Is the Trai tariff order fair?
Posted on August 11, 2010 | View 688 | Comment: 2
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Yes, but a small step for DTH industry The direct-to-home (DTH) television segment added 10 million customers last year, as many as it did in its first five years, expanding its reach to 24 million homes, of the total 130 million television homes today. Rural areas account for a growing share of DTH customers. Although Trai has recognised DTH’s role in increasing digitalisation with addressability, its recent Telecom (Broadcasting and Cable) Services tariff order is a small step in the right direction. The DTH business remains unviable in the absence of a level playing field vis-a-vis analogue cable service due to the content cost and the high incidence of taxes. Trai has acknowledged that the wholesale tariff for a DTH operator is 2.47 times that of the non-CAS cable tariff, arising out of rampant under-declaration and non-transparency. As a result of this non-transparency by the cable segment for years, it seems the broadcasters have adjusted their wholesale tariff to accommodate this high incidence of under-declaration. Hence, it has now become an issue of what gets corrected first: the tariff construct or the extent of declaration. Today, wholesale tariffs from broadcasters for all channels comes to nearly Rs 1,400, while the consumer is unwilling to pay more than Rs 150-250. Obviously, the model is highly unviable for the incumbent cable segment that continues to under-declare its subscriber base to correct the fundamental anomaly in the business model. This needs correction. However, as the tariff for DTH is linked to the cable segment, DTH service providers suffer due to under-declaration and are seeking a regulatory guideline to correct the anomaly. The new norm on tariff for addressable platforms at 35% of nonaddressable platform still does not cover for complete under-declaration by cable service providers and, therefore, does not provide a level playing field to the new emerging platform. The DTH pie today is less than 20% of the total cable and satellite households in the country, but contributes over 50% of broadcasters’ subscription revenues. Thus, the promising, technologically-advanced DTH segment is subsidising the incumbent analogue industry. Ajai Puri
Director & CEO (DTH), Bharti Airtel

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Order is erroneous and unreasonable The telecom regulator’s order is neither fair to the broadcaster who is the actual content provider nor does it benefit the subscriber. Going by the order, a broadcaster must offer its channels to distributors of television channels using addressable systems on a-la-carte rate that should not be more than 35% of the rate of the channel as specified by the broadcaster for non-addressable systems against the current 50% rate. The basis of the tariff structure for addressable systems is erroneous and devoid of reason. The point that needs consideration in the case of an a-la-carte channel is whether the DTH operator can ask for the same discount as they would expect when they were distributing the channel the way non-addressable cable operators do, but without the disadvantages of under-declaration. To start with, Trai had to regulate tariffs in the broadcasting sector to protect the interests of the consumer because there was lack of competition and the market was not mature. But competition has intensified in the broadcasting industry today, which has grown manifold, giving the viewer an abundant choice. But broadcasters have been at the receiving end of Trai notifications over the last few years. The business of broadcasters in general and sports broadcasters in particular — who spend millions of dollars to acquire marquee sports events rights across the globe — has eroded. So, should content creators or broadcasters be obliged to offer their channels at a universal discount irrespective of volumes and content? Is it then fair to make it mandatory for private sports broadcasters, already making huge losses, to share events of ‘national importance’ as determined by the government with Prasar Bharati? Is regulation necessary given the fact that there is sufficient competition in each genre and the prices for each of these genres can be determined by market forces? Based on the tariff regime prescribed by Trai, a consumer can watch three channels of a broadcaster for 24 hours per month, and pay half the price than he would pay for watching a movie for two hours. Is this fair? Vijay Rajput
COO & GM (India) ESPN Software India

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Comments (2)

  • The TRAI can keep a constraint on specifying all the channels on ala carte basis for Dth users, but it should also allow the dth players to specify their own packages as it gives better choice of getting channels at lower price, else their is a chance of decrease in Dth subscribers for getting less channels for same price.

    Posted by Naveen Kumar , R & D engineer at AMD | 29 Jan, 2011

  • Pricing of DTH is best left for the market to decide. What government should do is to encourage more players to ensure healthy competition for the benefit of the users.
    TRAI should restrict itself in regulatory issues other than pricing. Telecom pricing is a typical example. where users are benefited by the lowerng of price due to competition, much more than what TRAI could have done.

    Posted by Abraham Paul,MD at FCOMNET - Futuregroups|13 Aug, 2010

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