Connect with us

Daily News

Why TRAI Does Not Like Bundling

Just as the Rs 74,000 crore Indian broadcasting industry was heaving a sigh of relief, comes a new whammy from the regulator.

On August 16 a ‘Consultation Paper on Tariff Related Issues for Broadcasting and Cable Services’ was released by the TRAI. “Barely a few months after the commencement of the NTO (or the New Tariff Order, implemented in February), before the industry and more importantly the consumer has fully adapted to the new regulatory regime, TRAI proposes a fresh consultation paper seeking to make fundamental changes in channel pricing and bouquet formation. This goes against all norms of a stable regulatory regime so necessary for the economic advancement of any industry,” says an Indian Broadcasting Foundation press release on August 23.

Even if you ignore broadcasters’ protests, TRAI’s haste and the paper itself defies understanding.

Over the 15 years that the TRAI has been broadcast regulator, most of its papers have been clear cut and well analysed. This one is essentially a rant against bundling. It was a big thing in the original order. In January when I asked R.S. Sharma, chairman, TRAI, about it, he said, “We are not anti-bundling.” But this new paper goes on and on raising questions on bundling versus a la carte channels, on how much discounts should be offered, the ceiling on pricing etc.

The timing is totally off. The market is just five months into the tariff order. Its impact is still being processed.

The first positive impact, and for which the TRAI should take credit, is that it has brought transparency and method. As a result broadcasters’ subscription revenues and MSO revenues have gone up as more homes are declared and revenue leakages plugged. However, as people pick and choose channels, many channels have lost reach and ad growth across broadcasters has plummeted.

Second, prices have gone up because there is now a network capacity fee of Rs 154 per home per month (including taxes) for a basic tier of 100 channels. Of these 25 Doordarshan channels are mandatory, so essentially you pay for 75 channels assuming they are free-to-air. Pay channels are priced separately. Note that over 28 years of private television, the average cable TV prices have remained way below inflation rates when compared to many essential commodities. And cable television is not an essential commodity.

Third, consumer choice has gone down. On an average, Indian homes watched 40-60 channels a month. These are of different genres — sports, music, entertainment, films, all in different languages. After the tariff order this number has gone down to 32-48 channels a home, according to one broadcaster. Remember that 98 per cent of India’s 197 million TV homes have one TV which is watched jointly. So dad, mom, kids, grandparents all have their choices.

Anti-bundling diktats have led to people dropping channels, killing serendipity from content discovery and forcing viewers into silos defined by genres or languages only.

This is where TRAI’s arguments that bundling is against consumer interests unravel. Globally bundling is a done thing in most industries — airlines, hotels, media, consumer products and most importantly in telecom which the TRAI regulates. Buffets are usually cheaper and offer more variety than an a la carte meal.

The fourth impact, not surprisingly, has been a migration of about 2 million homes from cable to DTH which now stands at 70 odd million. DTH with its backend, call centres et al is better equipped to deal with the flexibility needed to give you five channels from different broadcasters or to change that overnight. However, a bulk of the TV homes in India, about 100 million, are with cable companies which do not have the flexibility or backend to make one channel-at-a-time changes. This is frustrating for consumers who don’t get their choice of channels or are offered a best-fit package. As revenues improve and money comes back into the system most MSOs will invest in technology and this too should get sorted.

What then was the hurry with this paper?

Step back for a bit to see the pointlessness of debating bundles, choice and flexibility in 2019. Hotstar, Zee5 or Voot sell the same channels/programming that their parents Star, Zee or Viacom18 do. But their prices are not regulated: nor should they be. Why then should the price at which the same channels and programming are sold on cable or DTH? There are three different technologies, cable, DTH and online, countless devices and packages that the consumer can watch his TV or entertainment on. What is the need to nano-manage this industry to death?

Most media regulators such as the UK’s Ofcom usually calculate the cost of regulating versus not regulating by doing impact analysis for any new recommendation. It is time the industry and consumer organisations demanded that TRAI does the same. That might change its mind about rushing in with consultation papers every few months.―Business Standard

Click to comment

You must be logged in to post a comment Login

Leave a Reply

Copyright © 2021.Broadcast and Cablesat

error: Content is protected !!