Ladies and gentlemen from the media, thank you very much for your presence here this afternoon. Let me begin by wishing all of you a happy new year, although, I may add, it hasn’t been a very good start to the year for us in the industry.
is the industry body of broadcasters. It works towards ensuring that the
television industry has a common voice which helps orderly growth of this
sector. It also is a forum for the broadcasters to highlight issues which
impact the industry as a whole. We all have gathered here under the aegis of
IBF to discuss recent developments that can potentially trigger another round
of large-scale disruptions, detrimental to the orderly growth of the
is king and broadcasters invest substantial resources in producing and
acquiring world class content, be it entertainment, knowledge or live sports.
By packaging a variety of genres in economically priced bouquets, broadcasters
offer the Indian consumer world class news, sports, movies, music and
entertainment at affordable prices. Any industry and especially one that is
regulated, looks forward to a stable and consistent regulatory regime that
works for the benefit of all stakeholders. As broadcasters, we expect a stable regulatory
regime, which is necessary to enable long term business planning and a
strategic approach towards investments. This is absolutely critical to enable
us to provide the best of content to our consumers, more so in these times of
rapid technological change.
we have seen, in the last 15 years of regulating the broadcast sector, TRAI has
issued more than 36 tariff orders, in an attempt to micro-manage what is
arguably the most “value for money” form of news and entertainment in the
world. This goes contrary to the Government’s stated position of ensuring the
“ease of doing business”.
Last year in February 2019, TRAI came up with a New Tariff Order (NTO), which brought about far reaching changes to the way pricing of pay channels was managed. While the broadcasting industry was apprehensive about the magnitude of changes, we supported the move with the best of our abilities. The collective cost to the broadcasters was well over 1,000 crores in just communicating the changes to the consumers. Even with that, there was an overall loss of 12-15 million subscribers in the process. All stakeholders, most of all our consumers, went through considerable inconvenience during the transition period.
Even as the new regime was settling down, on 1st January 2020, TRAI notified certain amendments to the New Tariff Order and Interconnection Regulations for the Broadcast sector. These amendments attempt to make further disruptive changes in an industry already grappling with the paradigm shift to an MRP based pricing regime.
the changes are many, I will summarise a few of the key ones:
Arbitrary Reduction of MRP cap from Rs. 19/- to Rs. 12/-, for channels to
be part of a bouquet:
Just a few months ago (February 2019) the Regulator notified a cap of Rs. 19/- as the threshold for creating bouquets and backed this up with empirical analysis. And now this has been reduced by 40% to Rs. 12/- without any logical rationale or consumer insight to back this change.
pricing is related to the quality and cost of content being offered, which the Regulator
appears to consistently ignore. In a competitive and free market like
broadcast, channel pricing should be determined through open market forces
rather than through the arbitrary fixing of caps without any fundamental basis.
2. Imposition of twin conditions on bouquet pricing:
When the NTO was introduced last year, TRAI took a conscious decision to do away with the twin condition formula for bouquets as the Regulator advocated free pricing. Within a few months, in NTO 2.0, TRAI has sought to reintroduce the twin conditions, negatively impacting the pricing and packaging of bouquets. In order to offer wider choice to their consumers through affordable bouquets which is the practice world over, the broadcasters will have to either price their premier channels very low, hampering the ability to provide quality content or increase the price of other channels just to fit in the maths but artificially increase the burden on consumers.
fall-out of the twin condition restrictions is that it limits the number of
channels in the bouquet, which in-turn reduces the value delivered to
when SD and HD channels are clubbed together in a bouquet, the same price
reduction is applicable to both in spite of HD being a premium offering.
using regulation to limit the number of bouquets being offered to consumers is
fundamentally restricting consumer choice, given the large variability in
consumer preference across 200 million TV homes.
3. Restricting incentives only to a la carte:
is a completely arbitrary discrimination between a la carte and bouquet without
a rationale. Just a few months back TRAI thought it fit to allow
incentives on both bouquets and a la carte and now in NTO 2.0 TRAI has changed
its mind and removed discounts on bouquets. From the regulator looking at the
interests of all stakeholders and the industry at large, we expect a market
facing and non-discriminatory approach to regulation.
A few months back, at the request of the Regulator, the major broadcasters including Sony, Star, Zee, Viacom introduced promotional schemes and offered their premier channels at an MRP of Rs. 12/- for a limited period. But the results showed no uptick in the a la carte offering in spite of the price reduction, clearly highlighting the consumer’s preference for bouquets. In fact, our members suffered revenue losses in this whole exercise.
the on-ground experience of this consumer offer has indicated that the desired
intention of consumers getting the benefit of such an offer has not
materialised in a majority of cases but may have got absorbed as additional
margin in the distribution chain. So, it begs the question whether the new
changes being recommended will not again end up with the same outcome, given
the challenges of on ground execution.
TRAI appears to have a predisposition and bias towards a la carte and against
bouquets and is attempting to compel DPOs to not offer bouquets by removing
their incentives to do so. Clearly, this is arbitrary and discriminatory.
Inspite of 15 years of regulations that sought to influence a consumer’s choice
for a la carte, the lay consumer still prefers bundling, a fact the regulator
seems unwilling to accept.
the stated intent of the Regulator is to allow consumers to get content at more
affordable rates, the fact that it’s the imposed NCF is the single largest
component of end consumer price is not being addressed.
the current NTO, if a consumer is paying, say Rs. 275 per month as his/her
bill, ~60% goes to the distribution platforms, 15% towards taxes, and only ~25%
comes to pay broadcasters. This when it’s the broadcasters who are creating the
content, investing in talent and capability, and taking all the risks related
to content development. Why then is the focus only on the broadcaster’s
component of revenues, which is only 25% of the consumer bill?
is fair to say, the implementation of the MRP regime which came into effect on
1st February 2019 resulted in seismic changes in the distribution landscape.
Nevertheless, with the support of all stakeholders and the end consumer, the
transition to the new regime was managed relatively smoothly. Broadcasters, on
their part, along with other stakeholders, did their best to ensure a smooth
transition without disruption of services. It is therefore quite surprising that
in less than 12 months after the commencement of the NTO and even before the
industry at large and more importantly the end consumer has fully adapted to
the new regulatory regime, TRAI has notified amendments in the NTO.
in its response to TRAI’s consultation paper had pleaded with the regulator to
adopt a “soft touch” and allow the industry to come to terms with the
current NTO before making further changes. In fact, TRAI itself had
acknowledged this need by proposing a two-year moratorium on further
regulation. Unfortunately, all IBF’s pleas have been ignored and, in this
exercise, content creators and owners have been disempowered by taking away
their fundamental right to monetize their content in the manner they choose.
believes these amendments will severely impair broadcasters’ ability to compete
with other unregulated platforms and adversely affect the viability of the pay
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