Television

IBF says let market forces decide; cable ops want TRAI to rein in broadcasters

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NEW DELHI: It's jockeying that's going on big time as the different stakeholders try to get their point across to the Telecom Regulatory Authority of India (TRAI).

The Indian Broadcasting Foundation (IBF) today expectedly made a strong case in front of the regulator to let "market forces decide" revenue aspects, instead of mandating them, and suggesting that conditional access system be "properly test-marketed before full rollout."

 

On the other hand, cable industry representatives called for reining in the broadcasters and the frequent rate hikes they were resorting to, putting a cross-service restriction and, in some cases, also suggested regulator-mandated pricing and an advertising mechanism for pay channels.

In a lengthy presentation made made before the cable industry made its own pitch, the IBF conveyed to the TRAI that the interim price freeze of cable services has created confusion, opening avenues of "potential litigation" between stakeholders.



The IBF presentation, a copy of which is available with the indiantelevision.com, says that the regulator should not step in where revenue share arrangements are to be formalised as such things are "best left to market forces."



Pointing out that there are three revenue models worldwide ---

NEW DELHI: It's jockeying that's going on big time as the different stakeholders try to get their point across to the Telecom Regulatory Authority of India (TRAI).

The Indian Broadcasting Foundation (IBF) today expectedly made a strong case in front of the regulator to let "market forces decide" revenue aspects, instead of mandating them, and suggesting that conditional access system be "properly test-marketed before full rollout."

 

On the other hand, cable industry representatives called for reining in the broadcasters and the frequent rate hikes they were resorting to, putting a cross-service restriction and, in some cases, also suggested regulator-mandated pricing and an advertising mechanism for pay channels.

In a lengthy presentation made made before the cable industry made its own pitch, the IBF conveyed to the TRAI that the interim price freeze of cable services has created confusion, opening avenues of "potential litigation" between stakeholders.



The IBF presentation, a copy of which is available with the indiantelevision.com, says that the regulator should not step in where revenue share arrangements are to be formalised as such things are "best left to market forces."



Pointing out that there are three revenue models worldwide --- FTA sustained by only ad revenue, pay through a dual stream and premium pay only through subscription --- the IBF said that "TV is like print medium, and relies on advertising and subscription revenues."



Harping on the benefits of a dual revenue stream, the broadcasters said "ads cross-subsidise the consumer" as "without ad revenue, daily newspapers (for example) would not exist."



Putting the blame squarely on the doorstep of the cable industry, the IBF said lack of transparency and under-declaration was one of the reasons for high rates of pay channels.



"Only 10-15 per cent of consumers' payout reaches the broadcaster and a large proportion is unaccounted to the exchequer," the IBF presentation told the three TRAI members present.



Those who attended the interaction with TRAI included What's more, it seems the new person at the helm of the IBF executive director (the former information and broadcasting secretary) NP Nawani, Star India's newly appointed corporate affairs head Nitin Atroley, Zee Telefilms vice-chairman Jawahar Goel, Turner India's Anshuman Misra, Hallmark's Amitabh, SET India CEO Kunal Dasgupta and representatives from south Indian channels too.



The IBF also made a strong argument that broadcasting is not a commodity (premier movies can cost over Rs 100 million, while sports events can cost in the hundreds of millions of rupees) and "channel pricing is dependant on numerous issues" and "no standard pricing formula can be applied."



Bottomline: pricing of individual channels should best be left to market forces by encouraging competition.



On the possible restrictions on ad time on pay channels, the IBF has pointed out that the regulator should follow a model that is similar to the print medium as it would be "impractical to lay down standards for compliance."



It has added further that such restrictions of revenue streams would hamper growth and competition in the broadcast industry and increase the cost to the consumer. "Avoid administered pricing," the IBF has said in its presentation.



"To the best of our knowledge, nowhere in the world is the regulator administering the revenue sharing arrangements between broadcasters, MSOs and cable ops," the IBF said, adding that revenue splits are best left to market forces.



Dropping ample hints that the cable industry is to be blamed for the CAS imbroglio, the IBF has said that CAS is just one of the platforms for consumer addressability and transparency and not the ultimate one.



"A distinction needs to be made between bundling, which deprives consumers of choice and packaging of channels in a manner to offer additional value," Discovery India MD Deepak Shourie said, while making the presentation, adding bouquets are a cost-efficient delivery mechanism.



The IBF has also implied that cable ops should provide boxes as an investment to protect acquisition of a consumer, implying that boxes should be given free of cost by the cable industry.



Dwelling on boxes and CAS implementation. the IBF came up with the googly that success would depend on attractiveness of "competing platforms like DTH, 

broadband, etc."



As a way forward, IBF's suggestions are as follows:



*Adopt pro-competition and free market approach and withdraw price freeze notification.

*Foster competition between cable service providers through multiple operators or technologies.

*Ensure cross-platform addressability.

*Avoid administered pricing.

*Don't stifle ad revenue stream as it would hamper industry's growth and ability to re-invest

*Regular interaction with the industry is critical.



Interestingly, TRAI has asked the IBF to collate data on various rules and regulations on broadcast and cable industry from around the globe as also the role that is played by regulators in other countries.



"As we see it, TRAi is likely to come out with another round of consultation paper," an IBF member said. TRAI is slated to have an open forum tomorrow here and also interaction with the consumer groups and cable operators.

sustained by only ad revenue, pay through a dual stream and premium pay only through subscription --- the IBF said that "TV is like print medium, and relies on advertising and subscription revenues."



Harping on the benefits of a dual revenue stream, the broadcasters said "ads cross-subsidise the consumer" as "without ad revenue, daily newspapers (for example) would not exist."



Putting the blame squarely on the doorstep of the cable industry, the IBF said lack of transparency and under-declaration was one of the reasons for high rates of pay channels.



"Only 10-15 per cent of consumers' payout reaches the broadcaster and a large proportion is unaccounted to the exchequer," the IBF presentation told the three TRAI members present.



Those who attended the interaction with TRAI included What's more, it seems the new person at the helm of the IBF executive director (the former information and broadcasting secretary) NP Nawani, Star India's newly appointed corporate affairs head Nitin Atroley, Zee Telefilms vice-chairman Jawahar Goel, Turner India's Anshuman Misra, Hallmark's Amitabh, SET India CEO Kunal Dasgupta and representatives from south Indian channels too.



The IBF also made a strong argument that broadcasting is not a commodity (premier movies can cost over Rs 100 million, while sports events can cost in the hundreds of millions of rupees) and "channel pricing is dependant on numerous issues" and "no standard pricing formula can be applied."



Bottomline: pricing of individual channels should best be left to market forces by encouraging competition.



On the possible restrictions on ad time on pay channels, the IBF has pointed out that the regulator should follow a model that is similar to the print medium as it would be "impractical to lay down standards for compliance."



It has added further that such restrictions of revenue streams would hamper growth and competition in the broadcast industry and increase the cost to the consumer. "Avoid administered pricing," the IBF has said in its presentation.



"To the best of our knowledge, nowhere in the world is the regulator administering the revenue sharing arrangements between broadcasters, MSOs and cable ops," the IBF said, adding that revenue splits are best left to market forces.



Dropping ample hints that the cable industry is to be blamed for the CAS imbroglio, the IBF has said that CAS is just one of the platforms for consumer addressability and transparency and not the ultimate one.



"A distinction needs to be made between bundling, which deprives consumers of choice and packaging of channels in a manner to offer additional value," Discovery India MD Deepak Shourie said, while making the presentation, adding bouquets are a cost-efficient delivery mechanism.



The IBF has also implied that cable ops should provide boxes as an investment to protect acquisition of a consumer, implying that boxes should be given free of cost by the cable industry.



Dwelling on boxes and CAS implementation. the IBF came up with the googly that success would depend on attractiveness of "competing platforms like DTH, 

broadband, etc."



As a way forward, IBF's suggestions are as follows:



*Adopt pro-competition and free market approach and withdraw price freeze notification.

*Foster competition between cable service providers through multiple operators or technologies.

*Ensure cross-platform addressability.

*Avoid administered pricing.

*Don't stifle ad revenue stream as it would hamper industry's growth and ability to re-invest

*Regular interaction with the industry is critical.



Interestingly, TRAI has asked the IBF to collate data on various rules and regulations on broadcast and cable industry from around the globe as also the role that is played by regulators in other countries.



"As we see it, TRAi is likely to come out with another round of consultation paper," an IBF member said. TRAI is slated to have an open forum tomorrow here and also interaction with the consumer groups and cable operators.

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