New TV channel tariffs and how the cookie crumbled during Digitisation

Digitisation has failed to deliver genuine choice to the consumer, or lower prices, even years after its compulsory implementation.

Published: 16th February 2019 09:37 AM  |   Last Updated: 16th February 2019 09:37 AM   |  A+A-

TRAI.

Express News Service

India has amongst the lowest Pay TV tariffs, worldwide. Historically, Indian consumers have been provided a large bundle of Free-To-Air (FTA) and Pay channels at a flat monthly fee from around Rs 150 to over Rs 300. Viewers in rural areas and shanties were often charged less than their urban counterparts.
Compulsory Digitisation and its associated Set Top Box (STB) promised the consumer the power to pick and pay for only those channels they wished to view.

However, pay channel broadcasters like Star, Zee, Sony, Colors and others created large bouquets that included several laggard channels compulsorily bundled with some Prime channels. The pricing was intentionally skewed, making it disadvantageous to selectively pick only Prime channels. Individual channel prices were highly inflated, while bouquets were discounted by 50 to 80 percent! As a result, consumers continued to receive inflated bouquets with several channels of no interest to them.

Reviewing this, industry regulator Telecom Regulatory Authority of India (TRAI) formulated and notified its New Tariff Order (NTO) in March 2017, prohibiting bouquet discounts of more than 15 per cent of the sum of each individual channel price.

This was immediately challenged, but after almost two years of protracted litigation, the apex court ruled unequivocally in favour of the NTO. TRAI called for immediate implementation, but surprisingly removed the key 15 per cent bouquet discount cap!

FROM FREE TO PAID

TRAI requires broadcasters to create pay channel bouquets without Free-To-Air channels. As a result, broadcasters who have prime channels have migrated their FTA channels into pay channels priced from a few rupees to 10 paise a month, just so they can be bundled with Prime channels.

NCF – NOTHING IS FREE

Each cable TV/ DTH consumer is to compulsorily pay a Network Capacity Fee (NCF) of Rs 130 + 18 per cent GST (totalling Rs 153.40) per month. Additional capacity can be purchased for Rs 25 + GST for each block of 20 channels. 

Each High Definition (HD) channel counts for two regular (SD) channels for the purpose of NCF. It is very important to note that the NCF applies uniformly for Pay and FTA, consumers effectively paying Rs 1.53 per channel. Clearly, no channels are genuinely “free”. If it’s a pay channel, or a pay channel bouquet, that cost is extra.

Each pay channel is also to be offered standalone (A-la-carte) and as part of a broadcaster’s bouquet. Further, TRAI requires cable TV/DTH platforms to create their own bouquets which could include pay channels from multiple broadcasters.

The consumer has the choice to select any or more of the following:
● Any channel a-la-carte
● Any broadcasters bouquet
● Any cable TV/DTH bouquet

Interestingly, they can opt for specific channels (eg: Sports Channels) even for just a month.

BASIC SERVICE TIER

TRAI also requires cable TV/DTH platforms to create a ‘Basic Service Tier’ consisting of 100 FTA channels including 26 ‘Must Carry Channels’ from Doordarshan. A key point often not highlighted is that it is not compulsory to select the BST. However, consumers must compulsorily opt for the 26 free FTA Doordarshan channels.

A-LA-CARTE BEST?

Hence, the consumer could consider selecting all their channels individually to minimise NCF. Keep in mind that laggard channels bundled in bouquets cost Rs 1.53 per channel for the NCF alone. Their pay channel price tag is extra.

MULTIPLE STBs

There is no mandated discount for multiple STBs in a home and each is counted as a separate consumer. Broadcasters do not provide any discount and it is left to the Cable TV/DTH platform to extend a voluntary discount on the NCF. This is unlikely to yield a significantly lower price for additional TVs.

CHAOTIC IMPLEMENTATION

After a final clarification from the Supreme Court on January 3, 2019, TRAI decided to implement the NTO from February 1, 2019! 
While some consumers have selected their channels, often without full knowledge of their options, others remain bewildered. Many of these ‘Undecided’ consumers saw their TV screens go blank early this week. 

BEST FIT PACKAGE

TRAI has now directed that all undecided consumers should be continued on their earlier plans if they have already paid for it. Alternately cable TV/DTH platforms are to create ‘Best Fit Packages’ that provide a similar service for a similar price as the old tariffs. Such consumers have the option to shift out of the Best Fit Package any time up to March 31, 2019. However, until they shift out, they will be billed the Best Fit Package rates.

Broadcasters, however, said on February 13 that they will commence billing as per the new tariffs from February 1. This eliminates any option of a continuation of the old tariffs for prepaid consumers.
Looking back, consumers have paid for digital STBs and probably receive fewer channels today for more money than they did before digitisation. Digitisation has failed to deliver genuine choice to the consumer, or lower prices, even years after its compulsory implementation.

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