Satellite @ Internet India Magazine & SATII Team Analysis of Some Facts on New Tariff Order

Satellite @ Internet India Magazine & SATII Team Analysis of Some Facts on New Tariff Order

Telecom Regulatory Authority of India (TRAI) Released Consultation Paper on Tariff Related Issues For Broadcasting & Cable Services on 16th August, 2019 & has invited all stakeholders’ comments & counter comments before the 16th September, 2019.
On 12th September, TRAI has extended the date for submission of comments till 23rd September & for counter comments till 7th October, 2019.

In this context, Satellite @ Internet India Magazine & SATII Team has analyzed these Facts on The New Tariff Order (NTO) as mentioned below:-

As per New Tariff Order implemented by TRAI the TV Viewers / Subscribers are paying higher monthly TV bills. They are not getting proper service from Cable TV / MSOs / DTH / Distribution Platform Operators (DPOs), because  pay-channel Broadcasters /  DPOs have been distributing unnecessary / unwanted channels with the Subscriber’s monthly pack. So, TV Viewers / Subscribers are paying extra for these unwanted channels.  TRAI implemented new tariff order without 15% discount Bouquet discount cap, but Broadcasters / MSOs / DTH Operators misused it very cleverly.

It has also been observed that some Distribution Platform Operators (DPOs) are offering a large number of (Free to Air ) FTA channels free of cost to the Subscribers / TV Viewers without taking any additional Network Capacity Fee (NCF). However, these are the specific channels chosen by the DPO & the Subscribers do not have proper choice to choose the channels. One way of looking this offering could be that as they are not asking money from the subscriber and therefore there should be no problem and these are complimentary in nature.

However, if you look from other angle, it will be very clear that it is distorting the market and DPOs are giving preferential treatment to some of the channels.

TRAI has also received several customers complaints wherein consumes have shown concerns about the mandatory DD channels within one hundred channels.
Since Network Capacity Fee (NCF) is prescribed to cater for 100 SD channels capacity, Subscribers  / TV Viewers must be allowed the freedom to select 100 SD channels. Mandatory 25 channels of DD are an additional burden on the TV Viewers. They are of the opinion that either customers should be given freedom not to choose any/all DD mandatory channels or these channels should be over and above the 100 channels selected by the subscriber.

The Authority observed channels notified by Central Government to be mandatorily provided to all the subscribers, any change in the rules made by MIB cannot be superseded by the Regulations.

However, the Authority may give recommendations after due consultation process on this issue. Another way of solving this problem could be that there is no additional cost on DPOs in offering these 25 mandatory channels over and above the One hundred channels chosen by the subscriber in the NCF of Rs. 130/- particularly looking at the trends, where large number of FTA channels are being provided by few DPOs without any additional NCF over 100 permitted channels. Therefore, these channels can be excluded from the One hundred channels for which freedom has been given to the subscribers.

New Tariff Order should be revised on these points:

Pay Channels Delivered To Subscribers / Distribution Platform Operators on A-La-Carte Basis only. No Discounts Permitted On Declared A-La-Carte Prices, No Multi TV Discounts & Long Term Discounts, No Bouquets Permitted By Broadcasters / DPOs.

Network Capacity Fee in only 2 Slabs:

Rs 100 + tax NCF for up to 100 Standard Definition (SD) Channels (1 High Definition  = 2 SD Channels)
Rs 150 + tax NCF for unlimited number of channels (Pro FTA Channels).

They must be delivered free, as long as at least Rs 100 NCF +Tax  is paid and 100% of the NCF to the Local Cable Operators.

TRAI has asked some questions in the Consultation Paper No:  10/2019, Dated 16th August, 2019 & has also invited comments on the same:

Q-1) Do you agree that flexibility available to broadcasters to give discount on sum of a-la-carte channels forming part of bouquets has been misused to push their channels to consumers? Please suggest remedial measures.

ANS: YES, Broadcasters misused the bouquet price cap under the New Tariff Order,  so all Bouquets / Pay Channel can be offered based on a-la-carte & unnecessary Network Capacity Fee which was paid by Subscribers for unwanted channel packages. Broadcasters should proclaim only a-la-carte rates chargeable from the Subscribers / TV Viewers as MRP price.

Q-2) Do you feel that some broadcasters by indulging in heavy discounting of bouquets by taking advantage of non-implementation of 15% cap on discount, have created a non-level field vis-a-vis other broadcasters?

ANS: YES, Broadcasters offer multiple pay channels including some prime channels with huge discounted price.
Here Subscribers pays a Network Capacity Fee (NCF) of Rs 1 to Rs 1.50 for each unwanted channel in the inflated bouquet.

Q-3) Is there a need to reintroduce a cap on discount on sum of a-la-carte channels forming part of bouquets while forming bouquets by broadcasters? If so, what should be appropriate methodology to work out the permissible discount? What should be value of such discount?

ANS: YES, Broadcasters should declare ‘a-la-carte’ rates only for PAY content.  80% Broadcasters inflated  A-La-Carte Prices of pay channels, where TRAI did not implement 15% Bouquet Discount Cap despite Supreme Courts approval.

Primarily, there are 100 Pay channels priced less than Rs 1.53 – the NCF charge a subscriber pays for delivery of any channel – Free To Air or Pay. The TV Viewers / Subscribers are forced to take on unwanted bouquets containing multiple channel and pay NCF on the same.

Same pay content when offered as Bouquet should mention individual rate for the content in the bouquet providing that sum of all pay content in bouquet shall not average out to be more than 85% of the same content rate in the a-la-carte.

Q-4) Is there a need to review the cap on discount permissible to DPOs while forming the bouquet ? If so, what should be appropriate methodology to work out the permissible discount? What should be value of such discount?

ANS:  YES, Distribution Platform Operators (DPOs) must be disallowed from discounting the NCF. To avoid this situations, extra pricing must be disallowed, so that the industry can operate &  grow in a sustained manner.

Q-5) What other measures may be taken to ensure that unwanted channels are not pushed to the consumers?

ANS: Every Headend to be audited for Customer Care functionality at least once.

No Multi TV Discount & Long Term Discounts, No Bouquets Permitted By Broadcasters / DPOs, Pay Channels Delivered To Subscribers / Distribution Platform Operators on A-La-Carte Basis only. No Discounts Permitted On Declared A-La-Carte Prices which will ensure that unwanted channels are not forced to subscribers.

Q-6) Do you think the number of bouquets being offered by broadcasters and DPOs to subscribers is too large? If so, should the limit on number of bouquets be prescribed on the basis of state, region, target market?

ANS: YES, a perplexed number of bouquets are being offered (more than 200 bouquets), effectively confusing the customer. We Suggest, No Pay Channel Bouquets Should Be Permitted By Broadcasters Or DPOs. This can solve the problem without any complexity.

Q-7) What should be the methodology to limit number of bouquets which can be offered by broadcasters and DPOs?

ANS: No Pay Channel Bouquets Should Be Permitted By Broadcasters & DPOs. Scrutiny of composition of programs in bouquets required to be uploaded on Broadcaster’s web site by TRAI.

Q-8) Do you agree that price of individual channels in a bouquet get hedged while opting for a bouquet by subscribers? If so, what corrective measures do you suggest?

ANS:  No discounts permitted on declared A-La-Carte prices & bouquets should be disallowed.

Q-9) Does the ceiling of Rs. 19/- on MRP of a a-la-carte channel to be part of a bouquet need to be reviewed? If so, what should be the ceiling for the same and why?

ANS: YES, the ceiling of Rs. 19/- as mentioned above in the question should be reviewed and this question already answered in the above question.

If price cap on pay channel is removed there need not be any price regulation or any channel price cap (of A-La-Carte) channels.

Q-10) How well the consumer interests have been served by the provisions in the new regime which allows the Broadcasters/Distributors to offer bouquets to the subscribers?

ANS: The TV Viewers / Subscribers have not been properly empowered to select only the channels they want to view due to the highly inflated a-la-carte prices.  So hence all the Bouquets must be disallowed instead the Broadcasters should offer their content only, as a-la-carte for the FTA content as well as for PAY TV content.

Q-11) How this provision has affected the ability and freedom of the subscribers to choose TV channels of their choice?

ANS: This provision has created lots of confusion as the Subscribers have been offered more than 200 Bouquets & 400 FTA channels and most of the time website of the DPOs does not even list all the bouquets offered. Various links are provided from the different websites of broadcasters creating further confusion.

TV Viewer / Subscriber is almost forced to select one or two large bouquets of pay channels that are promoted on the DPOs’ website. More than 50% of pay channels in this highly inflated bouquets are mostly unwanted channels / programs for the Subscribers.

Rather the subscribers are penalised and compelled to pay NCF on all these channels of this bouquet. The subscriber is required to selected a-la-carte only of more than 400 FTA channels. Which generally discourages viewing of FTA channels.

Q-12) Do you feel the provision permitting the broadcasters/Distributors to offer bouquets to subscribers be reviewed and how will that impact subscriber choice?

ANS: YES, this provision of present system of unregulated bouquets discounts should be immediately stopped & must be removed. Since the Subscribers / TV Viewers is paying hard earned money, so they should be given the full choice of individual (a-la-carte) channels as this will retain their interest. Since the bouquets have restricted their choice. So hence no bouquets should be allowed in the larger interest of the TV Viewers.

Q-13) How whole process of selection of channels by consumers can be simplified to facilitate easy, informed choice?

ANS: This process of selection can be made in the following three steps:

1) By making a user friendly catalogue of programs describing its title beside the logo.

2) Posting of the same content on the Electronic Program Guide.

3) By guiding the TV Viewers / Subscribers to access and see this Electronic Program Guide & then advising them to choose their channels / programs from this EPG.

Cable TV  / DTH Technicians being the frequent visitors to TV Viewers / Subscribers  homes / premises should be instructed to assist / guide the subscriber during their regular visits or on the telephone calls received from the Subscribers / TV Viewers.

Q-14) Should regulatory provisions enable discount in NCF and DRP for multiple TV in a home?

ANS: No discounts should be permitted in NCF & DRP for multiple TV in a home. DPOs / Broadcasters should not be allowed to offer excessive packages for all different viewers like one home, Multiple TV / Set Top Boxes.

Q-15) Is there a need to fix the cap on NCF for 2nd and subsequent TV connections in a home in multi-TV scenario? If yes, what should be the cap? Please provide your suggestions with justification.

ANS: No discounts should be permitted in NCF & DRP for multiple TV in a home. Every Set Top Box should pay the same amount of Network Capacity Fee:

The suggested CAP with justification as follows
Rs 100 + tax NCF for up to 100 SD Channels (1 HD = 2 SD Channels) & Rs 150 + tax NCF for unlimited number of channels.

Q-16)  Whether broadcasters may also be allowed to offer different MRP for a multi-home TV connection? If yes, is it technically feasible for broadcaster to identify multi TV connection home?

ANS: No discounts should be permitted by DPOs / Broadcasters to offer different MRP for multiple TV in a home.

For TV Viewer / Subscriber proper & justified implementation, no discounts should be offered for channels / programs subscribed on multiple Set Top Boxes or Multiple Home TV Connection.  So hence, DPOs / Broadcasters should not be permitted different MRPs for Pay channels in the same premises / home.

Q-17) Whether Distributors should be mandated to provide choice of channels for each TV separately in Multi TV connection home?

ANS: Once Pay channels are offered (only a-la-carte), on each Set Top Box without any discount, each Subscriber STB will automatically receive the choice of any Pay Channel.

Distributors / DPOs should be mandated to provide (only a-la-carte) choice of freedom of channels to the TV Viewers without any discount to a Multi TV connected home. Since pay channels should be offered only on a-la-carte basis for each Set Top Box & on M.R.P without any discounts. So each Customer / Subscriber / TV Viewer of STB will receive their choice of any pay channel that they want to view. This will give complete freedom of choice with most affordable price for the TV Viewer / Subscriber.

Q-18) How should a long term subscription be defined?

ANS: To empower the Customer / TV Viewer / Subscriber no discounts should be allowed on long term subscription also so as to help and maintain the tariff order in a regulated way. Cable TV is basically working on post paid model basis and can not be compared with prepaid DTH model.

In DTH to attract the customer long term subscriptions are offered where if the customer wants to leave the service they get stuck to claim the refund. So hence, long term subscription is not at all beneficial in the larger interest of the TV Viewer / Customer.

Q-19) Is there a need to allow DPO to offer discounts on Long term subscriptions? If yes, should it be limited to NCF only or it could be on DRP also? Should any cap be prescribed while giving discount on long term subscriptions?

ANS: No discounted long term subscriptions should be permitted to any DPOs / MSOs / DTH Operators etc. So as to ensure that these DPOs continue to deliver efficient, prompt and quality service every month to their Subscribers / Customers and not take their customers for granted. More elaboration already given in answer no: 18.

Q-20) Whether Broadcasters also be allowed to offer discount on MRP for long term subscriptions?

ANS: No, Broadcasters should also not be allowed to offer Long term subscriptions & discounts on M.R.P etc. All privileges / benefits / schemes should go to the DPOs, so that it is an incentive for them to give quality service to their subscribers / customers.
For the convenience of the Subscriber / TV Viewer  simplified electronic program guide should be made for different program wise in alphabetical order. 

Q-21) Is the freedom of placement of channels on EPG available to DPOs being misused to ask for placement fees? If so, how this problem can be addressed particularly by regulating placement of channels on EPG?

ANS: TRAI has already acknowledged that both Placement Fees & Carriage Fees are the legitimate sources of revenue by DPOs. So hence there is no reason to restrict or disallow Placement Fees, as long as they are levied in a transparent and uniform manner for all channels on the network and the quality of service does not deteriorate for the customer / viewer.

Q-22) How the channels should be listed in the Electronic Program Guide (EPG)?

ANS: Freedom and liberty of listing of the channels in the EPG should be given to the DPOs / MSOs / DTH Operators. TRAI should not get involved in to this.

Q-23) Whether distributors should also be permitted to offer promotional schemes on NCF, DRP of the channels and bouquet of the channels?

ANS:  Distributors also should not be permitted / allowed to offer any promotional schemes on NCF, DRP of the channels and bouquet of the channels.

Q-24) In case distributors are to be permitted, what should be the maximum time period of such schemes? How much frequency should be allowed in a calendar year?

ANS:  No one should be permitted to offer any schemes / discounts whether it is Broadcasters, Distributors or DPOs so that the service to the customers are properly regulated.

Q-25) What safeguards should be provided so that consumers are not trapped under such schemes and their interests are protected?

ANS: In the larger interest of the Customers / Subscribers / TV Viewers no schemes / promotions / discounts should be permitted and the customers should have no restrictions to choose the service provider they want.

No TV Viewers restrictions are required & no schemes shall be permitted.

Q-26) Whether DPOs should be allowed to have variable NCF for different regions? How the regions should be categorized for the purpose of NCF?

ANS: To maintain the policy of one country one price and equality for all fixed NCF must be implemented India wide for all DPOs to maintain transparency, uniformity for all the people.

NCF in only 2 Slabs:

Rs 100 + tax NCF for up to 100 SD Channels (1 HD = 2 SD Channels)
Rs 150 + tax NCF for unlimited number of channels.

Q-27) In view of the fact that DPOs are offering more FTA channels without any additional NCF, should the limit of one hundred channels in the prescribed NCF of Rs. 130/- to be increased? If so, how many channels should be permitted in the NCF cap of Rs 130/-?

ANS: Network Capacity Fee (NCF) for add on channels discourage the viewer to choose FTA Channels for general viewing / trying different genres of around 400 FTA channels. Also subscribers are asked to select FTA channel at (a-la-carte) only! As this is not justified to all Free To Air channels as they do not receive proper visibility while selecting by the viewer. So, hence the advisable solution in to 2 slabs only advised in NCF.

Rs 100 + tax NCF for up to 100 SD Channels (1 HD = 2 SD Channels)
Rs 150 + tax NCF for unlimited number of channels.

Detailed explanation already given in our answer to question no: 26 above.

Q-28) Whether 25 DD mandatory channels be over and above the One hundred channels permitted in the NCF of Rs. 130/-?

ANS: TV Viewers / Subscribers must not be burdened with the NCF for compulsory channels that they do not watch. Cable TV & DTH licenses already dictate that DPOs must distribute these channels.

We recommend that, Must carry channels not to be included when computing NCF. They must be delivered free, as long as the minimum NCF is paid. The number of Mandatory channels may be changed by the MIB from time to time without restriction simplicity is once again preserved with this solution.

The mandate of MIB remains complied if these programs are aggregated in the headend, and  are visible in the stream at every place in the wireline network as a check, including but not limited to that in subscriber home. But legally the subscriber cannot be coerced to include them in the list of programs selected against NCF to be paid for by the subscriber. Such imposition will never be maintainable in a court of Law.

Q-29) In case of Recommendation to be made to the MIB in this regard, what recommendations should be made for mandatory 25 channels so that purpose of the Government to ensure reachability of these channels to masses is also served without any additional burden on the consumers?

ANS:  Since the TV Viewer / Subscriber is paying money so they have a choice and also have right to watch  channels / programs what they want. Hence we suggest, mandatory channels must be excluded from the NCF computation & the viewers should be motivated to voluntarily watch these channels and we also recommend to MIB to improve the quality of content / program along with the relevant subjects, topics along with interesting & relevant news, information, adventure, knowledge  for these channels like example of Man ki Baat on Radio by our Honorable Prime Minister Shri Narendra Modi ji is one of the most popular program.

Q -30) Stakeholders may also provide their comments on any other issue relevant to the present consultation.

ANS: 100% of the Network Capacity Fee (NCF) Should be shared with the Local Cable Operators.

Sharing of revenues between the MSO & LCOs is not mentioned in this consultation paper. There are almost more than 1,100 MSOs and 1,00,000 LCOs all over India. These LCOs are the pioneer & pillar & source of strength of Cable TV Industry, delivering TV channels & services to more than 800 lakhs Indian homes. Since 1990s now for almost more than 29 years.

After NTO implementation by TRAI, these LCOs are protesting as their revenue figure is below sustenance levels. LCOs have no earnings to revert back into upgrading & extending their networks. They provide extensive connectivity for wired distribution. The combined cost of the LCOs distribution plants, and the daily operational effort far exceeds the distribution costs incurred by MSO. The present enforced NTO provides 55% of the NCF to MSOs with only 45% to LCOs.

We all need to understand that the existing Cable TV System works on signal strength system.  Hence all RF channels enveloping programs arrive at the input of the set top box with visibility dependent upon signal voltage level, MER and Carriage to Noise ratio at the end of line. The Subscriber / TV Viewer, as per DAS Act provisions, opts for a number of programs, payable in terms of NCF & PAY content.

Hence the efforts and the cost put by the LCO is manifold times while maintaining the existing network, office cost, staff & labor cost replacement, traveling cost and other unforeseen expenses to run and maintain the network to provide these services at the doorstep of the TV Viewers.

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