| The
Regulator has pegged tariff for addressable systems at 35 per cent of the rates
prevailing in non addressable markets thereby even lowering the earlier ceiling
of 50 per cent fixed by the sectoral tribunal. As a result, the value of content
has been squeezed out of content creators for the benefit of carriage operators,
thereby distorting the level playing fields.
While broadcasters are not
asking operators to subsidise the creation of content, the operators on the other
hand have been demanding a sizeable subsidy from the broadcasters to sustain their
business models. "The
Regulator has clearly given in to the unjustified demands of certain DTH players
who had been arguing for a hefty discount on content cost for no apparent reason.
This has not only destabilized the existing arrangements between broadcasters
and operators, by paving the way for reopening concluded contracts but has also
brought in a degree of uncertainty within the regulatory regime itself,"
the IBF says.
Broadcasters are unanimous that such random and knee jerk changes in ground rules
on the basis of grievance mongering by some isolated players in the value chain
do not augur well for a nascent industry even in the short run.
Industry
watchers contend that such intrusive regulations are contrary to Trai’s own
stated position of deregulating pricing in addressable platforms and altogether
militates against Trai’s own findings that whole sale price regulations are
altogether nonexistent in the international scenario, IBF adds.
In most
other countries, where competition in television broadcasting is much lesser as
compared to India, there is no attempt to regulate price for entertainment including
pay television. The average ARPUs for Pay TV range from Rs 800 to Rs 2,500 per
month in other countries but is less than Rs 200 per month in India. An average
person in Indian cities pays Rs 150 per movie ticket, which amounts to more than
Rs 600 per family.
In comparison, the prices are lower than Rs 200 for
Pay TV which includes more than 100 television channels for the entire family
for the entire month.
In view of this, IBF has asked if there is any
need to regulate this kind of pricing. There is enough competition in each genre
and the prices can be easily determined by the operation of market forces viz.
laws of demand and supply. The industry needs to focus on building better infrastructure
for content creation, on creating more variety of content and cater to the diverse
needs of the Indian consumer.
If the price for content is regulated
by putting a price cap, then there is a strong possibility of impeding the growth
and creativity in the industry, the broadcasters’ body adds.
While
the broadcaster-operator pricing has been heavily regulated, the pricing between
operators inter se and to the ultimate consumers have been surprisingly left to
free market pricing, IBF points out. With a multitude of channels being beamed
and multiple delivery platforms made available to consumers, content availability
to addressable platforms or to consumers was never an issue.
The Broadcasters
in any case have an ever present need for greater “Reach”. In the absence
of any market abuse or anti competitive practices, there was no case for the Regulator
to have intervened in such an intrusive and regressive manner. The
Regulator’s argument has been surprisingly that broadcasters are in any case
offering substantial discounts to addressable platforms and hence a lower ceiling
would do no harm. The point that is being missed is that such discounts were the
results of market based negotiations between parties at equal terms which covered
a host of issues ranging not only pricing but also packaging, volumes, and joint
promotional and marketing spends among others. The
regulator has only selectively picked up the aspect of discounts already available
to DTH operators as a justification for further lowering the cap without however
addressing the entire gamut of issues that concern the parties in market based
negotiations. Also there was no reason for the regulator having intervened when
by its own findings the operators were availing content at rates far below the
stipulated ceiling which goes to show that market based negotiations were successful
in keeping the prices at competitive rates.
Discounts and pricing are
always calibrated against volumes all over the world, but Trai has taken packaging
out of the broadcaster’s narrative altogether and the content creators are
now required to offer channels at a universal discount irrespective of volumes
that result from the packages the operators create and sell.
The IBF
points out that ‘ironically, the present chairman of Trai who has now delinked
pricing from packaging had in his earlier “avatar” as one of the presiding
members of the sectoral tribunal clearly exempted “add on packs” from
the 50 per cent ceiling’.
While DTH operators have been given complete
liberty to price their offerings, and also discriminate by having different region
wise price formulations, this flexibility has been denied to broadcasters. Given
the fact that the retails rates have more or less bottomed out, any further options
for operators to renegotiate pricing from 50 per cent to 35 per cent will only
serve to augment margins for operators at the cost of broadcasters without any
corresponding benefits being passed on to the consumers. In
the presence of a clear finding by Trai that television channels cannot be taken
as ‘essential commodities’ and are in effect similar to ‘consumer
durables’ which have been identified as “esteemed needs” as opposed
to physiological needs, one fails to comprehend the rationale for such intrusive
and high handed regulations more so when television channels are not inputs or
intermediary products to be utilised by any other industry.
The apparent
justification for mandating an ala carte mandate is that the FCC in its “Further
Report” had recommended ala carte regulation. Trai, however, has not adverted
to the fact that economists, industry, consumer groups and most importantly the
Government Accountability Office i.e. the investigative arm of the US Congress,
had desisted FCC from acting upon the said report after research revealed that
such a mandate would actually be anti consumer and anti competitive.
The minimum retail price of 150 for ala carte offerings have all the trappings
to ensure that ala carte offers by operators are illusory and the consumer will
end up being compelled to subscribe to bundled offers.
While no increase
in prices is permitted within six months of subscription, the minimum subscription
period for subscribing to channels on ala carte has been pegged at three months.
Also it is high time that the question of mandatory carriage to Doordarshan
channels is revisited along with the direction for mandatory sharing of sports
feed. | 
