Regulators

New TRAI's tariff regime unlikely to reduce TV bills for most subscribers: Report

Popular channels and OTT platforms will gain from new rules

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MUMBAI: The network capacity fee (NCF) and channel prices announced by broadcasters and distributors as per the Telecom Regulatory Authority of India’s (TRAI) new guidelines could increase the monthly bill of most subscribers of television channels as per the CRISIL report.

TRAI’s new regulatory framework for broadcasting and cable services industry is intended to usher in transparency and uniformity, and will afford far greater freedom of choice to viewers.

More than 90 per cent of TV viewers flip 50 or fewer channels, and the new rules will let them subscribe to what they want and not be saddled with channels they are not interested in.

The regime, which came into effect on 1 February 2019, will benefit popular channels and hasten adoption of over-the-top (OTT); or content providers who stream media over the internet, such as Netflix and Hotstar) platforms, and will be a mixed bag for viewers and distributors.

Ratings senior director Sachin Gupta said, “Our analysis of the impact of the regulations indicates a varied impact on monthly TV bills. Based on current pricing, the monthly TV bill can go up by 25 per cent from Rs 230-240 to ~Rs 300 per month for viewers who opt for the top 10 channels, but will come down for those who opt upto top 5 channels.”

The new regime could drive consolidation in the broadcasting industry because content will clearly be the king and key differentiator. Subscription revenues of broadcasters would rise ~40 per cent to Rs 94 per subscriber per month compared with Rs 60-70 now. With viewers likely to opt for popular channels, large broadcasters will have greater pricing power. Conversely, broadcasters with less-popular channels will find it tough to piggyback on packages, and the least popular ones will hardly have a business case and could go off air.

For distributors (DTH and cable operators), the new regulations are a mixed bag. While content cost will become a pass-through, protecting them from fluctuations, they may lose out on the benefits of value-added services such as bundling content across broadcasters, customisation, and placement revenue.

Currently, most distributors are charging NCF at the cap rate of Rs 130 per month. Similarly, broadcasters have priced subscription for the most popular pay channels at the cap rate of Rs 19 per month.

But these are early days and the situation may evolve with prices charged by broadcasters and distributors declining depending on market forces, viewership and competitive intensity.

Ratings director Nitesh Jain “In all this, OTT platforms could emerge as the big beneficiary because many viewers could shift because of rising subscription bills. And low data tariffs also encourages viewership on OTT platforms.”

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