In the last few months or so, the Minister for Telecommunication and Information and Technology Ashwini Vaishnaw has shown great courage in stepping in for the industry whenever required. Be it the rescue of Idea-Vodafone or withdrawal of the Personal Data Protection Bill.
The Minister, who has both a bureaucratic and corporate background, has been sensitive to the industry issues ever since he took over almost 13 months ago.
However, one industry that needs desperate attention from Vaishnaw, along with his dynamic counterpart Anurag Thakur in the Information & Broadcasting Ministry, is India’s embattling broadcasting sector.
The broadcast sector’s growing concern at the moment is a sharp decline in overall television viewership and an even sharper decline in pay TV subscriptions.
In its latest report for the January-March quarter, Telecom Regulatory Authority of India (TRAI) said that Pay DTH lost 1.6 million subscribers, which was the sharpest drop ever recorded in its history in a quarter.
Four months later, the conversation around cord-cutting has further intensified with broadcasters estimating about a million subscribers giving up their linear television connections every month. Are these viewers migrating to OTT or Freedish, or would they rely on YouTube for their daily dose of entertainment, is a separate discussion altogether.
Following TRAI’s report, last week a comprehensive TV consumer behaviour report was launched by Broadband India Forum (BIF) and Consumer Unity & Trust Society (CUTS International) based on a nationwide survey of over 10,000 TV consumers to gauge perception with respect to the choice enjoyed for TV channel selection and overall satisfaction.
The report makes a very simple point - the television consumer does not have a choice.
This is contrary to the objective TRAI wanted to achieve with the new tariff order (NTO) and amended new tariff order (NTO 2.0).
Close to three-and-a-half years since NTO was first implemented, there seems to be no sign of settling down the dust in sight.
Three-and-a-half years is a significant time in the service industry and it is considered the standard gestation period for a business to turn profitable or break-even. On the other hand, no stakeholder including the consumer is in the position to claim any benefit of NTO even after three years.
The BIF-CUTS report highlights the shortcomings in the concept of NTO even at the starting point which is the Network Capacity Fee.
At present, consumers start with a basic service package of 200 channels for Rs 130 + GST (Rs 153), unless they explicitly opt out by intimating their distributor. TRAI had explained this concept in a 2017 memo:
“The Authority has further noted that in Phase-III and Phase-IV areas, large number of small MSOs (Multiple System Operators) are providing services who have smaller networks and cater to small number of subscribers. In order to protect the interests of such MSOs, the amount of Rs 130/- has been prescribed for Network Capacity Fee for the capacity of initial one hundred channels. In order to provide flexibility to distributors of television channels and protect the interests of customers/ viewers the ceiling of Rs. 130/- has been prescribed. Distributors of television channels are free to fix Network Capacity Fee below this ceiling,” reads para 81 of the Explanatory Memorandum to the 2017 Tariff Order published by TRAI.
Other than the mandatory DD channels which are to be carried in the base pack, the free-to-air (FTA) channels included in this pack of 100 or 200 are decided by the MSOs which brings them huge revenues from the channels who want to be a part of the base pack.
The consumer is paying the NCF for the channels chosen by MSOs. This is quite contradictory to the basic objective of the order – keeping consumer choice supreme.
Industry questions NCF
“The broadcast sector knows well what played out in the backdrop of NTO. With all the shortsighted logic, TRAI’s previous dispensation was made to believe that the interests of cable operators are hampered by the monopoly of big broadcasters. Then the regulator vowed to safeguard the cable operators’ interests through NTO in the garb of “consumer choice”. The NCF was a result of that,” a broadcast veteran said.
TRAI is the regulator for the telecom sector which has this concept of the base price of a postpaid connection.
Time and again, the NCF was termed as an inspired outcome from the telecom sector without considering the huge gap in investments in both services. Although both services are non-creative, the telecom sector’s investment is consistent whereas the cable sector is largely a one-time investment. This is evident in the gestation period for both sectors. While telecom has a gestation period of over 10 years, it is between 2-3 years for cable operators.
“Once the cable operators recover their investment in 2-3 years, they can keep upgrading it and they anyway charge for it. Then why is the broadcast sector forced to follow the telecom rules? How can 50 free SMS be compared with 100 free channels? One is just a service and the TSPs do not decide the content of the SMS. Whereas MSOs decide what free content a TV consumer will get against the NCF,” said the broadcaster veteran quoted above.
He added, “Limiting the number of FTAs under NCF is beyond any logic. When there are no bandwidth concerns after DAS, what was the concept behind the limit of 100 or 200 channels? What would a consumer do if she has to watch more FTA channels? It was all done to keep the carriage and placement income flowing in for the MSOs enabling dual income for the same thing. Why should a consumer not feel cheated and leave the subscription? I only wish that the current dispensation has a broad view in order to ensure the growth of the broadcast sector.”
“If consumer choice was supreme, everything from NCF to various conditions on bouquet formations to discounts defies the “consumer choice” logic. TRAI needs to press the reset button before it is too late,” said a policy expert.
“OTT is an upper-middle-class phenomenon whose content consumption is moving from linear to connected TV. That is more of an issue of choice. Of course, TRAI did not mean that by consumer choice. Having said that, there is enough headroom for TV to grow including pay TV and an affordable regime can only bring more and more consumers who can be measured. Remember, DD Freedish is not measurable in terms of the absolute number of subscribers. Whatever, 40 or 43 million subscribers are claimed for DD Freedish is only an estimate,” said an industry observer.