NTO 2 Effect: Distribution Platform Operators Will Get Advantages

NTO 2 Effect: Distribution Platform Operators Will Get Advantages

New Tariff Order 2.0 (NTO 2.0) which was implemented by the Telecom Regulatory Authority of India (TRAI) which allows 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.

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NTO 2.0 also allows the DPOs to provide more than 200 Free to Air channels at Rs 160 (excluding taxes).

TRAI made changes to the New Tariff Order which is now referred to as NTO 2.0 as on 1st January, 2020 .

This New Tariff Order 2.0 (NTO 2.0) 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.

So, now television Broadcasters are feeling that there will be huge loss in their revenue. It 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.

According to these broadcasters, the quality of content of such channels may go down as they become completely dependent on advertisement revenue and TRP of the channels.

TRAI stated that 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.  The Indian Broadcasting Foundation (IBF),  argued that the lowering of cost will ultimately limit the number of channels in the bouquet, which in-turn reduces the value delivered to consumers.

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.

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.

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

However, in a bid to stop the implementation of the amended new regulations, IBF moved the Bombay High Court. Hearing the case on 22 January 2020, the court did not passed an interim order. It will again hear the matter on 30 January 2020.

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