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HomeNewsNational NewsNTO 2.0 may pile up losses of broadcasting sector: IBF
Sunday, 26 January 2020 13:33

NTO 2.0 may pile up losses of broadcasting sector: IBF

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The Indian Broadcasting Foundation (IBF), an industry body of broadcasters, expressing its views on new tariff order amendments by TRAI, said that lowering of cost will ultimately limit the number of channels in the bouquet, which in-turn reduces the value delivered to consumers.

IBF President NP Singh said: “Additionally, using regulation to limit the number of bouquets being offered to consumers is fundamentally restricting consumer choice, given the large variability in consumer preference across 200 million TV homes." 

TV broadcasters believe they are staring at a massive cut in their subscription base and loss in revenue. At the heart of their dissatisfaction is the reduction in the maximum retail price (MRP) of a channel that the broadcasters want to be part of a bouquet.

Widely known as New Tariff Order 2.0 (NTO 2.0), the new rules require that the MRP of a channel should not be more than Rs 12 per month to be part of the bouquet which was Rs 19 earlier.

TRAI, however, said on January 13 that the recent amendments to the broadcast tariff regulations would not impose restrictions on the market players and there will be 'full' flexibility for them to price their channels.

The New Tariff Order (NTO) came into effect in February last year and TRAI also proposed two-year moratorium on further regulations. However, the regulator on January 1, 2020 announced changes to the NTO which is now referred to as 'NTO 2.0'.

"It is important to note that the broadcasters continue to have full flexibility to price their channel as Maximum Retail Price (MRP) of any channel remains in forbearance," TRAI said in a statement.

NTO 2.0 also allow the distribution platform operators (DPO) to increase the number of free-to-air channels from 100 at Rs 130 (excluding taxes) to 200 at the same price. It also allows the DPOs to provide more than 200 free-to-air channels at Rs 160 (excluding taxes).

This move by TRAI, the broadcasters believe, is aimed at incentivising free-to-air channels which solely rely on advertisement revenue for their business, unlike pay TV channels which rely on both advertisement revenue and subscription fee.

Far from helping the consumers, the quality of content of such channels may go down as they become completely dependent on ad revenue and TRP of the channels.

Moreover, consumers often cannot choose which free-to-air channels they want to see because all distributors do not have the required infrastructure to deliver these channels. As a result, subscribers are flooded with channels that they do not want to see.

So the broadcasters have argued the new rules are neither benefiting the broadcasters, nor the consumers, while the DPOs will be at an advantage.

It is feared that the new order will sap the ability of TV channels to create quality content. Sports channels may particularly be on the receiving end as their operations costs are generally higher.

Due to the cost of creating content, the broadcasters could be forced to take their premier channels out of the bouquet and market them as a la carte which is a losing proposition as consumers have demonstrated clear liking for bouquet channels.

Globally too, consumers generally prefer bouquet over a la carte.

"A few months back, at the request of the regulator, the major broadcasters including Sony, Star, Zee, Viacom introduced promotional schemes and offered their premier channels at an MRP of Rs. 12 for a limited period," the IBF President said.

"But the results showed no uptick in the a la carte offering in spite of the price reduction, clearly highlighting the consumer's preference for bouquets. In fact, our members suffered revenue losses in this whole exercise," he added.

TRAI said that the new amendments to NTO are scheduled to come into effect from March 1, 2020.

However, in a bid to stop the implementation of the amended new regulations, IBF has moved the Bombay High Court. Hearing the case on January 22, the court did not passed an interim order. It will again hear the matter on January 30.

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