Cable, DTH Operators Face The OTT Threat

The Telecom Regulatory Authority of India (TRAI) will hold an open house meeting on 25 March, in which it will take views on formulating regulations, which currently do not exist, for over-the-top (OTT) companies of the likes of Netflix, Hotstar and their many peers. The meeting, to be followed by another one in Bengaluru, will be critical in collating the views of those who believe that these platforms are not operating on a level playing field vis-a-vis others who provide similar services. Cable and DTH operators for instance.

The rapid growth of OTT-delivered content consumption in India might not have led to television subscribers disconnecting their TV services yet, but this is a future possibility that cable and DTH players are very aware of, say industry sources. It is in this context that TRAI’s consultations, and what results from the process, are seen as crucial to the television distribution industry.

The issue, according to one Chennai-based cable operator, is that while it is possible for viewers on OTT platforms to gain access to TV content for free, cable and DTH subscribers have to shell out substantially more for the same content and with little of the flexibility that comes with OTT platforms. “These platforms have no regulations, but TV distributors have to pay license fees, comply with several other regulations. The advantage is all with them now,” he points out.

Girish Menon, media and entertainment head, KPMG, says the crucial question which needs to be dealt with in the consultations is one of ‘substitutability’. Essentially, can services provided by OTT content players be considered a substitute for those provided by cable and DTH operators? If so, do they compete within the same market on a level playing field?

“While catch-up TV is arguably ok, a lot of consumption on OTT platforms happens to be live TV, which is available for free on many OTT platforms. This will be the crux of the issue, whether OTT players compete directly with television distributors but without the regulations the latter have to comply with,” notes Menon.

While consumers have not yet followed up increased OTT consumption with cutting TV connections, this may become an issue going forward. Especially if the new TV tariff system makes it cheaper to access TV content on OTT platforms. “For broadcasters, this is not really a problem, since they get some revenue and viewership regardless of the platform. But this isn’t way out for cable and DTH players because their subscriber count will get hit,” Menon adds. If TRAI chooses to bring in a level playing field, it could see OTT players requiring licenses to distribute content or certain changes to tariff systems.―New Indian Express

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