TRAI Says New Rules Won’t Raise Cable, DTH prices Or Hurt LCOs

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Telecom Regulatory Authority of India has dismissed the “fabrications and concoctions” being circulated on social media about the new tariff rules that will come into effect on December 29.

In a statement, the regulator countered two broad concerns on the upcoming tariff scheme — that consumers will have to pay far more to watch their channels, and that the new rules will impact the earnings of the local cable operators.

CONSUMER FEARS

The original TRAI tariff scheme was meant to dismantle the system of packages or bouquets used to force customers to buy unwanted channels, and provide them the option of buying only the channels they want.

TRAI reiterated this point in its latest statement and said if a customer only buys what he watches, then his bill will actually come down.

 “As per data provided by the BARC, more than 90% of TV homes view or flip 50 or lesser number of channels,” TRAI said.

“If consumer chooses the channels that he really watches, then he will be paying a lesser amount compared to what he or she is paying now,” TRAI said.

However, the TRAI did not comment on the modifications made to the TRAI scheme by the Madras High Court. The Madras High Court had struck down the anti-bouquet measures contained in the TRAI order.

As a result, TV channel operators have come out with a pricing structure in which consumers will be practically forced to buy large packages of channels — whether they want to watch them or not — on December 29, defeating the purpose of the whole exercise.

While the original TRAI scheme would have resulted in individual channel prices of up to Rs 5 each, the modified scheme has led to channel prices rising to Rs 19 each for popular offerings.

As a result, even if a customer buys only 50 channels, he would have to shell out around Rs 850 (Rs 19 x 50) per month — which is two times what he’s paying now.

That said, the regulator has gone to the Supreme Court against the High Court order in an effort to reinstate its original rules and force broadcasters to bring down channel prices from Rs 19 to less than Rs 5.

The regulator also hinted that broadcasters will be forced to bring down their prices when they see that consumers are not willing to pay so much for a single channel.

Comparisons based on the Rs 19 figure are therefore “skewed and far from teh real market discovered prices most likely to be in vogue, once the new framework kicks in,” it said.

LCO FEARS

The TRAI also addressed fears by another section of stakeholders — the cable operators.

Under the current system, a cable operator or LCO collects between Rs 150 to Rs 300 per month from each household,  keeps about half of it and passes on the other half to the feed provider, who then splits the money with the broadcaster.

Under the upcoming system, the local cable operator cannot take a share of the ‘content charges’ paid by the customer, but can only take part of the ‘capacity charge’ or network charge.

While content charges for a basic package will come to practically nothing, it could comprise more than 65% of the monthly payment in more costly plans.

Local cable operators fear that this new structure, in which content payments ‘pass through’ them, will reduce their earnings.

TRAI dismissed such fears and pointed out that it is up to the local operator to work out a satisfactory deal with his feed provider on sharing the network charge component.

“LCOs have the flexibility to negotiate their revenue share with the MSOs as per the structure provider under the model interconnect agreement,” TRAI said. 

“The new framework does not alter the prevailing market structure under MIA/SIA based regime that exists since March 2016,” it said.

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