Report on Shemaroo

Exclusive: TRAI's RS Sharma on new tariff order, tussle with BARC & potential monopoly in the sector

Sharma says cable bills have reduced by 5-15% under new tariff order

MUMBAI: Telecom Regulatory Authority of India (TRAI) and its chairman RS Sharma have hit the headlines rather frequently in the first quarter of 2019. After much resistance and a series of legal battles, some of which are ongoing, TRAI was triumphant in rolling out a new tariff regime for India's broadcast and cable services sector. While the TRAI tariff order is aimed at instilling transparency and discipline into the system, the broadcast sector continues to be plagued by several other issues that are yet to be addressed by its stakeholders. In order to understand the role of the regulator in eradicating some of these hurdles, interacted with the TRAI chairman, who articulated his views on a wide range of subjects.

How would you respond to critics that draw parallels between implementation of the tariff order and demonetisation? Disrupting the system for very little gain.

The comparison of the two is completely unfair and perceived wrongly. I will only like to talk about the new tariff framework. TRAI’s new framework was aimed at extending the benefits of digitisation of Broadcasting & Cable Services sector to the whole country for which work had started in 2012. It had well-defined objectives and a roadmap for its implementation. The new framework has enabled choice to the consumers, brought transparency in the sector, ensured level playing field among stakeholders, equal opportunities to all, opened growth opportunities and initiated market dynamics to take auto-corrective actions. Wait for some time and you will see how transformational these initiatives are for the broadcasting and cable services sector.

While you’ve often stated that monthly cable bills have reduced, certain studies and reports suggest otherwise. Is the truth somewhere in the middle?

It is being insinuated that a family that watches 250 channels will end up paying a much higher amount than in the present. This is a fictional pretention. As per data provided by Broadcast Audience Research Council (BARC) more than 90 per cent of TV homes view or flip 50 channels or fewer. Therefore, any analysis that keeps 250 or more channels for pricing of monthly tariff results is creating a false impression and in such cases, the marginal price increase cannot be denied. The challenge is to effectively convey to the consumers to change the habit into one of choosing what they want to view over the old habit of getting everything irrespective of viewing pattern. The concept of ‘take it all’ has to be modified. If a consumer chooses only those channels he actually views, then there is a greater probability of paying lesser amount compared to what he/she is paying now.

The new framework has been designed after balancing and providing for the proportionate revenue for various service providers in the service provisioning value chain. The basic architecture of the framework provides for fair competition among broadcasters and the real prices will be discovered after a few months of market play. The analysis of preliminary data of a few large DPOs reflects actual savings by subscribers to the tune of 10 to 15 per cent in metro towns and between 5 to 10 per cent in non-metro (DAS 3 and DAS 4) areas.

What’s the regulatory or legal basis for introducing the 'best fit plan' in the new tariff order?

The system of selecting channels on an a-la-carte or bouquet basis by the subscribers had been introduced for the first time in the country. Some subscribers were facing difficulties in selecting the channels and bouquet of their choice. In some cases, LCOs were not able to reach out to the subscriber to create awareness among them and collect the options. Some subscribers might be required to go to the nearest point of sale (POS) for exercising their option as they did not have access to IT facility or are not comfortable in using an IT system to exercise their options.

A few cases were reported recently where pay channels of the subscribers who have not exercised the options were deactivated. Such incidences were causing hardship to the subscribers. We noted that though the new framework promotes consumer choice and enables the subscribers to pay for what they wish to view, non-exercise of the option should not create any inconvenience. Accordingly, we requested all DPOs to create ‘best fit plan’ (BFP)  for their subscribers as an intermediate plan for those who have not exercised their options.

The DPOs were asked to design BFP based on consumers’ usage pattern, language spoken and it should preferably be a blended combination of various genres. DPOs were also asked to ensure that while making BFP for a subscriber, payout per month of the BFP generally does not exceed the payout per month of existing tariff plan of the subscriber. Further, DPOs have also been directed to shift the subscribers from the BFP to their options, within 72 hours, as BFP is an intermediary step towards shifting to the new regulatory regime.

Despite your repeated appeals and directives to DPOs, some of them continue to defy the letter and spirit of the tariff order. How do you intend to tackle this issue?

We are monitoring the implementation of the new regulatory framework by the service providers. In case any violation by any service provider is noticed, we will act as per prevailing law. On prior occasions, show-cause notices were also issued to few errant DPOs. TRAI never compromises on such violations of regulations or any market aberrations, if noticed.

You were involved in a stand-off with BARC. Given that it is an independent entity, can your directives and show-cause notice be deemed as interference?

BARC India  has been granted permission by the government to carry out the television rating services.  It is mandated to provide credible and unbiased ratings of TV viewership. We noticed that BARC India stopped publishing the viewership data on its website during the migration to the new regulatory framework. During the migration period, there could be some changes in the preferences of the subscribers and TV viewership patterns may waver due to the exercise of choice by consumers. In our view, such changes reflect the market reality and dynamics and therefore it was not appropriate for BARC to restrict rating information of channels in contrast to stated practice as these changes are the outcome of consumer choices and real reflection of market changes. Accordingly, TRAI directed BARC  not to stop publishing ratings during migration.

Many of the vertically integrated companies are giving preference to their own broadcast channels in their basic plans, pushing out pure content players who do not have platforms. Your take?

The new regulatory framework ensures that the real and informed choice is made available to consumers. A consumer is able to see all the channels with their price on the Electronic Program Guide (EPG). Consumers are empowered to choose the channels of their choice. Consumers have been given freedom to choose and their choice has to be implemented in a time bound manner. Hence, there is no possibility of pushing channels to consumers as he is always free to exercise the options. Therefore, forcing of channels may not work for long.

Now, increasingly, a single company is on the verge of capturing the whole of telecom and media sector. TRAI seems to have turned a blind eye to this.

It is incorrect understanding. Each entity has to work under the policy and regulatory framework prescribed by TRAI. TRAI has already submitted its recommendation on media ownership and vertical integration in the media and entertainment sector to the Ministry of Information and Broadcasting (MIB). It is under consideration by the MIB.

Although FDI is relaxed to 100 per cent in broadcast distribution, not a single dollar has come into the sector. Has the regulator not been able to send positive signals inviting FDI into the sector?

In the era prior to the new regulatory framework, there were a large number of disputes among the various stakeholders due to non-transparent and discriminatory practices, which might not have won the trust of foreign investors. New regulatory framework is focussed on enhancing transparency and non-discrimination, which may lead to a reduction in litigations and higher growth of the sector thereby making it attractive for foreign investors. An attempt is being made to create a conducive regulatory framework which is expected to bring fruits in time to come.

Do you think TRAI has failed vis-a-vis the role of Arasu Cable in Tamil Nadu? This seems to have encouraged others in states like Andhra Pradesh to get a foot into the door. Your predecessor had recommended that governments should not be in the business distribution.

You have yourself mentioned that TRAI has already sent its recommendations to the government. Now, it’s up to the government to take the final decision on these recommendations.

TRAI appears to be supportive of legacy issues facing the cable TV sector instead of forward thinking which has dwarfed the growth of the broadcasting sector compared to other developed markets. Your comments?

TRAI is known for its forward-looking regulations. TRAI is duly innovative and forward-looking. In fact, the new regulatory framework introduced by TRAI for the broadcasting and cable sector in India on 29 December 2018 is one such example of its forward-looking initiative. The new framework is the first of its kind in the entire world, empowering the consumers to choose what they want to view and resulting in a balanced and orderly growth in the sector.

There’s a widespread view among the stakeholders that TRAI has been going through the motion of consultations, but its pre-conceived policies get implemented in the end. Is the criticism fair?

No, it is not a fact. TRAI resorts to extensive consultations among all the stakeholders (starting from issuing a consultation paper, calling/analysing the comments and counter-comments and then, placing all these aspects back in an Open House Discussion, duly supported with techno-commercial analysis). The final decision taken by the Authority on such inputs is in a highly transparent and judicious manner. The explanatory memo attached with regulations and TTO is a clear example of transparent decision making.

What have been the key learnings for TRAI and you, as its chairman, from the rollout of the tariff order? Have you accomplished what you set out to achieve?

The broadcasting and cable services sector in India went through a paradigm shift when the sector in the country got completely digitised on 31 March 2017. The authority received several representations from various stakeholders regarding the inadequacies of the pre-digitisation regulatory regime to tackle the problems being faced in a digitised network and non-optimal realisation of the benefits of addressability. Like protecting the interests of consumers by giving them a choice to select a channel that he/she wishes to watch and pay only for that, provisioning of channels by broadcasters to DPOs on a transparent and non-discriminatory manner, ensuring level playing field within broadcasters and within DPOs, ensuring access of distribution networks to broadcasters on non-discriminatory terms and orderly growth of the sector and laying roadmap for the future.

Similar problems were also highlighted in the Noida Software Technology Park Ltd (NSTPL case) by the TDSAT. The tribunal also directed TRAI to carry out a comprehensive review of the existing regulations and tariff order so as to frame a comprehensive code for the era of complete digitisation and addressability.

The new regulatory framework introduced for the broadcasting and cable services sector in India is the first of its kind in the entire world. The implementation of this framework called for undertaking a massive exercise involving every stakeholder in the industry and reaching out to the 165 million households in the country. As such, experiences in the process of its implementation are quite unique - reaching out to 195 million households and making them aware about the new framework was a big challenge, taking the industry stakeholders into confidence, despite multiple court cases affecting the very level of confidence, and tackling misinformation and malicious campaigns by some vested interest groups in media and social media.

The new set of regulations has extended all the intended benefits of the digitisation of the sector in India to its consumers and the service providers. As such, the defined objectives are largely met.

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