Indian Broadcasting Foundation Disproves TRAI On Various Tariff Related Issues

Indian Broadcasting Foundation Disproves TRAI On Various Tariff Related Issues

The Indian Broadcasting Foundation (IBF) has mitigated Telecom Regulatory Authority of India’s (TRAI) criticism that Broadcasters are resorting to heavy discounting to push bouquets.

IBF submitted comments on TRAI consultation paper ‘Tariff related issues for Broadcasting and Cable services’, that only 1 bouquet out of the 331 bouquets offered by top five broadcasters has a discount higher than 65%. It further stated that 15% of bouquets have a discount that is less than 35%, and 66% have a discount that is 50% or less. It also mentioned that higher discounts ultimately benefit the consumer, as it delivers better value for money.

The foundation which is the apex body of Pay TV Broadcasters in India, argued that bundling of TV channels, by enabling ad revenue to defray content costs, has also expanded consumer choice from 212 TV channels in 2005 to 880 TV channels in 2018.

It pointed out that the ad revenue has prevented the ‘pass-through of content costs’ to subscribers and has reduced the average monthly TV bills in India by 81% than they would otherwise be without bundling.

 TRAI stated on New Tariff Order (NTO) that the Broadcasters have misused the flexibility on bouquet discount to throttle market discovery of TV channel prices by giving huge discounts on the bouquets. The authority had observed that broadcasters are offering bouquets at a discount of up to 70% of the sum of a-la-carte rates of pay channels constituting those bouquets.

Indian Broadcasting Foundation (IBF) challenged the TRAI’s view that the channels that are subscribed to by the customers but not frequently watched or not watched at all are unwanted channels. This is a wrong analysis of customer choices. The IBF also argued that ‘Bundling of channels’ provides better service to subscribers allowing more customer choice, variety and differentiation for subscribers.

The IBF mentioned that since more than 95% homes in India are single TV homes, these households have to choose channels keeping in mind the requirement of all family members. On the authority’s charge that the large number of bouquets offered by broadcasters has created confusion in the minds of subscribers, the IBF clarified that the number of bouquets offered by any network at a specific customer level is limited. It further stated that the large number of bouquets is due to the regulatory demand of having separate SD and HD bouquets.

The IBF competed that the TRAI’s assumption that choosing channels a la carte is a customer preferred and friendly route is not backed by facts. In fact, it added that bouquets have been firmly established as the preferred route by customer across the world. Further, the IBF submitted that the regulator had directed DPOs to offer a Best Fit Plan to their subscribers to encourage them to transit to the NTO which the DPOs did by offering bouquets.

The DTH subscriber base has grown more rapidly post the NTO rollout, at an annualised rate of 12% in the first six months. And this is largely because of the better customer service provided by DTH, even though the pricing is now exactly the same as it is for the cable ecosystem, it asserted.

The IBF suggested that to make it easy for customers to get their channel choices in the cable ecosystem, the focus of the MSOs / LCOs should be to invest in the backend infrastructure which facilitates this. The Authority should insist on such infrastructural changes in customer interest. It also submitted that the sum of all a-la-carte prices of channels has significantly decreased for subscribers when compared to the previous regime. Despite such a significant decrease in a-la-carte prices nearly 80% of subscribers are still choosing to procure bouquets. This shows that the preference of Indian customers is bouquets, irrespective of the low price of a-la-carte channels.

The foundation also said that the customers and the distribution platform operators (DPOs) have benefitted more from the NTO than the broadcasters.

It also stated that the introduction of Network Capacity Fee (NCF) of Rs. 130 plus 18% GST (Rs. 153.40 post-GST) as the base price for getting any set of channels is responsible for the increase in Cable / DTH bills.

Because of this forced pricing, certain segments of customers and the lower income subscribers will find the price of channels to have increased in the NTO, it added.

The foundation also warned that any restriction on pricing or bouquet would compel the broadcasters either to reduce the quality or the quantity of the content or the number of TV channels or to raise the prices. It will also amount to infringing on the fundamental rights of the broadcasters.

In response to another question, it submitted that there is no mechanism in the regulatory framework at this stage which can assist or suggest that the broadcasters can identify any household which has an additional connection, thereby enabling the broadcaster to even think of offering any such discounts.

It also submitted that allowing DPOs to offer discounts on long term subscription cannot be a possible option as subscribers are identified by active Set Top Boxes and the possibilities of manipulations cannot be ruled out. This further has to be coupled with the consumer’s choice, which is always subject to change on a month on month basis.

The IBF said that it is necessary to effectively implement the audit provisions in the interconnect regulations requiring DPO to commence their annual audits.

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