The TRAI has promulgated new draft guidelines — which are expected to soon turn into final guidelines — that require cable and DTH operators to keep the rates charged from ‘a la carte’ customers under check.
At present, DTH operators charge up to Rs 50 per channel from customers who do not subscribe to the bouquet system.
Examples of such channels include Germany’s DW channel, which is priced at Rs 50 on Airtel Digital, but is available free of cost on Doordarshan’s DTH service Free Dish.
DTH operators price single channels at a high rate to discourage their customers from opting out of ‘packages’ designed by them. ‘Packages’ are good for DTH operators as they collect money from channel owners (broadcasters) for including them in such packs and bouquets. If more and more customers opt out of bouquets, DTH and cable operators will not be able to charge inclusion charges from channels for their bouquets.
To put a limit on the price that can be charged under a la carte system, TRAI has suggested draft guidelines that put two limits on the final price.
“The a‐la‐carte rate of a pay channel forming part of a bouquet shall not exceed two times its RIO (maximum) rate offered by the broadcaster for addressable systems; and (b) sum of a‐la‐carte rates of all the channels in the bouquet shall not exceed three times the bouquet rate,” TRAI said in a paper today.
Explaining its reason for coming out with such rules, TRAI said — “As per the practice prevailing at that time, the broadcasters used to provide their channels to MSOs/LCOs in a bouquet form by resorting to perverse pricing of bouquets vis-à-vis individual channels. The bouquets were sometimes formed so as to contain only one or two popular channels, while rest of the channels in the bouquet may not be value for money to the MSOs, LCOs and subscribers. The MSOs and LCOs were forced to then take the entire bouquet as otherwise they were denied the popular channels altogether. The cost of these unwanted channels was usually passed on by the MSOs/LCOs to the consumers.”
“On examining the prevalent market conditions, it was observed that though the platform operators were allowed to package and price the offerings as bouquets in addition to offering them on a-la-carte basis, the uptake of channels on a-la-carte basis remained negligible as compared to the bouquet subscriptions. Analysis yielded that the prime reason for such poor uptake of a-la-carte channels was that the a-lacarte rates of channels were disproportionately high as compared to the bouquet rates and further, there was no dynamic relationship between these two rates. It was also observed that many popular channels were distributed among different bouquets or packs compelling a consumer to subscribe to more than one pack to be able to view all his desired channels, as the a-la-carte rates of channels were exorbitantly high. Thus a subscriber, under such circumstances, in order to view his desired channels, was ultimately paying more on this account. Consequently, the very purpose of addressability was defeated.”
“It was observed that a platform operator offered a bouquet, containing pay channels, at Rs. 290/-, while the sum of a-la-carte rates of pay channels constituting this bouquet was Rs. 1605/-. Therefore the bouquet was being offered by the platform operator at a discount of 82% to the sum of a-la-carte rates of pay channels constituting that bouquet. This indicated that a-la-carte rates of pay channels constituting the bouquet were exorbitantly high.As a result, while technically, a-la-carte rates of channels were declared, these were illusive and customers were left with no choice but to opt for bouquets,” it said.