100 FTA channels for Rs 100; Minimum Rs 150 for FTA & Pay channels: Trai

NEW DELHI: Tevision viewers will be able to get a minimum 100 free-to-air (FTA) channels at a maximum retail price of Rs 100, or pay a minimum Rs 150 per month for a la carte choice that may include pay as well as FTA channels.

This has been specified in the Telecommunication (Broadcasting and Cable) Services (Fourth) (Addressable Systems ) Tariff (first amendment) Order 2012, issued exactly a month after its own announced date of 31 March by the Telecom Regulatory Authority of India (Trai).

Basic Service Tier

According to the regulatory framework for Digitalised Cable TV brought out by Trai "to safeguard consumers‘ interests", cable operators will have to mandatorily offer a Basic Service Tier (BST) to viewers throughout the country that will consist of 100 FTA channels including 18 mandatory Doordarshan channels and the Lok Sabha channel.

Under the order, cable operators and multi-system-operators (MSOs) have to ensure that there are a minimum of five channels of different genres. The genres which Trai has named are General Entertainment Channels (GECs) in English, Hindi, Regional, Music, News, Movies, Sports, Kids Infotainment, and lifestyle.

"The BST shall be mandatorily offered by the cable operator. However, it will be optional for the consumer to subscribe," Trai said. Consumers can choose a la carte FTA channels also.

The broadcast sector regulator also said that in case customers choose some option beyond the BST which includes some pay channels, a minimum monthly price up to Rs 150 would be paid. "If the total value of the channels/ bouquets opted by the subscriber exceeds Rs 150, only then actual subscription charges has to be paid," Trai said.

Trai has also issued the The Telecommunication (Broadcasting and Cable Services) Interconnection (Digital Addressable Cable Television Systems) Regulations 2012. While the Tariff Order has been issued as an amendment to the existing Tariff Order for addressable systems, dated 21 July 2010, the Interconnection Regulation is comprehensive one for the Digital Addressable Cable TV Systems.

These rules will come into force along with the digitisation of the cable sector for which the government has already set up a deadline of 30 June this year in the four metros and December 2014 for the entire country.

Trai‘s latest tariff order has also laid down rules on the basis of which channels and bouquets will be priced.

All channels will have to be made available individually or on an a la carte basis that will ensure viewers will have the choice to take only the channels they want.

Trai has mandated that the rate of a single channel should not exceed three times the average channel rate of the bouquet. So, if on an average, a channel has been priced at Rs 3 by the cable operator, he cannot charge more than Rs 9 per channel in that bouquet.

MSOs to carry minimum of 500 channels from 1 Jan 2013

The Authority has mandated MSOs to carry a minimum of 500 channels from 1 January 2013. However as MSOs having less than 25000 subscribers may need some additional time for building the capacity, they have been given time up to 1 April 2013. To ensure that the consumer is not adversely affected, the Authority has prescribed that every MSO should have a minimum capacity to carry 200 channels from 1 July 2012.

The Authority asked all the MSOs operating in areas of Phase-II onwards to take suitable measures to enhance the channel carrying capacity to 500 channels. The Authority has ordered that from 1 January next year, all cable operators must carry Hindi, English, and channels in the regional language of the area concerned.

Carriage Fee

While not doing away with the carriage fee as demanded by broadcasters, Trai said it will have to be charged in a non-discriminatory and transparent fashion. All channels will be charged uniformly and the MSOs will have to file the fees with Trai. There is also a provision mandating that the regulator will intervene if carriage fees is found to be unreasonable.

Keeping in view the fact that substantial investment for implementation of Digital Addressable Cable TV Systems is made by the MSO and the cost involved in carriage of channels, the Authority has decided that every MSO may fix the Carriage Fee. However, it should be published in the Reference Interconnect Offer and applied in a uniform, non-discriminatory and transparent manner. The Carriage Fee cannot be revised upward for a minimum of two years. The Authority would intervene in case it is felt that the Carriage Fee is unreasonable.

The MSOs can fix the retail tariff and also package and price offerings. However, the sum of the a la carte rates of channels, forming part of a bouquet, shall not exceed 1.5 times the rate of the bouquet. Further, the a la carte rate of any channel shall not exceed three times the average channel rate of the bouquet.

The number of TV households in India is estimated to be around 147 million. The cable industry has grown from 0.4 million cable homes in January 1992 to an estimated 94 million cable TV homes in 2011 with more than 800 registered channels. Of these, around 160 are pay channels. There are a large number of channels which are transmitted as FTA channels.

Trai says the basic purpose of digitisation is to ensure ample choice to the consumer as well as to enable him to budget his subscription according to his paying capacity.

Must Carry Provision

Trai has also prescribed the ‘must carry provision‘. This means that MSOs will have to carry the channels.

Only those MSOs that have the requisite capacity, as mentioned above, can invoke ‘must provide‘ clause. The broadcasters shall not provide their channels to MSOs who have channel carrying capacity of less than 200 channels immediately and less than 500 channels from 1 January 2013 or 1 April 2013 in case of smaller MSOs.

The provision relating to amount charged by broadcaster to MSO remains unchanged. They can charge a maximum of 42 per cent of the rate they charge in the non-addressable systems.

Revenue share between MSO & LCO

The July 2010 Tariff Order provides that the revenue share between the MSO and LCO shall be based on mutual negotiations. The Authority has now prescribed that in case the mutual negotiations fail, the revenue share shall be in the ratio of 55:45 (MSO: LCO) for BST or FTA channels. The revenue share for Pay channels or bouquet of Pay channels with or without FTA channels shall be in the ratio of 65:35 (MSO: LCO).

Trai said, "Implementation of Digital Addressable Cable TV Systems (DAS) will lead to better choice to consumers, variety and quality of content, adequate revenue to stakeholders and healthy environment for the industry in addition to bringing in transparency in the business transactions and subscriber base. It would also ensure that the Government receives the due revenue."

Ad-free channels

Referring to viability of ad-free channels, Trai said a large majority of the stakeholders, consisting of all the segments including the consumers, are of the view that the determination of viability of the ad-free channels in the Indian markets be left to the market forces to decide.

On the issue of tariff dispensation for the ad-free channels, "a large majority of the stakeholders have advocated forbearance at both the wholesale and retail levels in the DAS areas. Some MSOs have, however, suggested that the wholesale tariff be regulated, keeping the retail under forbearance whereas one cable operator association has suggested that tariff for ad-free channels should be regulated by Trai."

As far as the sharing of the subscription revenue of the ad-free channels is concerned, all the broadcasters have said it should be left for the commercial negotiations between the service providers. The other stakeholders are divided over this issue. Some of these stakeholders have suggested that revenue share be decided in the same way as any other pay channel while others have suggested different percentages for broadcaster, MSO and LCO. However, they have not offered any justification for the same.

Offering of a channel in advertisement-free format (Ad-free channel) is a recent phenomenon in the Indian television market. These channels are driven by demand and generally cater to targeted segment of viewers. The ad-free channels, being solely dependent on the subscription revenue and demand based, in line with the view of a large majority of the stakeholders, the Authority has decided to keep the ad-free channels under complete forbearance. The niche channels, for example. HDTV channels and 3D channels - which require specialised STBs, are already under forbearance and would continue to remain under forbearance. The Authority will review the position at an appropriate time. As far as revenue share is concerned, it shall be shared between MSO and LCO in the same ratio as defined for other channels.

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