Technology

Trai seeks views on rationalisation of tariffs in non-Cas areas

NEW DELHI: The Telecom Regulatory Authority of India (Trai) has asked all stakeholders to respond by 25 April and counter-comments by 5 May to a consultation paper on-“Tariff Issues related to Cable TV Services in Non-CAS Areas”.


This is part of a de novo tariff exercise for cable TV services in non-Cas areas in pursuance to the Supreme Court order dated 13 May 2009. The consultation paper has been prepared based on inputs on financial and operational information given by the stakeholders (broadcasters, MSOs, cable operators, DTH operators and consumer advocacy groups); information obtained during meetings with the stakeholders and their associations; published secondary sources of information including annual reports and financial statements; and interaction with international regulators.


The paper raises 38 questions relating to wholesale tariff of channels from broadcasters to MSOs; retail tariff for cable TV services from cable operators to consumers; a-la-carte provision of channels from broadcaster to MSO; carriage & placement fee paid by broadcasters to MSOs/cable operators; tariff for commercial subscribers, and digitisation with addressability.


At the outset, Trai says the cable and satellite television market in India has experienced rapid growth, with the number of subscribers increasing from just 410,000 in 1992 to more than 83 million by the end of 2008 – a growth rate of nearly 40 per cent every year for the last 16 years. This expansion of subscriber base is mirrored by commensurate growth on the supply side. India today has a large broadcasting and distribution sector, comprising 485 television channels, 3,000-4,000 multi system operators, up to 60,000 LCOs, seven DTH operators, and several IPTV service providers.
 
In 2009, the revenue size of the Indian television industry was estimated at Rs 257 billion. Of this, Rs 169 billion (66 per cent) is attributed to subscription revenue generated from consumers and the balance Rs 88 billion (34 per cent) comes from the advertising market.


The last five years have changed the dynamics of the market significantly. Introduction of viewing platforms like DTH and IPTV, and digitisation of the last mile (both voluntary and mandatory) have led to a more diverse, rapidly evolving multi-platform market. From a scenario where 100 per cent of the cable & satellite (C&S) population was dependent on analog cable services, DTH commanded around 20 per cent market share in 2009. Uptake of digital services is increasing and choice is becoming possible at the consumer end. The figure below provides an estimate of the subscriber base of various platforms:




































Subscriber Base of Various Platforms


Platform


Estimated number of subscribers (2009)


1

Analog cable

68 million


2

Digital cable

4 million


3


DTH


19 million


4


IPTV


Less than 1 million


Total


91 million (approximately)






 In this view, Trai wants to know if complete digitisation with addressability (a box in every household) is the way forward, and what would be an appropriate date for analog switch off.


It has also sought views on the investment required for achieving digitisation with addressability, at various stakeholder levels (MSOs, LCOs and Customers), and if there is a need to prescribe the technology/standards for digitisation.


It has also asked what could be the possible incentives that can be offered to various stakeholders to implement digitisation with addressability in the shortest possible time and make a sustainable transition and the structure of license where MSOs are licensed and LCOs are franchises or agents of MSOs.


Stakeholders have been asked if they feel there is need for a communication programme to educate LCOs and customers on digitisation and addressability to ensure effective participation.


Stakeholders have been asked if the market for cable services in non-CAS suffers from Under-reporting of the analog cable subscriber base; lack of transparency in business and transaction models; differential pricing at the retail level; incidence of carriage and placement fee and of state and region based monopolies, and frequent disputes and lack of collaboration among stakeholders.


It also wants to know which methodology should be followed to regulate the wholesale tariff in the non-Cas areas: Revenue share; retail minus; Cost Plus


Trai has also sought to know if broadcasters should be mandated to offer their channels on a-la-carte basis to MSOs/LCOs and the way to ensure this. It wants to know if the MSOs opted for a-la-carte after it was mandated for the broadcasters to offer their channels on a-la-carte basis by 8th tariff amendment order dated 4 October 2007.


It has also asked if the carriage and placement fee, and the cable television tariff for these identified commercial subscribers, should be regulated and what this should be linked to.

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