TRAI cracks down on “free channel packs” under new tariff scheme

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One of the key aspects of the new tariff order of the TRAI that came into effect from February 1 was the uniformity of pricing among channels.

The distributor — a cable or DTH operator — had to charge the same network fee for any channel, irrespective of content or ownership.

So, whether it was a pay channel costing Rs 50 per month or a free channel that costs zero per month, the cable or DTH firm was supposed to charge the same network fee of a maximum of Rs 1.30 per month for delivering it to the customer.

However, many DTH and cable firms soon started flouting this rule in an effort to make more money than they otherwise could.

BROADCASTER SUBSIDY

They decided to make some extra money by helping broadcasters push their channels into the homes of all customers, including those that did not opt for the channels.

This was done by reducing the network charge on these channels to zero and then activating them on all customer set-top-boxes irrespective of customer choice.

For example, a distributor that was offering channels at a network charge of Rs 1.20 would tell broadcasters that it would auto-activate their channels at all its customer premises for free if the broadcaster would pay them an x amount, say Rs 5 cr per year.

Broadcasters agreed to do this because now, the DTH or cable operator could switch on their channel to all their customers without waiting to get the consumer’s preference or permission. This could help them make more money via advertisements.

Thus, the broadcaster benefited by having their channel activated for all subscribers, while the DTH provider benefited by getting extra income from the channel owner and the customer got free channels.

However, the TRAI doesn’t seem to have taken this attempt ‘game’ the new tariff rules lightly.

It has sent notices to two DTH providers — Dish TV and Airtel Digital — earlier this week asking them to make sure that their plans are fully in compliance with the new tariff order that prohibits different network charge for different channels.

It asked the Dish TV and Airtel Digital to ‘resolve’ the matter quickly.

Other DTH providers doing the same thing can be expected to get the same notice from the TRAI soon.

WHY IS TRAI ANGRY?

This leads to the question of why the TRAI is angry. Shouldn’t TRAI just leave the matter, given than it ‘benefits’ broadcasters, distributors and the consumer?

The reasoning followed by the regulator seems to be that allowing differential network charge — based on whether the broadcaster pays money to the DTH firm or not — would be against the core principle of equality and non-discrimination contained in the new TRAI Tariff Order.

It has also led to a situation in which a customer cannot turn off a channel, no matter what he does, if the broadcaster has paid money to his DTH or cable provider.

But beyond the concern for equality, allowing cable and DTH firms to push certain channels free while making others paid also distorts the principle of customer choice — core to the new tariff regulations.

TRAI’s new tariff scheme is based on the principle that the popularity of a channel will depend on whether consumers want to watch that channel, and not whether the owner of the channel can bribe a cable or DTH operator to push it into people’s homes.

In other words, TRAI wants to ensure that only those channels that have attractive content that people want to watch end up in people’s homes.

If this principle can be bypassed by channel owners by paying money to the DTH or cable operator, the whole purpose of the new regulations stands diminished.

Secondly, TRAI’s strict stand also stands to benefit customers in the long run.

Under TRAI’s strict stand, if cable and DTH firms want to charge money from broadcasters for access, the only way they can do so would be to make all free to air channels free of charge as far as network capacity fee is concerned.

They will be forced to come out with schemes like ‘unlimited channels’ at Rs 154 and so on, under which a basic network charge of Rs 154 is enough to watch all the free channels available on the platform, irrespective of the number.

Once the cable or DTH firm caps network fee at Rs 154, it could offer all the FTA channels on its platform in all its packs without contravening TRAI guidelines or introducing discriminatory pricing.

Such a scheme would benefit the customer more than the current scheme, in which only certain channels are being made available free.

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