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Trai’s new tariff: Watch Out!

Trai’s new tariff: Watch Out!
The new tariff order allows consumers to choose their TV channels/Photo: UNI
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Above: The new tariff order allows consumers to choose their TV channels/Photo: UNI

With the regulator TRAI coming down hard on DTH and cable operators over non-compliance with its new rules, customers can now look forward to some relief

By Shruti Bist

It has been a long time coming, but the Telecom Regulatory Authority of India (TRAI) has finally decided to crack the whip. Last week, it entrusted Broadcast Engineering Consultants India Ltd (BECIL) with carrying out an audit of direct-to-home (DTH) and cable TV operators to ensure their compliance with the new tariff order.

The audit, which will look into, among other things, subscriber management, billing systems of Distribution Platform Operators (DPOs) and whether the choice of channels (a la carte or bouquet) are trickling down to consumers, is expected to start soon.

TRAI’s belated decision followed many direct-to-home (DTH) operators like Tata Sky, Dish TV, and Sun Direct TV and cable operator Independent TV not following its new tariff order that came into effect early this year. It directed the DPOs to abide by the order, specifically those pertaining to the migration of customers who had paid for long-term packs.

In February this year, TRAI had clarified that customers who had already paid for long-term packs would be able to receive the channels until their subscriptions ended. After that, they would have to choose the channels/packs in compliance with the new tariff order. However, according to TRAI, consumers sent in complaints that their pre-paid long-term packs had been discontinued or migrated to “Best Fit Packs” by their DPOs. TRAI had directed DPOs to shift consumers who had not exercised their choice by March 31 to the “Best Fit Pack” based on their usage pattern. However, this was not applicable to those who had paid for long-term packs.

As a result, TRAI directed the four DPOs to “desist from migrating long-term plan subscribers to any new plan till the contracted period ends, unless the subscriber opts out of it or the validity of the long-term plan expires, whichever is earlier”. All four DPOs had been given seven days to comply with the directions issued on May 1.

The new tariff structure implemented by TRAI on February 1, 2019, allows consumers to choose their TV channels and pay for these at maximum retail prices (MRPs) set by broadcasters. The new system is different from the bouquets offered earlier.

The new regulations and tariff were challenged in the Supreme Court in Star India Private Limited v Department of Industrial Policy and Promotion & Ors in October last year. Star India had questioned TRAI’s authority under the TRAI Act, 1996. But the Supreme Court had upheld the validity of the Telecommunication (Broadcasting and Cable) Services Interconnection Regulations, 2017, and the Telecommunication Tariff Order, 2017, and dismissed the appeal by Star India Private Limited against the Madras High Court verdict upholding the new regulations and tariff.

Star India argued that the TRAI Act allowed the statutory body to only regulate the carriage and means of transmission, and it could not regulate the content being transmitted. The petitioner alleged that the clauses, in effect, resulted in regulating the content of the broadcaster. Star India further contended that content is covered and controlled solely by the Copyright Act, 1956, implying that TRAI did not have the jurisdiction to regulate it.

The Supreme Court, however, rejected the arguments of Star India. It held that TRAI did not directly encroach upon the rights available under the Copyright Act, 1956. It further clarified that even if any of the rights were being restricted, it was completely justified in the public interest, keeping in mind the regulation of compensation payable to the broadcasters.

The apex court noted that the objectives of the TRAI Act include the protection of interests of service providers and consumers and ensuring fair competition while promoting consumer interests. It said that the tariff order did not affect the flexibility of the broadcasters in evolving a bouquet of channels.

The Supreme Court, by upholding the validity of the regulations and tariff order, has altered the landscape of broadcasting in India and this will definitely have an impact on how consumers are offered television channels in future. It will allow more flexibility to consumers and help them get the best in terms of the channels they want to subscribe to and pay for.

However, there are issues regarding the regulations and tariff order which impose certain limitations as far as packaging and selling channels to consumers by broadcasters and distributors is concerned. And this could also severely impact many upcoming channels which would have earlier obtained visibility by being a part of a discounted bouquet. Many broadcasters and distributors will now be required to rethink their existing business models.

As per TRAI, India has about 170 million television watching households of which around 100 million are cable subscribers while 70 million use DTH.

On February 12, 2019, TRAI was quoted as announcing that 90 million homes had already migrated to the new tariff order of which 65 million were cable TV households and 25 million were DTH subscribers.

Earlier, the consumers simply got what was served to them; now, they have to select the channels or bouquets they want to watch. Also, earlier there was a cable fee that each household in a particular locality had to pay every month, but with the implementation of the new tariff order, consumers will only pay for the channels they subscribe to.

As recommended in the new regulatory framework, consumers will have to pay Rs 130 each month which TRAI calls the Network Capacity Fee (NCF). This fee will give subscribers access to 100 Free-to-Air (FTA) channels. Of the 100 FTA channels, it is compulsory to subscribe to 25 DD channels, leaving the consumer to choose the other 75.

Based on the current pricing scheme, a consumer’s monthly TV bill can go up by 25 percent—from Rs 230-240 to Rs 300 per month for viewers who opt for the top 10 channels. However, the price will come down for those who choose only five of the top channels.

For consumers who are unable to select a particular package, under the new tariff order TRAI has recommended that cable operators come out with “Best Fit Packs” on their behalf. The broadcasters depend on subscriptions and advertising to generate revenue. They have always bundled their channels and sold them at a subsidised price, but TRAI considered this akin to forcing a channel down a consumer’s throat.

“TRAI’s new tariff order is a gamechanger for the industry. Although there are fluctuations in viewership, and hence, advertising revenue in the current quarter is affected, in the long run, it will be beneficial for the industry as the Average Revenue Per User (ARPU) increases and so does the subscription revenue,” says MK Anand, MD and CEO, Times Network.

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