be given the 100% of FTA basic package since they do not get share of placement fee. 


2. LCOs margin for pay channels distribution not specified

For pay channels, the MRP is split 80:20 between Broadcaster and MSO. LCO's margin has not been specified. LCO is the carrier of these Pay Channels to consumers and responsible for marketing them. They should not be left at the mercy of the MSOs for negotiations. Their share must be specified to survival of their business.


3. Post Paid and prepaid, both systems should exist 

It is very important because one payment is directly paid to the MSO, refunds for poor services or removal of channels are seldom entertained. LCOs and consumers both suffer in this regards and subscriber’s wrath is always faced by the LCO.


4. Quality of Service

LCOs need protection against arm-twisting by MSOs to extract increased payments. MSOs discriminate and exploit the LCOs by deteriorating signal quality at LCO’s headend or some other means. By the time the LCO files a complaint to the authority, many of his consumers would have shifted to other service providers. Signal standards at LCO’s headend must be specified. Method of complaining and competent authority must also be specified.  


5. GST on Cable Service

GST for entertainment through broadcasting services should also be lowered from 18% to 5% to help the consumers and the industry migrate without pains like it has been done for cinemas recently.


6. N Advertisement in Pay Channels

Since Broadcasters are getting full payment from all subscribers for their content, there should be no advertisements in Pay Channels.


7. Takeovers and Mergers 

As digitisation spreads, takeovers and mergers by large companies will become more common to achieve economy of scale. Unfortunately, at present there is no permanent relationship between MSO and his LCOs where LCO also can share the advantage of such takeovers and mergers. Lack of policies in this direction must be looked into and taken care in the regulations.


8. OTT and online broadcast must be regulated. 

Online media and OTT has been spreading in a big way for the last five years. Now it needs to be regulated at par with digital cable and DTH to create a level playing field for all addressable services.


9. DD FreeDish and DTT

Government is now planning to restart auctioning of FreeDish slots and increasing the channels to 200 on this subscriptionless platform. Even DTT, the digital terrestrial service is being started in more than 40 cities. If Cable and DTH subscriptions are high, subscribers will prefer these free services, particularly in low income areas.

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