Broadcasters thrilled, cable frat incensed by Trai order

NEW DELHI/MUMBAI: The Telecom Regulatory Authority of India (Trai) today said that new channels may be launched but the price cannot be out of sync with the prices of similar channels that were existing on or before 26 December, the cut off date for freezing of cable prices.

It also indicated that there is no ceiling on cable operators or service providers but any decrease or increase in number of channels should be calculated on a pro rata basis and that the price freeze order is effective in CAS and non-CAS areas.

After announcement of the Telecommunication (Broadcasting and Cable) Services Tariff Order 2004, a number of questions had been raised in regard to the underlying import of the provisions of the order by the industry. Through today's directive, the regulator attempts to clarify certain contentious issues.

Pointing out that Trai has not put any sort of a ceiling or bar on new launches, the clarifications issued by the regulator said, "In such cases, the Tariff Order does not provide any specific ceiling. However, in specifying the relevant charges (cost of a new channel for the subscriber too), the charges that the broadcaster/multi system operator/cable operator might have in place in the contiguous areas/similar channels as on 26 December 2003 should be kept in mind."

Explaining the rationale behind this, Trai chairman Pradip Baijal told in the evening that the clarifications issued by the regulator is more aimed at bringing about a semblance of orderliness in an unorganised industry.

On the pricing of new channels, if launched now, Baijal said, "the basic aim is to see that the consumer does not get affected by industry's own games. If new channels are to be launched, then the industry needs to absorb a major portion of the cost because the burden of the extra cost or service cannot be passed on to the customer." Similar calculations would have to be done if the consumer base is sought to be increased by the broadcaster for increased subscription revenue.

For the pay broadcasters, the Trai order came as welcome news but not so for the cable fraternity, who made no bones about their displeasure with the latest directive from the regulator.

"If there is a price freeze, then there is a price freeze. Why should there be calculations done on a pro rata basis?" an executive of Zee Telefilms' cable arm Siti Cable said.

National Cable & Telecom Association's Vikki Chowdhry said, "How can Trai think of keeping the consumer immune from any price hike, if the broadcaster raises its subscriber base or pushes for that? It is evident that the government of India is bent on favoring the pay TV channel broadcasters for the sake of their utility in the coming general elections whereby this NDA Government will solely utilize the broadcasting media to their advantage now after giving this sop to the broadcasters."

"The previous order of Trai dated 15th Jan 04, of freezing the cable subscription was welcomed by cable service providers as well the consumers at large, but after today's clarification the previous order passed in the consumers' interest has no meaning left," an NCTA statement said.

Star India COO Sameer Nair was in a far more positive frame of mind (to put it mildly). "This is very good news," Nair said. "In any case, we had dropped our price from Rs 30 to Rs 27 so the Trai order serves to underscore an issue that we have constantly been trying to get across. Which is that there has been massive underdeclaration and increasing the subscriber base is a legitimate option that will only improve transparency in the business," Nair said.

K Jayaraman, CEO of the Rajan Raheja promoted MSO Hathway Datacom (in which Star has a 26 per cent stake) refuses to buy this argument. "If more declaration is demanded, prices have to go up. If Trai implements this then it should also decide the subscription margins that the broadcaster, MSO and cable operator should take home. Otherwise it will just not work."

SET India CEO Kunal Dasgupta was also happy with the latest developments. "It is good that Trai has clarified the matter," he said.

HTMT group director and CTO KV Seshasayee had this to say: "We believe that Trai probably is not fully informed about the implications of saying the subscriber base numbers can change. This will be used by the broadcasters to force declarations far beyond what the MSOs are getting paid for. It will finally hit the consumer because we will be forced to pass on these extra costs which MSOs cannot bear since we are already incurring huge losses."

The latest Trai directive has completely taken the wind out of the Cable fraternity's sails. It remains to be seen how they respond to this setback.

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