TRAI issues order for amendment of a la carte pricing

As per the order, the a la carte rate of a pay channel forming part of a bouquet cannot exceed two times its RIO rate offered by the broadcaster. Besides, the sum of a la carte rates cannot exceed three times the bouquet rate

BestMediaInfo Bureau | Mumbai | October 1, 2015

The Telecom Regulatory Authority of India (TRAI) has released the draft Telecommunication (Broadcasting and Cable) Services (fourth) (Addressable Systems) Tariff (Amendment) order, 2015. The order was issued on September 20, 2015, wherein 'twin conditions' were prescribed at retail level pricing of TV broadcasting services in order to link the a la carte rates of channels to bouquets.

As per the order, if a multi-system operator (MSO) or direct-to-home (DTH) operator or Internet protocol service provider or HITS operator providing broadcasting services or cable service to its subscribers, using a digital addressable system, offers pay channels and FTA channels as part of a bouquet, then the a la carte rate of such pay channels shall be subject to the following conditions, namely:

• The a la carte rate of pay channel forming part of a bouquet shall not exceed two times its RIO (Reference Interconnect Offer) rate offered by the broadcaster for addressable systems
• Sum of all a la carte rates of all channels in the bouquet shall not exceed three times the bouquet rate

This means that the a la carte rates of all the channels offered by the service provider shall be the same for all the bouquet of channels formed by the service provider and the rates of each such bouquet must satisfy the conditions specified under clause (a) and clause (b) of this proviso.

As per data available with TRAI, it was observed that a platform operator offered a bouquet containing pay channels at Rs 290, while the sum of a la carte rates of pay channels constituting this bouquet was Rs 1,605. Therefore, the bouquet was being offered by the platform operator at a discount of 82 per cent to the sum of a la carte rates of pay channels constituting that bouquet. This indicated that a la carte rates of pay channels constituting the bouquet were exorbitantly high. As a result, while technically a la carte rates of channels were declared, these were illusive and customers were left with no choice but to opt for bouquets. To enable consumer choice through a la carte offering and also to prevent skewed a la carte and bouquet pricing, TRAI, in its Tariff (Amendment)  Order dated April 30, 2012, extended the 'Twin Conditions' to the retail level pricing as well.

It was contended that the use of a flat average value restricted the flexibility of a platform operator to fix the a la carte rates of channels based on its business model and the channel costs. The DTH Operators Association submitted that under this dispensation, the ceiling derived from the flat average rate of a pay channel in the bouquet at times might work out to be considerably low due to the large size of the bouquet and presence of a large number of FTA channels in the bouquet. This, according to the Association, placed abnormally low ceilings for a la carte rate of certain pay channels.

In order to address this issue, TRAI, in the Tariff (Amendment) Order dated September 20, 2013, introduced new 'Twin Conditions', wherein the ceiling for the a la carte rate of pay channel was linked to the 'ascribed' value of a channel instead of the earlier prescribed flat average value of the channel in the bouquet.

Some operators have raised concerns about the implications of 'Twin Condition' prescribed in the Tariff (Second Amendment) Order dated September 20, 2013, and filed an appeal before TDSAT. However, TDSAT disposed off the appeal vide its order dated July 13, 2015, stating that the authority will consider the concerns of the appellants and take a final call decision on the matter within four months from the date of order.

All stakeholders have been asked to offer their comments latest by October 14, 2015. Counter comments, if any, have to be submitted by October 21, 2015.

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