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New tariff regime: Placement fee to punch a hole in pockets of most FTA channels

FTA will be a tough space for most broadcasters as around 300 channels will compete for a slot among the 100 free channels operators have to offer. The intense competition is likely to increase the placement fee for channels with less than 20% penetration, making it costly for them to reach viewers

The Telecom Regulatory Authority of India’s (TRAI) new tariff regime for the broadcast industry is likely to cause a major headache for free-to-air (FTA) channels as well as most of them will compete to make it to the list of 100 free primary channels that operators have to provide to consumers for a fixed price of Rs 130.

The new regime offers consumers the liberty to shortlist the 100 FTA channels for the primary set from the around 300 channels available. As a result, each of these channels would want to be placed in that 100 slot, which could lead to a hike in placement fee.

“The framework offers 100 FTA channels whereas there are almost 300, so yes there will be a hike in placement fee. Also, from those 100 channels, 26 channels are from Doordarshan, which are compulsory. So, for broadcasters, there are only 74 FTA slots, as a result of which there will be a fight among broadcasters to get the slots and there will be a hike in placement fee,” a leading distributor said.

While the popular FTA channels may not face the brunt of the placement fee, the long tail ones with less than 20% penetration will have to shell out extra.

The competition is likely to be much more intense in the news category, which has a string of FTAs and consumers would like to settle down for the top player instead of going for other channels.

“MSO will make all the FTA channels available as per law on a la carte. But if the channel doesn’t want to pay placement fee, then it has to achieve 20% penetration. If it is less than 20%, the broadcaster has to pay 5 paisa per subscriber, the channels with less than 15% or 10% will pay 10 paisa per subscriber and channel less than 5% will have to pay 20 paisa per subscriber,” the distributor said.

A broadcaster said the consumer might choose FTA channels of popular broadcasters but they won’t be well-versed with a long tail or niche channels. So many FTA channels will have to pay placement fee to be in the primary set of 100 channels.

A news broadcaster had an opposing view and feels that there won’t be a rise in the placement fee. “There won’t be a hike in placement fee as the regulation is made in a way where consumers will select the channels they want to watch. Even among the base 100 FTA channels, the consumer will choose the channel they want to watch. This is why there is a 20% penetration rule,” a news broadcaster said.

A leading broadcaster gave a different view, stating that though the ideal scenario revolves around the choice of consumer, at the end of the day, DPOs and MSOs are creating the primary set of 100 FTA channels. “If one visits the websites of DPOs and MSOs, they will see that they have already selected the 100 FTA channels they are offering to consumers. Also, consumers will choose to look into what the MSOs and DPOs are offering. As a result of this, FTA channels will have to pay a placement fee to DPOs and MSOs.”

NBA urges TRAI to not grant any further extension

As the deadline of migrating to the tariff/interconnect regime comes closer, the News Broadcasters Association (NBA) has urged TRAI not to grant any further extension beyond January 31.

Rajat Sharma, President, NBA, said that as required under the new tariff regulations, members of the NBA prescribed have published their RIOs, including a la-carte and bouquet rates, within the timeline. He said to facilitate consumer awareness and for smooth transition to the new regime, NBA members are advertising and providing details about various rates and packages on their respective channels. “NBA members have been and would remain fully supportive of TRAI's efforts in the successful implementation/migration to the new tariff/interconnect regime,” he said.

Sharma urged TRAI to remain firm and not to grant any extension as it would be detrimental to the broadcast industry. He suggested TRAI should communicate and publicise this deadline for the benefit of all stakeholders and consumers.

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