The Telecom Regulatory Authority of India (TRAI) has recently rolled out New Tariff Order (NTO) on television channel pricing that will require around six to eight more months to be implemented effectively, India Ratings said in a research note.
According to the agency, the new tariff mechanism has been hobbled by challenges related to revenue sharing between multiple system operators (MSOs) and local cable operators (LCOs), the repricing of channel bouquets and treatment of long-term packs already sold by direct-to-home (DTH) players. It said DTH firms might see profitability being impacted in the next 6 to 12 months, “since they have already sold long-term plans till 2018 end and the firms won’t be allowed to withdraw or reprice a plan that’s already in use”. “However, the tariff order is likely to de-risk the business model of MSOs and LCOs as their revenue stream will contain fixed network capacity charge from subscribers and content commission from broadcasters, thereby effectively passing through content cost,” the agency said.
The new system under which television entities have priced their channels and channel bouquets has also led to consumers having access to fewer channels compared to the previous tariff regime.
“Post-TRAI’s removal of 15 per cent discount on bouquet price versus a-la-carte channel pricing, broadcasters have started offering bouquet of channels, at 20-60 per cent discount to the a-la-carte channel pricing, presumably to avoid any hike in final consumer price. Despite similar costs, consumers will have access to fewer channels,” it said, adding as the new system settles down broadcasters’ business models will change from a B2B to a B2C system.