Recent data on the viewing habits of Indians threw up some interesting results. According to the Broadcast Audience Television Council (BARC), it was found that out of the gamut of channels available to choose from, viewers tend to watch not more than 30 channels on a daily basis. Based on this information, the Telecom Regulatory Authority of India (TRAI) has issued a New Tariff Order (NTO) that supposedly gives power to customers to pick the channels they would like to watch instead of the 300 plus channels provided by the cable operators in bulk. The NTO comes into effect from February 1.
On the surface, the order seems fair on the pockets of customers, allowing them to choose and pay for only those channels they prefer. However, cable and DTH operators say that the new order will largely be a burden on their business and will also pinch the pockets of customers.
Prices under the new order
Under the present regime, a customer has to shell out between Rs 250–Rs 400 to watch around 350 channels under a single cable operator or DTH service. This includes a bouquet of channels, of which around 150 are pay to watch channels and the rest are Free to Air Channels (FTAs).
According to the NTO issued by TRAI, every customer is entitled to a set of 100 FTAs paying a base amount of Rs 130 plus taxes. This set of base channels may or may not include popular channels offered by major broadcasters.
To watch channels of one’s choice, the customer will have to choose among different broadcasters. The value packs begin at a base rate of Rs 184 consisting of 95 channels from 10 different broadcasters. For example, Zee Entertainment has priced their basic pack at Rs 45, which consists of 25 channels while Sony Entertainment charges Rs 31 for 9 channels.
Additionally, for 20 additional channels one chooses (apart from the FTAs), the customer is supposed to pay Rs 25 as network carriage charges. The base value pack does not include sports or regional channels and the customer will have to pay double the amount for HD channels. So, under the present regime where the customer can watch 350 channels at a minimum of Rs 250, once the NTO comes into place, the customer will have to shell out close to Rs 400, only to watch a maximum of 100 channels.
If a customer opts to select channels on an a-la-carte basis, the rates are double as the value packs are provided to the customers under discounted rates.
Keeping the above figures in mind, the TRAI order, which was pitched under the affordability aspect, does not meet its objective as customers have to pay almost the same or more compared to the current pricing, that too, for a much lesser number of channels.
Why cable operators are unhappy
Speaking to TNM, Jagadishwar Rao, the president of the Telangana Digital Cable Operators Federation, opines that not only is the new tariff order a burden on the customer’s pocket, but it also will largely bring down the profit margins of the cable TV operators, who have immensely contributed to the building of the digitisation of television broadcasting in India.
“Television operations in India shifted from analogue broadcast to digital broadcast keeping in mind the increased number of channels that the customer will have access to. Even though the government claims that almost all the television networks in India have been digitalised, only 60-65% of the digitalisation work has been completed to date,” Rao claims.
“The new order claims to provide customers with the freedom to choose channels based on their interest, but at the end of the day, customers are again presented with bouquet packs where the broadcaster gets to choose what the customer should watch.”
Rao says that the new order is unfair to cable operators because even though the local cable operators (LCOs) can set prices for basic packs of their own choice, they will have to pay the digital broadcasters the stipulated amount for each channel on an a-la-carte basis anyway.
“Under the model interconnection agreement, Multiple System Operators (MSOs) are allowed to take home a share of 55% while LCOs get only 45% of the revenue share. Further, when it comes to paid channels, digital broadcasters are entitled to a share of 80% while LCOs get only 20% of the share. Of the 20% share, the government has again capped 18% as GST rates. Further, under the new regime, the installation charges have been brought down to Rs 350 from Rs 500 under the current setup,” Rao explains.
Rao adds that LCOs are not even entitled to loans from banks as their infrastructure, which is often exposed to wear and tear, does not provide adequate security for banks.
As more young people move on to OTT platforms for entertainment in the metros, Rao says that the future of cable operators is at risk as the people’s demand for an increased number of channels will come down due to increased pricing.
“The order comes into force on February 1. If the TRAI doesn’t comply with our demands, we will fight against the system until our voice is heard. The present system doesn’t take into account our work, our infrastructure or even the salaries we need to pay our staff who work 24x7, and the system we have built for the last 30 years,” Rao adds.
Does it really cut costs for consumers?
Speaking to TNM, Navin, a consumer, says that the new order is effective for people who would wish to watch a particular profile of channels.
“I mostly watch only sports channels, so the new order would help me in selecting 3-4 sports channels on an a-la-carte basis and pay only for those channels. So, I will end up paying much lesser than what I am paying now for many channels I do not even watch,” Navin opines.
But families where multiple profiles of channels are watched depending on the interests of different family members, consumers say that channels should be wisely chosen, only then will the NTO remain beneficial.
Speaking to TNM, Muni Shekhar, regional head of TRAI, Hyderabad, says that all cable operators and DTH providers around the country have been given instructions to display the terms under the NTO so that consumers are aware of how to use the new tariff system to their benefit.
“The NTO has been scrutinised by the central authorities and court and only then has it been approved without any loopholes. Customers are not going to incur losses and rather the a-la-carte system would only help them in saving expenses,” the officer added.