(21 July 2010 10:25 pm)

NEW DELHI/MUMBAI: In what could upset multi-system operators (MSOs), the Telecom Regulatory Authority of India (Trai) plans to cap cable TV pricing at Rs 250 in non-Cas areas while allowing broadcasters an inflation rate of nine per cent and denying cable TV operators to choose channels on a la carte basis.

The broadcast sector regulator is in favour of leaving carriage rates to market forces as it feels capping it would not be feasible.

Trai today told the Supreme Court that it plans to introduce three pricing slabs for cable television, with a maximum cap of Rs 250.

In an affidavit, Trai said it was considering limiting the monthly cable charge to Rs 100 per month for a minimum of 30 free-to-air channels. Subscribers opting for a basic package (which includes Doordarshan channels) with up to 20 pay channels will pay a monthly bill of Rs 200. But those taking a basic package with over 20 pay channels will have to pay Rs 250 per month.

Trai’s affidavit follows the Apex Court’s direction to formulate a comprehensive pricing mechanism for cable services in non-Cas areas after consulting various stakeholders.

The regulator said: "A retail price ceiling -- at a reasonable level -- that balances the consumers' interest with the growth potential of the industry is warranted in the case of cable TV services in non-Cas (conditional access system) markets. The Authority is of the view that the retail price cap for pay cable service should be fixed at Rs 250 per connection per month with the actual monthly bill being left to the business model of the individual operator -- subject to the ceiling."

While saying it was not in favour of allowing market forces to determine the rates of pay channels, Trai allowed broadcasters to raise the price of their channels and existing bouquets by nine per cent due to price inflation on the basis of the wholesale price index (WPI).

Upholding the orders of the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) the Apex Court had on 13 May, 2009, directed the regulator to study afresh and issue a comprehensive order on the pricing issue in non-Cas areas of the country.

Later the Court had granted six months extra time in January and directed it to file its report by June 30 2010 following a request by Trai.

The regulator has also filed a draft copy of the proposed Broadcasting and Cable Services Tariff Order, 2010, which would be notified after the Court clears it.

Though there was no limit on the number of free-to-sir channels, the monthly charge was fixed at Rs 83, while a maximum of Rs 260 was fixed for a basic package plus pay channels.

In Cas areas, including South Delhi and parts of Chennai, Mumbai and Kolkata, pay channels have been charged at Rs 7 per month.

Trai said it would not be possible to permit MSOs and cable operators to choose channels on a la carte basis from broadcasters in non-Cas regulated areas, where feeds are still given in analog mode.

"In the analog, non-addressable environment, Trai is of the view that a la carte should not be mandatory at the wholesale level, as technological constraints in any case make it impossible for the benefits of a la carte provisioning to be passed on to the subscriber," said Trai in the 273-page affidavit filed through Counsel Sanjay Kapur.

As far as the carriage fees charged by MSOs and area/local cable operators from broadcasters for putting their channels on their network, Trai said it is not feasible to place any cap on the amount of carriage and placement fee and it should be left to the players to decide among themselves.

"The authority is of the view that all carriage and placement fee transactions should be part of the interconnection agreement between the broadcasters and MSOs/LCOs," said Trai, adding that all such agreements between broadcasters and MSOs/LCOs should be filed before it.

Trai also said "Such filings of carriage and placement fees will enable the authority to monitor carriage and placement fees regularly and regulate the same through intervention where considered necessary."

"Keeping in mind the interests of consumers and broadcasters, the authority is of the view that it would be appropriate to allow an increase of 9 per cent over the existing price of the channels/bouquets."

"The principal risk of allowing forbearance (market-determined pricing) is that it could lead to an increase in price, especially for dominant/driver channels in the short run," said Trai, adding that it "was premature to allow forbearance".

MSOs are a disappointed breed. Says Digicable Network MD and CEO Jagjit Kohli, "We are unhappy that we are not allowed to choose channels on a la carte basis. The retail ARPU on pay channels (after Rs 100 on free-to-air channels) is Rs 150 while the pay channel cost for us totals to a huge amount. Broadcasters are provided an inflation of 9 per cent despite them posting strong revenue growth. Besides, there is nothing specific for digitisation. We are terribly disappointed."