DTH players trapped by TRAI directive on long-duration packs

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TRAI Chairman RS Sharma

DTH players who tried to ‘lock in’ their customers via long-term packs before the introduction of TRAI’s new tariff order seem to have instead ended up in a trap after the regulator ordered them to honor their earlier long-term plans.

A prominent DTH operator, which was calling up customers with attractive yearly offers just before new tariff regime came into effect, is among those affected.

With a view to locking in customers, DTH operators had offered extremely attractive long-duration packs or LDPs with the promise that they would be valid for a year, even after the new tariff scheme came into effect.

However, when the new tariff order was put into effect, the operators cancelled the schemes they had sold to their customers just days before.

These customers were then migrated to new montly packs and plans that were hardly comparable in terms of channel composition or pricing.

Not surprisingly, customers felt ‘trapped’ and cheated by their providers, as they had been made to pay in advance for one year on the promise that the service will continue for one year.

When they were migrated to ‘best fit’ plans, the money they paid for the whole year was refunded to their account based on number of days outstanding. However, the refund was not done to their credit or debit cards, but to their DTH account, with no way of withdrawing that money.

This effectively trapped them, as they could not migrate to another provider before using up their balance. In other words, they were stuck with their provider and had to choose from whatever plans and packs they were offered.

KARMA EFFECT?

However, it looks like the ‘over-smartness’ of the DTH players may have ended them in a soup, going by the latest TRAI directive.

The regulator on Wednesday issued directions to most of the DTH players to reinstate the long-duration packs of their customers in all cases where the subscriber did not ask for a migration to a new plan and held that cancellation of such long-term packs and forced migrations were illegal.

“..they are bound to provide services to long term plan subscribers (including multi TV subscribers) till the contracted period without any change unless the subscriber opts out of it or the validity of the long term plan expires, whichever is earlier. The same has also been clarified and reiterated by Authority in its press releases,” the TRAI said in its directive.

TIME LINE

It was in June last year that TRAI had announced that a new tariff scheme will come into effect from Dec 28, and asked all operators to get ready for the same.

It was also made clear that the pricing and packaging power would shift from DTH and cable providers into the hands of the channel owners.

In keeping with the time table, most of the big channel companies announced new prices and packs that were clearly much higher than what was prevalent till then

It was clear that any cable or DTH provider offering yearly or six-monthly packs would be taking a huge risk, given that the operator no longer controlled the channel prices and was at the mercy of the channel owners.

For example, most of the DTH operators were offering yearly packs of all their channels at around Rs 5,500. To make matters worse for themselves, some of them were also offering yearly ‘multi TV’ connection for Rs 2,500-3,000.

Using these schemes, one could subscribe to 500 channels at a monthly cost of less than Rs 500 in case of primary connections and for Rs 250 in case of secondary connections.

This was possible because under the old tariff regime, the channel price was largely decided by the DTH and cable operators. These schemes were being offered as late as the last week of December, with less than a week to go before the new tariffs came into effect.

When the new tariff order came into effect, the same 500 channels started costing around Rs 600-800 per month, including in case of secondary connections.

In other words, if a DTH provider was to continue to honor its commitment to provide the 500 channels for another six months or 1 years under the long-duration pack, it would have to shell out money from its own pocket to make up for the shortfall.

Assuming that the regulator will not interfere in the matter, the operators started canceling the long-duration packs of their customers and crediting the remaining amount to their DTH accounts.

Customers who complained were told that this was being done on TRAI’s directions, and that the new TRAI scheme had resulted in the withdrawal of their existing long-duration pack.

TRAI HITS BACK

However, the DTH industry seems to have misread the regulatory signals, going by yesterday’s clarifications and directives.

In its directives, TRAI has made it amply clear that such forced migration of long-duration pack customers was not acceptable, and that anyone who has been forcibly migrated from a long-term pack has to be reincluded in the same.

In its directive to Sun Direct, for example, TRAI asked it to “reinstate earlier long term plans with original validity date to the subscribers who have been migrated to any new plan unless the subscriber has himself opted out for it.”

It made similar directions in its orders to Tata Sky and Dish TV as well.

“Authority has already informed Ms Dish TV India Ltd that they are bound to provide services to long term plan subscribers (including multi TV subscribers) till the contracted period without any change unless the subscriber opts out of it or the validity of the long term plan expires, whichever is earlier,” it noted.

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