PayTV seeks regulatory support to stay in frame, as cable fades from centre stage

New Delhi: It is no secret that the relationship Indians have with their television sets has changed drastically. What might still surprise some, however, is just how quietly this relationship transformed - cable TV slipped out of the spotlight. 

In homes that once had cable ruling the entertainment appetite round-the-clock, smart TVs now stream apps and smartphones fill in the rest, at least in big cities. Apparently, viewers moved on, but the regulations around governance in the cable industry haven’t.

Tucked between tariff orders and competition with digital platforms, the industry finds itself asking a difficult question: how long can a traditional system stay relevant in a digital-first world?

A new report by the All India Digital Cable Federation (AIDCF) and EY doesn’t offer an easy answer. But it does outline why, and how, the regulatory framework must change if cable TV is to retain its place in India's media mix.

Data talks

According to the report, the number of pay TV households in India has declined from 151 million in 2018 to 111 million in 2024. By 2030, this number is projected to drop further to between 71 and 81 million homes. 

Over the same period, the television landscape has witnessed the emergence of 30 million connected TV households and an estimated 49 million free TV households, primarily serviced through DD Free Dish. 

Despite this, the cable and pay TV sector continues to operate within a tightly regulated environment. Since 2017, the introduction of multiple versions of the New Tariff Order (NTO) has layered the sector with pricing restrictions, packaging mandates and interconnection rules. 

Originally intended to promote transparency and consumer choice, these frameworks are now being re-evaluated in the face of fundamental changes to the way content is accessed and paid for.

The frame needs work

The distribution platforms and local cable networks have placed reforms at the centre of their ask. Through the report, the industry body has called for regulatory recalibration, suggesting that pay TV, Free TV, OTT platforms and Free Ad-Supported Streaming TV (FAST) channels be treated equitably, but with recognition of their differing technological and market dynamics.

Furthermore, the industry body has sought the introduction of territorial pricing flexibility, allowing operators to adjust pricing based on regional paying capacities, similar to practices followed in other consumer sectors.

Another critical reform proposed was the activation of over 20 million dormant set-top boxes through targeted incentives, such as subsidies, repair schemes or trial packs, to revitalise connections and curb churn.

The report further recommended restricting the live or near-simultaneous availability of pay TV content on free digital platforms to preserve the value proposition of pay TV subscriptions and encourage sustained engagement.

There is also an appeal for hardware subsidies in television-dark regions - 140 million households by current estimates - through public-private partnerships or government-backed schemes.

Finally, the report underscored the need for a unified and enforceable anti-piracy framework, noting that the media and entertainment sector incurs losses exceeding Rs 200 billion annually due to unauthorised content sharing.

The unspoken urgency

Underneath these reform proposals, however, is an unspoken urgency: the cable TV model, as it exists, is struggling to hold ground. While regulatory asymmetries are being flagged, the report also captures internal stress points, chief among them, the inability of many operators to pass on increasing content costs to consumers.

According to the survey of 28,181 Local Cable Operators (LCOs) cited in the report, 93% reported a reduction in monthly take-home income since 2018. Around 49% said their subscriber base had declined during the same period, with over one-third losing more than 40% of their customers. 

Employment generated by LCOs fell by 31%, amounting to 37,835 job losses in the surveyed sample. When extrapolated to the national level, the figure ranges between 1.14 lakh and 1.95 lakh positions.

The report mentioned that some LCOs have already attempted a pivot. Around 43% have launched broadband services, with another 20% planning to follow. However, the report avoids assuming these shifts as guaranteed success.

The TRAI tussle

The report drew on international examples and noted how markets like the UK and Australia have introduced prominence rules for local television services, incentivised public service broadcasting, and brought streaming platforms under regulatory scrutiny. 

These developments, while context-specific, are positioned as evidence of regulators adapting to new distribution realities. India, by contrast, remains in a consultative phase.

Over the years, the Telecom Regulatory Authority of India (TRAI) has introduced multiple iterations of the New Tariff Order (NTO), beginning with NTO 1.0 in 2017 and progressing through to NTO 4.0 in 2024, each aiming to recalibrate pricing structures, interconnection norms and consumer protections within the addressable broadcasting ecosystem. 

However, the report detailed how many of these efforts have faced legal challenges from broadcasters and industry associations, resulting in a fragmented implementation process.

While NTO 1.0 was upheld by the Madras High Court in 2018 and subsequently by the Supreme Court, subsequent versions, particularly NTO 2.0, were contested in both the Kerala and Bombay High Courts. Though most provisions were ultimately sustained, with only the “average test clause,” struck down.

Although TRAI initiated another review in 2023, the report stated that several longstanding concerns, such as channel bundling and the economic disadvantage faced by pay TV in comparison to free digital platforms, were not addressed. This led to a legal challenge currently pending before the Delhi High Court. 

The latest iteration, NTO 4.0, notified in July 2024, introduced incremental updates but, as the report observed, they stopped short of addressing the structural issues confronting traditional distribution platforms. 

Fighting fragmentation

The fragmentation of viewership is also reflected in the report’s data. As of 2024, total TV households stood at 190 million, but pay TV accounted for only 58% of them, a marked drop from 81% in 2018. 

Free TV connections and connected devices continue to expand, reshaping the definition of television access itself. While the report does not suggest that cable TV is obsolete, the underlying message from the report was quite glaring - the format, in its current state, is no longer at the centre of India’s viewing experience. What remains a fight for the cable industry is to garner the regulatory flexibility as soon as possible. Because if it is not fast enough, the audience behaviour might just move further afield.