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Focus 2012: Highlighting the question of Carriage Fees

The sixth Annual Summit on Entertainment and Media, ‘Digitization for Inclusive Growth’, organized by Assocham, brought to fore the simmering resentment against, and in motion of, Carriage Fees

Ananya Saha | Delhi | May 7, 2012

Four days after the notification on Carriage Fees was announced by TRAI, Assocham’s conference on ‘Digitization for Inclusive Growth’ saw stakeholders – Ministry, MSOs, Cable Operators and Broadcasters’ discussing the need and logic behind the need for notification. In a written statement issued on May 1, News Broadcasters Association said, “We are shocked and dismayed at the Notification which has legitimised the very practice the NBA had hoped would be ended, that is, the payment of steep ‘carriage fees’ by broadcasters.”

The industry estimates channels are paying almost Rs 4,000 crore as carriage fee every year. They say that since MSOs charge carriage fees because of capacity constraints, digitisation should lead to the practice being ended. The digitization of cable TV has brought to fore more issues than resolutions. The number of television channels in India has grown at a rapid pace from two in 1992 to 120 in 2003 to around 800 at present. Arrival of plethora of channels in the Indian television industry space in the backdrop of limited bandwidth of the analog cable systems, results in allocation of prime frequencies by MSOs to channels offering higher carriage (or placement) fee.

According to the paper on Digitising Indian Broadcasting prepared by ASSOCHAM, estimates expect six times increase in subscriber revenues for cable MSOs though not without at least a 20% churn in the cable subs base to DTH. Subscriber decleration levels are expected to increase, from 15% currently, to 100% while the retained RPU will increase six times after assuming a 30% base case revenue share with the local cable operator.

“TRAI is behaving like a controller instead of a regulator and the I&B Ministry is behaving like a dictator. We are not happy with the Rs 45 share in the TRAI proposed tariff plan for cable operators as this will lead to unemployment," Roop Sharma, Cable Operators Federation of India (COFI) President, opined.

“The government will consult all stakeholders before taking a final call on new regulations decided by Telecom Regulatory Authority of India (TRAI) under which multi-system operators are allowed to charge a carriage fee from broadcasters,” assured the Minister for Information and Broadcasting Ambika Soni at the summit.

Ashok Mansukhani, President, MSO Alliance brought three issues to the panel. He said that the issue of must-carry should be left to the MSOs; aspect of cable rules and clarifications from regulator on a la carte channels be made clearer; and even as the process to digitize is on schedule, the deadline might go beyond.

Presenting the point-of-view of the broadcasters, Jehangir Pocha, CEO, INX News, questioned various aspects of the TRAI regulation. Specifically bringing up the case of the news channel Times Now that pays Rs 50-55 crores as carriage fee right now and his channels’ inability to cough up such a big amount, he said, “How is it determined that 100 channels would cost Rs 100? What is the economics of this? We were repeatedly assured by TRAI and ministries during our meetings that carriage fee would go away because digitization would solve the capacity issues. Now, since digitization is fixing the problem of shortage, even then we are being asked to shell out carriage fee?”

He further said, “Even as carriage fee is not mandatory, if the MSO wishes to carry your channel in the specified 100 channel-limit, then the broadcaster would not have to pay any carriage fee. But if the channel wants to be carried in those 100 channels, then the broadcaster has to pay carriage fees!”

While lauding the efforts of the cable industry who have helped tremendously in the process of digitization, Anthony D’Silva, Group CEO, SUN Group said, “Digitisation should be looked as an infrastructure project. It is imperative that a conducive environment is created that makes the business viable in the long term.”

Answering the queries by the panelists, Supriya Sahu, Joint Secretary, Ministry of Information and Broadcasting Government of India said that digitization would help bringing in transparency within and outside the industry. Claiming that the ministry is not privy to the information about fee given by the broadcaster to the cable operators and MSOs, she said that the ministry would not comment on the issue of carriage fees notification since it is directly under the purview of the regulator. She also said that the grievance redressal system has been made mandatory

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