TRAI pulls up broadcasters, distributors for misusing new tariff mechanism

Regulator’s analysis finds that huge discounts were being given on bouquets which were preventing market discovery of individual channel rates.

Published: 18th August 2019 09:35 AM  |   Last Updated: 18th August 2019 09:35 AM   |  A+A-

Telecom Regulatory Authority of India

Telecom Regulatory Authority of India

The Telecom Regulatory Authority of India (TRAI), the apex regulator for the broadcast sector, has pulled up tv broadcasters and distributors for having misused the flexibility offered by the new tariff mechanism, by giving huge discounts on bouquets and preventing market discovery of individual channel prices. 

“Analysis reveals that while new regulatory framework has brought transparency in TV channel pricing, harmonised business processes in the sector and reduced disputes among stakeholders, adequate choice to select TV channels has not been given to the consumers,” the regulator observed, releasing a consultation paper on the issues arising from the New Tariff Order (NTO). 

According to TRAI, which has released detailed figures on discounts and a-la-carte channel prices after the rollout of NTO on December 28 last year, stated that while “a lot was expected from the broadcasters and the distribution platform operators (DPOs) to use flexibility given under a new regulatory framework to address the concerns and aspirations of consumers. However, the given flexibility was misused to throttle market discovery of channel prices by giving huge discounts on the bouquets”. 

TRAI’s analysis of how broadcasters and distributors have priced their bouquets and standalone channels shows that broadcasters are offering bouquets at a discount of up to 70 per cent of the sum of a-la-carte rates of pay channels constituting those packages.

“It indicates that in the absence of any restriction on the discount on bouquets, broadcasters are making the prices of a-la-carte channels illusory, thereby impacting the a-la-carte choice of channels by consumers,” TRAI said. 

According to the regulator, this has created a situation where a lack of restrictions on the number of channels has resulted in broadcasters and distributors offering too many bouquets, which was leading to confusion among consumers. “... many of them (bouquets) contain a very similar set of channels, with very few changes. This is not only creating confusion but is also becoming a hurdle while choosing the channels. The consumers get confused, and as a result, are forced to adopt suggested packs which kill the freedom given to consumers to choose desired TV channels,” it said. 

Data from TRAI’s analysis also shows that prices under the new regulatory framework for many Standard Definition channels have increased multiple times (mostly those of popular channels) while prices of high definition channels have generally fallen. While a bouquet is normally expected to have similarly priced channels, bouquets offered currently form a pattern in which channels prices very low are clubbed with one or two high price channels.

“... channels are now concentrated in the Rs 0-2 price range (some converted from Free To Air to pay) and at the Rs 19 price point (the maximum allowed),” TRAI noted, adding that “it is apparent that the tendency of broadcasters to price their driver channels at the threshold price of  Rs 19 or close to it is purely based on commercial considerations. No visible change in consumer demand or preference could be attributed to this sudden change in pricing”. 

TRAI findings on channel pricing

  • Broadcasters making the prices of solo channels illusory due to lack of restrictions
  • Offering too many bouquets and discounts leading to confusion among consumers
  • Confused users forced to adopt suggested packs, which have killed the freedom given to consumers to choose desired TV channels
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