Regulators

NTO 2.0 will affect viability of pay TV industry: IBF

Content creators will bear the brunt of it.

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MUMBAI: The broadcast sector has expressed its shock and dismay with the latest notification from TRAI issued on 1 January 2020, amending the new tariff order (NTO) and interconnection regulations. Indian Broadcasting Foundation (IBF) believes that both the amendments will severely impair broadcasters' ability to compete with other unregulated platforms and adversely affect the viability of the pay TV industry.

"IBF is disappointed at the lack of understanding shown by the regulator. It will strategise its future course of action, including evaluating legal options, based on feedback from its member channels and networks," said the body.  

The association in its response to TRAI's consultation paper had pleaded with the regulator to adopt a "soft touch" and allow the industry to come to terms with the NTO before making further changes. "In fact, TRAI itself had acknowledged this need by proposing a two year moratorium on further regulation. It appears all IBF's pleas have been ignored. Unfortunately, in this exercise, content creators and owners have been disempowered and the entire authority has shifted to the middlemen," expressed IBF.

IBF has conveyed that these changes will have very significant and industry growth-hampering ramifications for the broadcast sector. At a time when the economic environment is tough, this tariff order will force a lot of channels to shut down and will lead to unemployment in the sector. While the government is looking at ramping up growth, these changes will have the opposite effect for the broadcast sector just recovering from the twin shocks of NTO in the first half of 2019 and the ad slowdown business.

IBF said that it has always believed that consumers pay for the value of the content. Post NTO, the ecosystem had just settled down with about 200 million consumers choosing their favourite channels. "We have to allow the changes to fully settle down and the market forces to prevail while resisting the temptation to continuously tinker with the regulation. The Regulator’s intent was to address infirmities in the NTO, however, it has been done solely at the cost of the broadcasting fraternity," said IBF.   

In the last 15 years of regulating the broadcast sector TRAI has issued more than 36 tariff orders and ancillary regulations in an attempt to micromanage what is arguably the cheapest form of news and entertainment in the world. This goes contrary to the government's stated position of ensuring the "ease of doing business". While TRAI claims the amendments are in the consumers’ interest, it appears to have conveniently forsworn the interest of broadcasters. This change will only benefit the DPOs as they have been allowed to charge as much as Rs 160 for the channels that are supposed to be ‘FREE’.

"As per the new amendments, TRAI has reduced the cap on the MRP of individual channels, which can form part of any bouquet, to Rs 12 per month, from the earlier cap of Rs 19. Less than a year ago, TRAI itself determined that the price per channel can be Rs 19, which has now been reduced to Rs 12 without giving any logical reason. Thus making the change totally arbitrary," said IBF.  

It also said, "Over-regulation, inconsistency and frequent changes in the regulations by the regulator has already cost the broadcast sector 10-12 million TV subscribers as per various industry estimates in 2019. These amendments will compound the problem further."

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