Channel Churn: TRAI’s Attempts To Micromanage The Broadcasting Sector Have Backfired

The Telecom Regulatory Authority of India’s attempts to fix tariffs for the broadcasting sector have disrupted the TV broadcasting sector, without benefiting all stakeholders. The idea of allowing consumers to pick the channels they want to watch on a la carte basis was aimed at ensuring transparency, but the manner in which it has been implemented has led to higher costs for many subscribers. Under the new framework that came into effect from April 1, distributors of television channels can charge a monthly rental amount of maximum Rs. 130 per month from a subscriber for 100 Standard Definition channels. In addition, viewers may subscribe to any other paid channel individually. According to the regulator, 80 percent of subscribers, as per the viewing pattern given by BARC, either view or flip 40 or less number of channels. Therefore, the regulator argued, instead of paying for a bouquet of hundreds of unwanted channels, a consumer can carefully choose channels of her choice. This was supposed to put control back into the consumer’s hand, but in reality, it has become a nightmare for many consumers. The overall cost of accessing TV channels on a la carte basis have gone up by 25-50 percent for viewers who opt for top 10-15 HD channels. Those who do not want to subscribe on a la carte basis can no longer subscribe to an annual plan with all channels included. Challenges related to revenue sharing between multiple system operators and local cable operators had also emerged.

That TRAI has now undertaken a review of the entire framework within a few months of introducing it, is an acknowledgment that the tariff order was not working as intended. But TRAI’s latest attempt fails to address the core issue of enabling consumers to get access to TV content at affordable rates. For example, it has now proposed to impose a cap on the discounts being offered by broadcasters on bouquet offerings, in the hope that such a cap will make a la carte more affordable. This is a flawed approach, because making one product more expensive does not make the other product cheaper. TRAI also wants to regulate the number of bouquets and the type of channels in the bouquet. This may face more operational and legal challenges during execution. The broadcasting sector is already plagued with litigations between the various players and it is the consumers who bear the brunt of such disputes.

India is witnessing a strong wave of consumer migration from cable TV to streaming services. Content producers like Netflix and Hotstar offer programmes of different genres without any regulatory restrictions. Reliance Jio will soon start offering TV channels bundled with its broadband connection at Rs. 700 a month. TRAI should make sure that the same rules apply regardless of the technology used. Instead of micromanaging the broadcasting sector, the regulator should ensure a level playing field between various stakeholders to let market forces determine the winners.―The Hindu Business Line