TRAI RULE: Sun Direct beats Tata Sky, Airtel, D2h by offering all channels for Rs 153 network fee

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Sun Direct has become the first to offer capped network charges

Sun Direct, the smallest of the six DTH players in India, has bowled a googly at its rivals like Tata Sky and D2h by offering all its channels at a network charge of Rs 154 only. In comparison, other DTH and cable firms give only the first 100 channels for Rs 154.

In other words, Sun Direct has waived the Rs 1.25 per channel that it could charge for extra channels beyond the 100 channel basic pack. In case of HD channels, it could have been charging Rs 2.50 per extra channel beyond base pack.

It should be noted that Sun Direct has capped only the network charges at Rs 153, and not the content charges. Content charges have to paid by consumers to the channel owners and there is nothing Sun Direct can do about these charges.

UPDATE: Tata Sky has also waived the network fee on some channels.

The move is seen as an attempt by the player to remain competitive in the cut-throat world of Tamil cable and satellite TV market.

Tamil Nadu saw a delayed roll-out of cable digitization and the prices paid by cable customers in the states are among the lowest in India, and hovers around the Rs 150 per month mark.

By offering a large number of channels for Rs 153, Sun Direct is trying to remain competitive against such players, especially given that cable players are also likely to provide 150 channels or so under their base packs.

The move by Sun Direct will make a difference to people who are primarily interested in free-to-air channels, as content charges on free-to-air channels are zero.

In other words, a Sun Direct customer can simply activate all free-to-air channels without worrying about any impact on their monthly bill.

Under this scheme on Sun Direct, whether someone views only 100 free-to-air channels or 150 free-to-air channels, the total monthly bill will still be only Rs 153 only. In comparison, customers of other DTH platforms will have to pay around Rs 210 per month to watch the same 150 free-to-air channels.

PAY CHANNELS

Under TRAI’s new tariff scheme, the monthly bill of a cable or DTH customer is divided into two — network charges and content charges. While network charges are decided entirely by the cable or DTH operator, content charges are levied by the channel owner, has to be paid separately.

As mentioned above, Sun Direct’s offer is does not apply to ‘content charges’, which is passed on to the channel owner, like Star, Zee, TV18 etc. by the DTH provider.

To explain this in terms of an example, assume that a customer has already activated 100 channels for which he or she is paying Rs 153 to the DTH provider in the form of network charges or NCF.

Now, assume that the customer wants to activate Colors Tamil also.

To do this this, the person has to pay a content charge of Rs 3 per month — the price charged by Colors for its Tamil channel.

However, on Sun Direct, he does not have to pay any network charge for the new channel. In other words, his total monthly bill becomes Rs 153 + Rs 3, or Rs 156 per month.

If it was another DTH platform, he would be paying extra in terms of both network charges and content charges as well.

For example, in case of another platform, the person would pay Rs 153 + Rs 3 (content charge for Colors Tamil) + Rs 1.25 (network charge for Colors Tamil), totaling Rs 157.25 per month. Of course, to save the extra network charge, a customer on another platform could simply remove another channel from his or her existing pack.

SUN TV PRICING

There was some speculation as to whether Sun Direct would offer discounts on the content charges of Sun TV and other group channels.

However, the player has decided not to offer any such discounts.

Activating Sun TV will lead to an extra content charge of Rs 22, just like on other cable and DTH platforms.

It was speculated that Sun Direct could keep the content charge on Sun TV and other group channels at half the published rate or even at zero.

Such a move would have helped both Sun Direct as well as Sun TV.

It would help Sun Direct offer strong differentiation in the South Indian market compared to other DTH platforms.

Sun Group owns about 35 pay channels, and a DTH provider that gave all these pay channels free of charge would have been a big draw for South Indian audiences.

Secondly, such a strategy would have maximized the reach of Sun Group’s pay channels as practically all of Sun Direct’s millions of customers would end up as subscribers of these pay channels.

Without such discounts, it remains to be seen what percentage of DTH users activate Sun Network’s channels, many of which have been priced at Rs 22.40 per month in terms of content charges alone.

PRICING DISRUPTION

The biggest fallout of Sun Direct’s move to cap network charges — also known as NCF — at Rs 153 is the impact it would have on the competition.

Currently, all other DTH players charge anywhere from Rs 1.20 to Rs 1.45 as network charge of any extra channel beyond the first 100 channels. In case of HD channels, they charge Rs 2.40 to 2.90 as network charge for anything beyond the first 100.

So, if you activate 35 HD channels on top of the base pack, it would cost you an extra Rs 100 just in terms of network fees, in addition to the extra content charges.

This is especially important considering that many broadcasters are insisting on customers buying their mega packs that come with 20 or 40 channels.

If someone buys such packs, he would end up paying network charges for 150 or 250 channels in all, which alone could come to Rs 200-350 per month, while in Sun Direct, it would be capped at Rs 153.

As such, Sun Direct’s decision to cap network charges at Rs 153, other players in the market — such Airtel Digital, D2h, Tata Sky and Dish TV — will also come under pressure to rethink their pricing strategy as well.

Sun Direct is one of India’s top players in terms of HD content, even though its standard definition line-up is focused more towards the South Indian market. It offers around 300 channels in all, including 68 HD channels. Out of the 300, around 150 are free-to-air, while the others are pay channels and attract content charges.

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