NTO impasse continues to plague broadcast sector
PremiumBroadcasters have filed new prices in anticipation of NTO 2.0, which is currently on hold
Last week, the Telecom Regulatory Authority of India (Trai) extended the deadline to implement the New Tariff Order or NTO 2.0 by two months to 1 June.
A statement from the broadcasting regulator said the decision was based on requests received from stakeholders, mostly the distribution platform operators (DPOs), seeking extension owing to the pandemic, and their inability to reach covid-affected areas for collection.
In its notification, Trai said television broadcasters can report any change in name, nature, language, maximum retail prices (MRPs) per month of channels or bouquets according to the new framework by 28 February. Broadcasters who have already filed a reference interconnect offer (RIO) may also revise this by the same date.
Broadcasters, who have been fighting Trai in court over NTO 2.0 and maintain that the cable industry has sided with the regulator against them, have filed new prices in anticipation of NTO 2.0, which is currently on hold. Cleverly, they have withdrawn their popular flagship channels from bouquets since channel price in a bouquet cannot exceed ₹12 as per NTO 2.0. The flagship channels have now been individually priced at between ₹19 and ₹22. Obviously, bouquets lose traction among subscribers without these channels, leaving cable operators in a fix.
All India Digital Cable Federation (AIDCF), the apex body for Digital Multi-System Operators (MSOs), has shot off a letter to Trai on the matter, raising concerns around “significant increase in driver channel prices by the Broadcasters in their RIO’s".
“Broadcasters have continued to abuse their liberty and have resorted to the process of imposing arbitrary prices on their channels," they said in their note. They called the pricing model “irrational", which may cause “undue burden to existing cable TV subscribers" and may result in “subscriber erosion".
AIDCF said it received representations from local cable operators (LCOs) stating that the “implementation of NTO 2.0 in its present structure and form, will lead to a substantial loss of subscriber base and livelihood of the LCOs… as subscribers will not be able to bear additional costs and expenses".
Ironically, this is what the television broadcasting companies have been arguing right from the start—that NTO’s push to offer channels on a la carte basis to customers will increase cable bills. While critics of broadcast companies argue that they are playing games by outpricing their channels, TV channels claim they have taken the risk of losing subscribers and ad revenue through this move.
Their revised pricing is not “arbitrary" as they are well within the New Regulatory Framework. “If such pricing model is likely to cause burden to cable TV subscribers, then the issue is with the regulatory framework that has allowed such pricing models," said a TV industry executive declining to be named. He said the industry reiterates its stand that channel bundling has been in the consumer’s best interest, offering maximum choice at very competitive rates.
Interestingly, while condemning channel price hikes, cable operators have sought an increase in Network Capacity Fee (NCF) for themselves, which they charge from customers for their services.
Clearly, the fight a la carte around channels versus bundling isn’t over yet. And there are no easy solutions either. For now, the stalemate continues even as the matter is slated to come up in the Supreme Court soon. It may be recalled that the Indian Broadcasting Digital Foundation (IBDF), a representative body of television broadcasters, approached the Supreme Court against the Bombay high court’s verdict upholding Trai’s order.
Yet there has been some thaw in the relationship between Trai and broadcasters. Trai chairman P.D. Vaghela publicly stated the regulator’s commitment to ensure ease of doing business for the telecom and broadcast sectors. “Trai’s motto is to create a level-playing field for all stakeholders...and ensure a balance between broadcasters and distribution operators," he said at the Big Picture Summit organized by the Confederation of Indian Industry (CII). “The good thing is there’s a new team at Trai," K. Madhavan, the chairman of CII national committee on media and entertainment and president of Walt Disney Co. India and Star India, told Mint. “We can sit together and find a solution. We are working on that. I don’t know how far we will succeed."
Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pre-ssing issues related to all three. Or just fun stuff.
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