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New tariff regime: Old wine in new bottle?

TRAI claims that the new tariff regime will bring transparency in the television ecosystem, along with empowering the viewer. However, the new packs and bundles being offered by broadcasters and operators may end being the same as the previous ones. BestMediaInfo analyses whether things would change for the viewers, broadcasters and operators

Earlier if you were paying Rs 350 a month to surf 300 channels, chances are you'll end up paying the same amount to surf the same channels under the new TV pricing policy.

So what changes under the new disruptive regime are being implemented by The Telecom Regulatory Authority of India (TRAI)? The answer is almost nothing if you want to see all the channels. But if you choose judiciously, you may end up saving some money.

And if one looks from the industry point of view, then a lot seems to be changing under the new regime. But in reality, it hasn't.

The industry view

Transparency is one of the most highlighted factors of the new regime. In the earlier regime, broadcasters would make lump sum annual deals with DPOs and MSOs. The platforms would then create a package that would vary according to the market — a consumer in Mumbai would pay Rs 350 for the content that is available for just Rs 200 in Amravati.

“Very simply put, in the earlier regime because you had a fixed fee; rich people were subsidising the poor. Now in the new regime, everything is completely transparent. There is no discrimination, the poor will have to pay more and the rich will continue to pay whatever is needed,” a leading distributor said.

Under the new regime, broadcasters have released a pricing that will remain same across Indian markets. The consumer will have to choose their preferred channels or packs. For the convenience of consumers, MSOs and DPOs have released their own packs based on these pricing.

While the pricing has become transparent, the evaluation of subscribers still remains an issue. In the earlier regime, LCOs were supposed to hand over a form to the consumer, who would fill information on the offered channels. These forms were then supposed to be submitted to TRAI by MSOs.

According to the industry expert, “In the earlier regime, MSOs didn’t offer consumers any declaration form and would fudge subscriber information. The MSOs write those forms themselves, add whatever number they want and submit to TRAI. Which is why the big MSOs don’t have any subscriber database as LCOs won’t allow them to interfere or share that information with MSOs."

The situation hasn’t changed in the new regime as the authority doesn’t have any software or form to verify the authenticity of the information shared by the MSOs.

“TRAI doesn’t have any software or any set medium to know the channels and packages selected by the consumer. I haven’t seen any forms where TRAI will have a declaration of who is selecting what. The declaration forms being circulated will be with MSOs. So even if they share the numbers with broadcasters, they will share what they want. Who or how are they verifying the authenticity of the information that is shared by MSOs with the broadcaster? In such case, how is there a transparency in the system?” the expert said.

With the new pricing coming into place, the broadcasters are losing on advertising inventories as they won’t be able to push their niche channels. As a result, the subscription will play a major role in the broadcasters’ revenues. With no authentication of subscriber information shared by MSOs and LCOs, it seems broadcasters would be at a disadvantage on this front. 

From the viewers' point of view

Experts feel that with no discount cap, there isn’t much of a difference between the earlier and the current regime. The new regime offers consumers the choice to pick their preferred channels with the aim of reducing the clutter. But looking at the discounted packs, it seems like clutter will stay.

For instance: Zee’s base pack is available for Rs 39. Now a consumer decides to take three channels of Zee, of which one is priced at Rs 19 and others two are priced at Rs 10 each. In that case, the consumer might decide to go for Zee’s base pack that will comprise 24 channels. Going by the consumer’s psychology, he/she might decide it is beneficially to pay Rs 39 for 24 channels instead of three channels. So, the consumer will have 21 excess channels which he or she might not want to view.

Experts feel that the broadcasters have offered so much discounts that at the end of the day, a consumer will end up getting bouquets from all major networks. “Now, if TRAI had implemented a 15% cap which was discussed earlier, then that would have made a lot of difference.”

A leading broadcaster feels that there is a fundamental difference in a way that broadcasters and TRAI look at the business. “TRAI believes everyone watches around 39 channels but the problem is two-fold. As an individual, one can watch eight to 10 channels but as a household that has five people, they will want 50 channels. Kids will want different channels and the father or mother will want something different,” the broadcaster said.

According to a leading distributor, it is important to look at the channel packs offered by MSOs as they will be the one communicating with the consumers. These packs will have an important role as most of the non-tech savvy consumers will depend on them. Most MSOs have placed one of the popular channels in its base pack. As a result, there will be a hike in the placement fee as the popular channels will compete to find a place in the base packs of MSOs.

An industry expert said, “Now MSOs are making their own packages, giving importance to channels they feel are important. Now MSOs will charge a placement fee from channels wanting to get into those packages and make money.”

A leading broadcaster said that MSOs will gain from the new framework. “Earlier, MSOs were suffering. Now they will make money. Say if a consumer in Mumbai pays Rs 300, Rs 230 will be kept by the last-mile operator and Rs 120 will go to MSOs. Within that Rs 120, the MSO was taking care of his expenses, his profit margin and all broadcasters. Under the new regime, the MSO will take their money and then the margin from the broadcaster and Rs 130 or Rs 120 whatever the fee they charge. So, at the end, MSOs will end up making money,” the broadcaster said.

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