Report on Shemaroo

NTO 2.0 will not have much impact at consumer level: Shaji Mathews

MSOs will take it easy and won’t disrupt the system.

MUMBAI: Even as stakeholders have moved courts against Telecom Regulatory Authority of India’s (TRAI) amendment of the New Tariff Order (NTO), analyst and consultant Shaji Mathews feels that it will not have any significant effect on the existing system. “I don’t think NTO 2.0 will have much effect on the consumer either, because whatever changes and choices consumers were to make, happened during the NTO 1.0 implementation. Once the legal battle on NTO 2.0 is over, the MSOs will implement it at the consumer level with cautiousness. They won’t disrupt the system,” says Mathews, who previously held positions as the VP of Star TV, COO of GTPL and CEO of KCCL.   

According to him, NTO 1.0 was expected to remove discriminatory agreements which were imposed by broadcasters and create a level-playing field for small MSOs as well. “For that TRAI brought in the MRP regime, which was uniform pricing across the country for the consumers and transparent margins for the distribution platforms, whether they are small or big,” he says. It was expected that the MRP system will push broadcasters to bring consumer-friendly pricing, enabling consumers to avail a multitude of channels of their liking within the rates they were paying.

“In the process, what happened was that consumers who were expecting to go a-la-carte found themselves at the receiving end because broadcasters basically priced the channels in such a way that they can defeat the whole purpose of the NTO itself,” he points out. 

Now, by bringing in MRP regime, TRAI is expected to make it easy for consumers to choose channels based on prices.

It also brought in certain regulations, on bouquet pricing, that the discount in pricing should not be more than 15 per cent. But while implementing, that was removed from the regulation and was kept in abeyance because of the remark of the Madras High Court. However, in the legal battle at Supreme Court, the remark made by the SC prompted the regulator to go approach the Supreme Court for a decision on the 15 per cent. But the apex court threw it back to TRAI and asked it to take steps which were within TRAI’s powers.

In that scenario, he says that TRAI had to come out with NTO 2.0 wherein some regulations related to a-la-carte rate and bouquet rate had to have interlinked logics. And TRAI stepped in to clear the anomalies which were there in NTO 1.0.

According to him, the consumers are not bothered about all these things. They want convenience. “I don’t share the views of TRAI and many other stakeholders that the consumer is so bothered about his freedom to choose on an a-la-carte basis. There are 800 channels in this country. In the NTO 1.0 regime, when broadcasters brought out the bouquets, there was no limit on the number of bouquets you could make. There were about 500 packages to choose from, and the consumers were frustrated. There is no point in forcing a-la-carte on consumers; they don’t really bother about whether it is a-la-carte or bouquet. They are bothered only about convenience, getting to watch their favourite channels, and they don’t want to pay too much. All these three were disrupted by the NTO. The consumer was not in a position to choose from too many packages and too many a-la-carte options.”

Broadcasters, on their part, jacked up the prices, he said. All these went against the consumer requirements, resulting in a lot of them reducing their stickiness to watching TV. According to him, the cable industry lost around 10 to 15 per cent subscribers because of NTO.

“It is not necessary that these consumers migrated to DTH. They did not go to OTT or YouTube, either. In fact, a lot of consumers did not go anywhere. They may come back to the system over a period of time. They have other priorities in life. They were like, let it be. That was the effect of NTO,” says Mathews. 

He is certain that there won’t be much of a change in the case of NTO 2.0.

“What I expect is that broadcasters will come out with revised prices. Having learned lessons from the implementation of the NTO, MSOs will not disrupt the system this time. If broadcasters reduce the prices, I think MSOs will give more channels to the consumers for the same price.  I don’t see the possibility of broadcasters increasing the prices, except in one or two cases. Some of the broadcasters are very aggressive in their stand. As regulator has come up with the Rs 12 pricing cap, some aggressive broadcasters might remove their channels from the bouquet,” he explains.

Asked about the broadcasters’ complaint that their freedom to price has been curtailed by the NTO, he said: “Their freedom to price is there; only their freedom to bundle has been restricted. Their charges with regard to the loss of control over the pricing won’t stand. Broadcasters are making a fuss on this because it is their strategy of ensuring that the outcomes are advantageous for them.”

On the question of TRAI’s authority to fix price cap, Mathews answers that the cap is only on the bundled channels, not on any other channels.

He is also sure that none of the distribution platforms will create any disruptions under the NTO 2.0 regime. According to him, during NTO 1.0 the platforms went a little overboard in implementation. “So this time they will definitely not do anything disruptive. They will proceed cautiously. There will not have the same kind of disruption as we witnessed during NTO 1.0,” he states.

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