Regulators

TRAI tariff order: Topline projections for broadcasters, MSOs

TRAI tariff order: Topline projections for broadcasters, MSOs

http://www.indiantelevision.com/sites/default/files/styles/smartcrop_800x800/public/images/tv-images/2019/01/11/Pankaj-Krishna.jpg?itok=o6YoP7Jo

MUMBAI: In what is probably the acting collaboration of the year, Aamir Khan teamed up with Pankaj Tripathi for an infomercial for broadcasting behemoth Star. The 1 minute 22-second video, available both on TV and digital platforms, is an ad for Star’s new bouquet of channels, with the tagline“#Sachmein?”.Created to take the new TRAI tariff order ruling head-on, the ad seems to sum up the urgency broadcasters must be feeling to be ahead of the curve on this issue.

The ad also starkly displays customers being at the mercy of cable and DTH providers for a fair offer. The new tariff order, however, will change this by favouring consumer choice and bringing in transparency, equitable distribution and parity. That the broadcaster had to call out the big guns (Khan, Tripathi) to make their point is a fair reflection of how seriously they expect the TRAI order to affect the television industry. And, all things considered, this might be the next revolution in the industry, one that will put consumers firmly at the centre of the ecosystem.

The background

In the past, negotiation took place between the rates channels agreed upon with the DPO and those that reached the consumers. The customers were never clear how much they were paying for which channels. Now, broadcasters will be creating fair bouquets, which the distributors have to package attractively in order for customers to subscribe to them.

What the tariff order is all about:

·         All channels are offered on an a-la-carte basis.

·         Channels must be declared as pay channels or FTA-free to air channels and cannot be mixed in a single bouquet.

·         Distributors have to offer a base pack consisting 100 FTA channels in which 26 channels from Doordarshan are mandatory.

·         A bouquet of pay channels cannot contain a pay channel exceeding MRP Rs19.

·         The prices of bouquets and a-la-carte channels will be uniform across distribution platforms. No regional pricing is allowed.

All stakeholders will finally be at par

1. For the broadcaster: An obstacle to be worked around

The broadcaster will now have to announce the MRP of each channel individually and set reasonable a la carte prices.

They have to decide how much they can corner from advertising, subscription revenue and engage in intelligent pricing. They are even allowed to indulge in promotional pricing twice a year for up to 180 days in total. For broadcasters, opportunities need to be identified within the given framework. Those displaying good content will benefit while those used to bundling channels with no demand will take a hit.

Our research shows that broadcasters may take a substantial hit, but strictly only in an ideal a la carte scenario. If we accept the ideal scenario, the Chrome Content Consumption Index shows that consumers will choose, on a national average, six pay channels. So apart from the basic cost of Network Capacity Fee (Rs 130), plus one flagship channel (~Rs 19) and five secondary channels (5*Rs 3), the new ARPUs stand at Rs 164, down from the current average of Rs 208.

However, this needs to be tempered by the fact that most consumers will go for bouquets instead of ordering a la carte channels, largely due to the ease of ordering in one go, and if this is the case, the numbers need to be reworked. Broadcasters will sell their first bouquet for Rs 49 (led by driver/mass entertainment channel), the second for Rs 25 (led by a secondary driver/mass entertainment channel) and the 4 remaining channels (4*Rs 3), which will together amount to 86 rupees. In addition to the existing network capacity fee of Rs 130, the new ARPU is placed at Rs 216, an increase in the current ARPUs.

Over the next few months, how it plays out, remains to be seen.

2. Distributors and last mile operators (LMOs)

Broadcasters will now be directly linked to end consumers and the intermediaries have the most to lose. In the past, they used to gain out of leakages and from money, which was not accountable. With the tariff order bringing in transparency, money can be tracked and the government will receive its due taxes.

On the other hand, broadcasters will no longer coerce the distributors either. Rather than fixed deals between the two, which occurred in the past, the order will bring in objective, transparent deals based on content. They will now be able to create bouquets from different broadcasters at prices declared by them and can incentivise customers to purchase the same.

Distributors and LMOs have to sign an agreement for revenue sharing on a mutually agreeable percentage share. If they both do not reach an agreement then recommended revenue share will be distributor at 55 per cent and LMO at 45 per cent.

3. The audience: empowering consumers across the nation

The belief is that the customer is the same everywhere.

Overall prices are to be brought down through transparency of the pricing structure. The unfair advantage held by broadcasters will finally be dismantled as the consumers gain freedom to cherry pick their content and pay for the same. Not only is the price of each channel known, but viewers can also pro-actively, economically choose content from a wide range of choices. 

What remains to be seen…

Many have hailed the new regime as the right way forward where service providers and consumer interests are balanced. A fair deal is negotiated between broadcasters, distributors and the consumers as per the tariff regulations. However, its successful implementation remains to be seen and operational difficulties are being predicted.

In terms of advertising, that second revenue pillar of broadcasting, the new order should render sampling quite obsolete, especially with more than 50,000 variations in packages. This will be the time when distribution data will become ‘oil’ for the industry. Channel availability, and not sampling, will drive media buying in the short to middle term.

Industry topline projections

 The conclusion

In the end, this is a much-needed step in the right direction, although the ideal scenario of 100 per cent a-la-carte channels might still be an improbability. The tariff order promotes transparency, empowers the audience, and plugs the revenue leakages, thereby increasing accountability of the key industry stakeholders. 

(The author is chief executive officer and co-founder, Chrome DM. The views expressed here are his own and Indiantelevision.com may not subscribe to them) 

Latest Reads

http://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2019/05/22/MIB-2-Story.jpg?itok=gbTabnnU
Election results: MIB steps in as broadcasters mislead consumers, advertisers about coverage

Ministry of Information and Broadcasting (MIB) on Wednesday directed broadcasters to adhere to its Policy Guidelines for Uplinking of Television Channels From lndia, 2011 and ensure that there is no violation of the same.

Regulators I&B Ministry
http://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2019/05/21/Mobile_OTT.jpg?itok=ykuM9ZvE
TRAI may bring OTTs carrying TV channels under licensing framework

The telecom regulatory authority of India (TRAI) may soon bring over-the-top (OTT) platforms carrying TV channels under a licensing framework similar to the one for broadcasters. OTT platforms run by broadcasters like Hotstar, Sony LIV, Zee5, Voot will feel the heat if it gets finalised.

Regulators TRAI
http://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2019/05/21/whatsapp.jpg?itok=uQ-qQa3b
TRAI open house session: Telcos demand 'same stringent rules', adequate checks on competing OTTs

Telecom players have attacked OTT services such as WhatsApp and Facebook demanding that there be regulations on them similar to what they have to go through, as per a report by Mint. At the TRAI open house discussion on regulatory framework for OTT services.

Regulators TRAI
http://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2019/05/17/mib.jpg?itok=0A3lOYCa
MIB grants approval to National Geographic Tamil and National Geographic Telugu

The Ministry of Information and Broadcasting (MIB) has approved NGC Network India’s two name change applications. NGC Network got the MIB nod to rename its licences NAT GEO MUSIC HD and NAT GEO PEOPLE HD to National Geographic Tamil and National Geographic Telugu.

Regulators I&B Ministry
http://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2019/05/16/trai.jpg?itok=93F2BD4i
Tata Sky's application prompts Delhi HC stay on TRAI's directive to DTH companies on LDPs

The Delhi High Court on Wednesday stayed Telecom Regulatory Authority of India’s directive to direct-to-home (DTH) companies on restoring old plans of long duration pack (LDP) subscribers and abstaining from moving them to the new tariff order.

Regulators TRAI
http://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2019/05/10/trai-itv.jpg?itok=W5MK6E2t
Broadcasters, DTH companies attend TRAI session on STB Interoperability through downloadable CAS

Telecom Regulatory Authority of India (TRAI) on Thursday conducted a workshop to discuss the Downloadable CAS based solution to implement STB interoperability its headquarters.

Regulators TRAI
http://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2019/05/09/trai.jpg?itok=9FWfeMyS
TRAI vs DTH operators: Delhi High Court adjourns tariff order matter to 15 May

The Delhi High Court on Thursday adjourned the hearing of the petition of top DTH operators Tata Sky, Airtel Digital TV, Sun Direct and broadcaster Discovery India Communication challenging Telecom Regulatory Authority of India (TRAI) and its new tariff regime, to 15 May.

Regulators TRAI
http://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2019/05/09/tdsat.jpg?itok=2MsHIgyW
TDSAT allows SPN India to audit systems of Multi Reach Media, DigiCablecomm Services

The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) has allowed Sony Pictures Networks India (SPN) to audit the conditional access systems (CASs) and Subscriber Management Systems (SMSs) of two multi system operators (MSOs) DigiCablecomm Services India Pvt. Ltd. and Multi Reach Media Pvt...

Regulators TDSAT
http://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2019/05/09/mib.jpg?itok=lqaPw59A
MIB approves name change of Zee Bhojpuri Cinema to Ganga Biskope

The ministry of information and broadcasting (MIB) has approved the application from Zee Entertainment Enterprises to change the name of its Bhojpuri channel Zee Bhojpuri Cinema to Ganga Biskope.

Regulators I&B Ministry

Latest News

Load More

Sign up for our Newsletter

subscribe for latest stories