MxMIndia

Tag: Tariff Order

  • MxMIndiacaught up with various stakeholders of broadcast and cable industry to get their responses on the recently issued TRAI tariff order and to understand their respective concerns in the run up to digitization of cable television

    54 Days to D-Day | Industry voices concerns on sunset date (Video)

    By Shruti Pushkarna

     

    With less than 60 days to go for the switch from analog to digital distribution, different stakeholders of the broadcast and cable industry are battling out their respective concerns with the government and the regulatory authority. Following the Tariff Order and Interconnection Regulations for the Digital Addressable Cable TV Systems issued by Telecom Regulatory Authority of India (TRAI), a lot of stakeholders have raised issues that will affect their business in which they deem the order to be unfair.

     

    While the News Broadcasters Association (NBA) protested against the carriage fee mentioned in the order, local cable operators (LCOs) carried out a black flag protest during the recent Assocham event attended by the Minister for Information and Broadcasting, Ms Ambika Soni. The LCOs have objected to the revenue share prescribed by the regulator and the Multi System Operators (MSOs) have expressed concern over the increased number of ‘must carry’ channels mandated by TRAI.

     

    MxMIndia spoke to a few representatives of the industry to understand their concerns in the run up to digitization.

     

    Ashok Mansukhani, President, MSO Alliance

    What’s your first response to the Tariff Order?

    The Tariff order has a mixture of good and bad. Fundamentally, it lays out the path for digitization but there are certain issues which worry us like the mandatory ‘must carry’ channels. We don’t think that’s a fair thing to do, if the broadcasters have the right to decide how many channels to bring to India or create within India, we should have the right to decide what should be the capacity, obviously the capacity is much larger in a big city than a small city. Apart from that, there are some issues on revenue share, which is based on a formula which is pending in the Supreme Court. Our worry is that if the Supreme Court decides otherwise, the whole business model would break down. These are the main two concerns.

     

    News broadcasters are objecting to the carriage fee mentioned in the order issued by TRAI, what’s your view on it?

    Now everything will be transparent. What is possibly going to happen is that carriage fee, which is creating such a big hoo-ha today, will get replaced by genuine pay channel ecosystem but that is about five years away. In the current process, we have to digitize about a 100 million homes and enormous sums of money are required but no fiscal incentive or tax incentive or infrastructure incentive has been given by the government. I think in the run up to digitization, the broadcaster should not derail the process; rather they should sit down with the cables operators and the MSOs and work packages with attractive content and at compelling rates to attract consumers. I think that’s really what they should be doing instead of writing editorials about carriage fees.

     

    Do you think the sunset date of June 30 is achievable?

    No, it’s not achievable. There are just 60 days left. The negotiations with broadcasters have not begun. The revenue shares are default revenue shares but no discussions with operators have taken place. No agreements are in place. Out of 10 million boxes, only 2 million boxes have been installed. Many of those boxes don’t have smartcards, in other words, they don’t have the conditional access system, and they are vanilla digital set top boxes. I think it’s high time for the government to carry out a reality check. I am sure this will be discussed in the next task force and I am sure government will fix a new date.

     

    Jehangir Pocha, CEO, INX News

    What’s your first response to the Tariff Order?

    The TRAI order has been a disappointment to news broadcasters because we were repeatedly told that there would be no carriage fee. We were repeatedly told that there would a mandated EPG or menu system, which has not been delivered. These two things add up to a huge financial burden on broadcasters, especially news broadcasters, an industry that is, contrary to public assumption, not doing at all well, that is facing huge financial burdens and many channels have gone bankrupt.

     

    Apart from carriage, do you see any other issues in the run up to digitization?

    I think the other issues are really about the willingness and commitment with which the policy can be rolled out because this is going to disrupt some vested interests, it’s going to disrupt a regular way of doing business and therefore, there is going to be a natural push back. But the concept of digitization is superb, it’s wonderful that the government and the regulator have pushed for it, but there have been some imperfections in what they have presented. Another thing that doesn’t make enough economic common sense to me is how the price was set so low for free channels and pay channels because the entire industry’s problems stem from the fact that the consumer is literally being subsidized by paying such low price for content, which in every other country, costs so much more. How this price has been set, by whom and who’s paying for the inherent subsidy in this, there hasn’t been enough transparency on this.

     

    Both NBA and the IBF have expressed disconcert at the carriage fee in the order issued by TRAI, but the TRAI maintains that there is no cause for dissatisfaction on carriage fee. As a news broadcaster, what will be your next step?

    I think we will have to explain to TRAI and the ministry just what the imperfections in this otherwise very positive bill are, and how they will create a huge financial burden for news broadcasters, how it will push us towards bankruptcy, how it will stop us from being able to create quality content and how it will, in fact, stop us from growing. If the government is interested in inclusive growth, news broadcasters play a very valuable role in this industry and in this nation. And our financial concerns should be addressed in some manner both by TRAI and the government.

     

    Do you think the sunset date of June 30 is achievable?

    Everything is achievable if the intent is there. There may be some practical concerns but let’s be realistic, while the policy is being presented now, we knew for 6 to 7 months that it was going to happen and I’m not sure if MSOs and LCOs spent adequate amounts of money, time and effort on preparing for this day, which they knew was coming. Now they are saying, this day has come and we need more time. We have seen consistent attempts to delay digitization, and I think we should have very little patience with more delays.

     

    Pulak Bagchi, VP, Star India

    What’s your first response to the Tariff Order?

    It’s a step towards the right direction and I think it will be path breaking in terms of the reforms it triggers in the cable space.

     

    What’s your view on the concerns being raised by news broadcasters over carriage fee?

    Carriage is a phenomenon which is certainly not new – it’s been around since the inception of the industry. What TRAI has done is only put a method into the madness, which should be commended. Earlier, there was no transparency in the payments that were being made, now atleast you’ll be having a foothold into the figures. You’ll also be able to determine whether they are reasonable or not. TRAI has also said that they will be intervening in cases of arbitrary levels. So there’s really no cause for concern. I think we should not be pressing the panic button; it has taken so many years for the government and the regulator to come up with these formulations. It’s important that we live up to the mandate and we must also give regard to the expectations of the people of this country. Given that digitization is a reality today, the sooner we embrace it, the better.

     

    Do you think the sunset date of June 30 is achievable?

    It is, because it’s targeted towards four major cities where it’s not an alien concept. Perhaps there will be some incremental approaches that will be taken in those respective areas and I’m sure that the deadline could be met. There’s no difficulty in abiding by the timelines.

     

    Are there any marketing initiatives or consumer awareness campaigns that you are undertaking in the run up to digitization?

    Star and IBF have made it mandatory for all members to spread awareness in their respective channels. We are carrying out marketing campaigns, we are also doing citizen focused awareness programmes where people can be brought up to speed with what digitization is all about. And we are also trying to infuse in the public sensibilities as to why it is good for them.

     

    Roop Sharma, President, Cable Operators Federation of India (COFI)

    What’s your first response to the Tariff Order?

    It’s very bad from LCO’s perspective. Since there is a vertical monopoly and no cross media holding, none of the MSOs will be negotiating with the cable operator and if they don’t negotiate with the cable operator, the latter will end up taking only a Rs45 share, with which the business becomes unviable and the LCO will be unable to give better quality service to the consumer. Even the set top boxes, which are going to be put, are of vanilla quality, they are very primitive boxes. Consumer will not be able to get internet, broadband or other services on the same box. Cable operator has to spend so much money in upgrading and the government has just mandated a technology. We are even ready to upgrade, but we must get a proper share. The regulator wants to be the controller of the business. As a result, lot of cable operators will be forced to sell off their network or the network will die its own death. There will be a lot of unemployment generated in the market.

     

    Do you think the sunset date of June 30 is achievable?

    No, the timeline is very short. First is the procurement of boxes – in Chennai none of the MSOs have given any orders for boxes. Even in Kolkata, we are hearing that the state government was not consulted.

     

  • The Indian Broadcasting Foundation (IBF) has welcomed the Tariff Order but sought clarity on carriage fees that are crippling the industry

    IBF welcomes Tariff Order, seeks clarity on Carriage

    By A Correspondent

     

    The Indian Broadcasting Foundation (IBF) has welcomed the initiatives taken by the I & B Ministry and TRAI in bringing about much needed reforms in the cable sector.

     

    The Tariff amendments and the new Interconnect regulations for Digital Addressable Cable brought about by the Telecom Regulatory Authority of India (TRAI) will inject necessary transparency across the value chain. With a slew of consumer friendly measures – namely choice of packages and introduction of Basic Service Tier, TRAI has ensured that all subscribers of varied socio economic background are duly taken care of and provided for. IBF also welcomes the mandate to enhance the channel carrying capacity to a minimum of 200 channels wef July 1, 2012 and 500 channels wef January 1, 2013.

     

    The new interconnect regulations have brought within its wake the much awaited specifications for digital addressability while at the same time laying down the eligibility criteria for availing signals. The reporting requirements will help the government in plugging leakages while the provisions on disconnection of signals will ensure that all stakeholders are aware of their rights and obligations.

     

    Overall the Tariff Order and the Interconnect Regulations read with the amended Cable TV Act and Rules are steps in the right direction and will help the country to make the digital transition.

     

    However, a big area of concern for Broadcasters is Carriage Fee. The Broadcasters have taken up this issue in various discussions with the TRAI and the Government in the past. Carriage Fee has crippled various broadcasters, especially the smaller sized companies, and it has restricted a broadcaster’s ability to invest in content and other activities of a channel. Therefore, there is an urgent need to revisit this issue and IBF will seek clarity on this matter from TRAI.

     

    India is on the threshold of a digital makeover and IBF trusts that this will, over a period of time, make way for more freedom to stakeholders as digitalization acquires critical mass and the country gains more confidence in bridging the digital divide.

     

  • The loophole allows distributors to surreptitiously charge ransom-like placement fees from broadcasters

    58 Days to D-Day | Analysis: TRAI’s Tariff Order will make channels bleed more

    By A Correspondent

     

    In another major blow for TV channels, the Telecom Regulatory Authority of India’s (Trai) recent tariff order for digitization has a loophole that allows distributors to surreptitiously charge ransom-like placement fees from broadcasters. While this would be true for all tiers, it would be especially compounded in the Basic Service Tier (BST) where around 80 private free-to-air (FTA) channels are to be offered at Rs100 a month.

     

    This makes for a crippling double whammy for TV channels and makes the “must carry” proviso meaningless as Trai has also legitimized the usurious carriage fee racket which has turned multiple system operators(MSOs) and cable companies into the most profitable part of the Indian TV industry, even as it has bled nine-tenths of the TV channels into sickness.

     

    Over and above their other costs, TV channels annually pay over Rs3,500 crore as carriage fees alone, but collectively receive around Rs4,000 crore only of the approximately Rs20,000 crore paid by India’s viewers to cable companies and distributors.

     

    Trai’s own report had said that there was evidence of tax evasion in the cable industry while independent industry estimates have routinely put under-declaration by this cash-rich industry at a whopping four-fifths of its subscriber base – all of which allows for thousands of crores to be denied to the exchequer every year.

     

    According to an estimate, the government had lost around Rs5,950 crore in 2006-2011 in service tax alone due to under-declaration even as it posited the income tax evasion during this period at Rs17,413 crore, besides the loss of entertainment tax by states.

     

    In this situation, industry sources said, Trai’s move to force TV channels to pay carriage fees to distributors, ostensibly to enable them digitize their systems, was totally unacceptable. “There is no justification for robbing the already impoverished TV channels to pay the rich distributors, as they have had a favourable business model for years, and in any case, would reap the rewards of digitisation far more than any other segment of the TV business,” said an industry source.

     

    Adding that there was no justification for making the broadcasters pay for upgrading the infrastructure of the MSOs, they pointed out that upgradation was a one-time investment, but the carriage fees would continue to be an annual recurrence for broadcasters who, in any event, could not be suddenly made the medium to fund distributors.

     

    Broadcasters are especially aghast by this move as the prices of their channels are regulated and have been frozen for years, even as distribution costs have been allowed to rise unchecked in the garb of scarcity of bandwidth – problems which were supposed to have been addressed by digitization.

     

    Industry sources told ET that while they welcomed the Rs100 BST for 100 channels as being in consumer interest, there was a hidden minefield in the Trai tariff order that had come as a further shock. They said that the new order had no rules banning placement fees for channels in any tier, including the BST, and hence, this would again allow cable companies and distributors to fleece TV channels by demanding huge sums of money.

     

    Distributors already demand placement fee for placing the channel in a particular slot – by a process known as Electronic Programme Guide management. However, they had hoped digitization to end this malpractice.

     

    This problem is especially compounded, with the BST having only a restricted number of private free-to-air channels in its basket of 100 channels, compared to the large number of channels in the market place. As per the rule, at least five channels are to be carried in each of the following genres: movie, general entertainment, children’s content, news and current affairs and sports. This would allow distributors to cherry pick the minimum five channels in each genre and demand a huge placement fee to carry them since there are many more channels in each genre, language or market. In addition to carriage fees, this would be a crippling double whammy for broadcasters, sources specified.

     

    The solution, sources said, would be to increase the numbers of channels and also ensure an equitable, but not equal, split between genres, since there is a larger proportion of news channels to, say, sports channels.

     

    They also said that there was another burden in store for TV channels that Trai did not appear to have foreseen: Since every broadcaster would like to place its channel in the BST, the distributor could potentially subvert the letter and spirit of the Trai digitization order by fixing the carriage fee of the BST much higher than the carriage fee of its platform.

    CARRIAGE FEE

    Earlier, the News Broadcasters’ Association had slammed the Trai move to legitimize the ransom-like carriage fees charged by distributors, which have now been made a mandatory payment by all the broadcasters to the MSOs. Under this order, the MSO will not be bound to carry the channel of a broadcaster unless it pays carriage fees – which means that the broadcaster would have to pay carriage fees to the MSO to be carried on its platform – which would be decided solely by the MSO and would differ from MSO to MSO even in the same geography.

     

    Industry sources said legitimizing carriage fees could sound the death knell for small broadcasters, particularly the regional channels. The Trai move also goes against the concerns showed by the government for small regional channels. Information and broadcasting minister Ambika Soni, in a Parliamentary motion to discuss the Cable Television Networks (Regulation) Amendment Bill, 2011, had said: “This process of digitalization, I feel, would have a major impact on regional channels. They do not get on to national carriages. They cannot pay the high (carriage) fee. There are small channels catering to different states…”

     

    MUST CARRY

    However, the nub of the matter was that the evil of carriage fee would be abolished only if the capacity constraint was adequately addressed by mandating MSOs to increase their capacity to 999 channels instead of just 500 channels.

     

    India currently has around 800 registered channels available in the market and more are lined up for approval in the information and broadcasting ministry.

     

    Despite this, surprisingly, Trai has put the minimum number of channel at 200 for small distributors and 500 channels for large distributors, which frustrates the purpose of “must carry” as outlined in the regulation. “Assuming for a moment that every broadcaster is willing to pay the carriage fee declared by the MSO in its RIO, how is the MSO going to carry all the channels on its platform if it has no capacity to carry all the channels,” sources asked.

     

    They feared that the end result would be increased litigation between the broadcasters and distributors, thus potentially adversely affecting the smooth rollout of digitization. They said the situation can be salvaged only if Trai increases the numbers of “must carry” channels to atleast 500 channels by June 30 and 999 channels by January 1, 2013.

     

    Industry sources also pointed to other major systemic issues which the Trai order had failed to address.

     

    First, MSOs have been given the unfettered rights to decide the maximum retail price of the channels they carry- a move that would adversely affect both consumers and broadcasters as the MRP of the same channel could be different at the platform of every MSO. This would not only create confusion among the consumers, but would also increase the number of disputes apart from potentially allowing distribution platforms having their own channels a distinct advantage to manipulate for their own benefit. Sources said the solution to the peculiar situation was in allowing the broadcaster to have a say in fixing the MRP as is the right of manufacturers in all other sectors.

     

    Second, the freeze on the price of a TV channel – which had been introduced as a temporary measure – had not been lifted even after eight years. This has seriously affected broadcasters as many have not been able to recover their basic cost of operation. Given that there are more than 800 channels, with more in the pipeline, market forces should be allowed to play out.

     

    Source: The Economic Times
    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

     

  • The News Broadcasters Association (NBA) has expressed 'shock" and "dismay" at TRAI's Tariff Order.

    [60 Days to D-Day] NBA damns Order for ‘legitimizing’ carriage fees

    By A Correspondent

     

    News Broadcasters Association (NBA), the apex association of Indian news broadcasters, has expressed “shock” and “dismay” at TRAI’s Tariff Order.

     

    The Notification has legitimised the very practice the NBA had hoped would be ended, said secretary general Annie Joseph in a communiqué, referring to the payment of “steep” carriage fees by broadcasters: “The primary purpose of digitisation was to increase the number of channels broadcasted. The objective was to give consumers greater choice and to eliminate the phenomenon of ‘carriage fees’, which were being charged due to capacity constraints. However, the NBA is distressed and disappointed that TRAI’s new notification has actually legalised the practice of ‘carriage fees’ and given distributors the freedom to unilaterally set the amount of ‘carriage fees’ broadcasters must pay.”

     

    Ms Joseph added: “This unfairly penalises broadcasters and threatens the very survival of the broadcasting industry.” The NBA has urged the government and TRAI to take corrective action.

     

    A member of the cable trade pooh-poohed the NBA’s reaction as childish. “Let them set up their own distribution mechanism and see how much they will need to pay. If we bleed, they will cease to exist,” a senior industry person told MxMIndia, requesting anonymity.

     

    We are fine with rationalising carriage fees, but not eliminating them, the industryperson from the distribution sector added. “They should look at increasing ad rates to earn more,” he said, arguing that carriage fees are justified

     

  • We shall all have to brace ourselves to a large surge in operational logistics at the last minute, but yes all this is surmountable, says Neeraj Sanan, EVP- Marketing and Distribution, MCCS

    [60 Days to D-Day] All stakeholders need to work together: Neeraj Sanan

    The Telecom Regulatory Authority of India (TRAI) issued new rules refurbishing the regulatory structure of the broadcasting, cable and DTH industry ahead of the digitization switch over in four metros, Delhi, Mumbai, Kolkata and Chennai from July 1. The order deals with issues such as channel availability, channel pricing, carriage fee and revenue sharing.

     

    Digitization is being seen as the game changer for the Indian TV industry, expected to bring a sea change for viewers, broadcasters and cable operators. The broadcasting industry is expected to see a growth in subscription revenue post digitization, as opposed to the present model where they depend largely on advertising revenue.

     

    As per the new guidelines, ‘The Broadcaster would enjoy ‘must carry’ provision from 1.1.2013 or 1.4.2013 as the case may be, for Hindi, English and channels in the regional language of the concerned area.’  In the order, TRAI has also addressed the much debated issue of carriage fee. The order states, “Keeping in view the fact that substantial investment for implementation of Digital Addressable Cable TV Systems is made by the MSO and the cost involved in carriage of channels, the Authority has decided that every MSO may fix the Carriage Fee. However, it should be published in the Reference Interconnect Offer and applied in a uniform, non-discriminatory and transparent manner. The Carriage Fee cannot be revised upward for a minimum of 2 years. The Authority would intervene in case it is felt that the Carriage Fee is unreasonable.”

     

    The regulatory has also prescribed the MSOs to increase their channel carrying capacity, stating that every MSO should have a minimum capacity to carry 200 channels by July 1, 2012.

     

    MxMIndia’s Shruti Pushkarna spoke to Mr Neeraj Sanan, EVP- Marketing and Distribution, MCCS to get his response on the Tariff Order and Interconnection Regulations for the Digital Addressable Cable TV Systems issued by TRAI.

     

    What’s your first response to the Tariff Order? Specifically the MCCS position?

    It is a reaffirmation of the government’s stated position and something that TRAI has been working towards for a long time.

     

    The TRAI observes that the Order will help profitability of channels. But carriage fee exists. Do you think your bottomline will be impacted in a positive way with this?

    The TRAI’s order will help all stakeholders move to a position of working in a structured manner. A well-run business can hope to get its deserved profit.

     

    Do you see the implementation happening in the four metros before July 1?

    I understand that a lot of intelligent people in well-run MSO and LCO organizations are working round the clock to make it happen. A key factor here will be for the government to continue to do what it has been saying. We shall all have to brace ourselves to a large surge in operational logistics at the last minute, but yes all this is surmountable.

     

    What are the marketing initiatives you are undertaking to ensure that you retain viewers?

    This is a challenge more for a distributor.

     

    Do you think the government is doing enough to promote the switch to digitization and explain the benefits to consumers?

    There is always something better we could do, but yes, government has been consistent in it’s thought. Now it is for all stakeholders, including all state governments to realize the prudence of digitization and work together to make it happen.

     

    Are there any areas of worry in the run-up to digitization (given that we have just 60 days to go)?

    No constructive business happens without risk and yes there are a lot of things that could go awry but if all players remain aligned, this is achievable. We should all realize that it is history being written everyday for distribution and we need to carefully tread this path.

     

  • MxMIndiaspoke to Sahil Gupta, Senior Manager, Tax and Regulatory Services, PwCIndiato get his reading of the tariff order for cable TV issued by TRAI.

    [60 Days to D-Day] Digitization good for industry: Sahil Gupta, PWC

    The Telecom Regulatory Authority of India (TRAI) issued the Tariff Order and Interconnection Regulations for the Digital Addressable Cable TV Systems on April 30.

     

    Aimed at providing the viewers with a better viewing experience and maximum choice, digitization is being seen as the biggest change broadcast and cable industry in the country is set to witness. Television viewers will get to choose a minimum of hundred Free to Air (FTA) channels at a maximum retail price of Rs100, as per new tariff rules for Cable TV announced by TRAI.

     

    The order states: “The basic purpose of digitization is to ensure ample choice to the consumer as well as to enable him to budget his subscription according to his paying capacity. Accordingly, the Authority has mandated MSOs to carry a minimum of 500 channels from January 1, 2013. However, keeping in view that the smaller MSOs having less than 25000 subscribers may need some additional time for building the capacity, they have been given time up to April 1, 2013. Besides, to ensure that the consumer is not adversely affected, the Authority has prescribed that every MSO should have a minimum capacity to carry 200 channels from July 1.”

     

    In the new guidelines issues, TRAI has also addressed issues pertaining to revenue sharing between MSOs and LCOs, carriage fee paid by broadcasters, channel pricing and so on.

     

    Mr Sahil Gupta, Senior Manager, Tax and Regulatory Services, PwCIndia shared his analysis of the recent order with MxMIndia’s Shruti Pushkarna and how he sees digitization as a win-win for all.

     

    What is your view on TRAI’s Tariff Order? 

    It’s a pro-consumer directive. Consumers can now pay for what they want to see, unlike in today’s time when they purchase a bouquet which has unwanted channels as well. Hence a la carte selection works more cost-efficient for consumers.

     

    So do you see digitization as a win-win for all?

    Digitization per se is good for the industry – consumers get better quality reception, broadcasters can know their exact consumer base, which will help them realise full value from MSOscable operators (which gets under-reported in current times based on what subscription base the intermediaries disclose to broadcasters). Moreover, it helps in bringing addressability in the system.

     

    Do you think the government is serious about the July 1 deadline?

    The government is taking a lot of initiatives to push digitization – it has a stakeholders’ meeting every week or two weeks and is helping stakeholders migrate to the new system. They are thus doing their bit for helping meet the deadline of July 1.

     

    But on the ground we hear that there is much to be achieved?

    The infrastructure is what is taking time. The digital/upgraded set top boxes need to be procured and be ready for installation at the consumer’s end. Some MSOs/cable operators are looking at funding mechanisms for meeting these procurement needs, while others are working towards building a right procurement strategy for the same. All in all, the industry is gearing up for it and all stakeholders doing their bit.

     

    Your view on the guidelines for carriage fees in the Order?

    Carriage fee is what MSOs charge broadcasters for carrying their channels to viewers. Some element of arbitrariness gets reduced from this Order as it needs to be uniform and non-discriminatory across all broadcasters. The TRAI will step in if it’s unreasonable and this will help.

     

    And on pricing of channels?

    The limits on pricing mentioned in the order is aimed mainly at ensuring that channels, especially popular ones, are not priced high.

     

    There’s also a mention on the revenue sharing between MSOs and cable operators…

    There seems to have been certain disputes between MSOs and cable operators in regard to sharing of distribution revenues. Prescribing the revenue sharing formula, in absence of an agreement between them, will help and bring in transparency…

     

     

  • We will need a postponement of at least three to four months. The tariff order has just come; there are so many other issues such as DAS licenses being not issued till date, says JS Kohli, CEO of Digicable

    [60 Days to D-Day] Digitization in 4 metros will not happen by July 1: JS Kohli

    Late Monday night, Telecom Regulatory Authority of India (TRAI) announced the new tariff structure for digital cable TV services. Under the new rules, all cable operators will have to mandatorily offer a Basic Service Tier (BST) to viewers which would consist of 100 free to air channels, including 18 mandatory Doordarshan channels, as well as the Lok Sabha channel. The tariff order states that apart from the mandatory channels in the BST, cable operators and Multi System Operators (MSOs) will have to provide customers a minimum of five channels of different genres.

     

    The authority also stated that MSOs will have to increase their channel carrying capacity. TRAI stated: “The Authority has mandated MSOs to carry a minimum of 500 channels from January 1, 2013. However, keeping in view that smaller MSOs having less than 25,000 subscribers may need some additional time for building capacity, they have been given time up to April 1, 2013.” The TRAI has prescribed that every MSO should have a minimum capacity to carry 200 channels by July 1.

     

    TRAI has also established new guidelines for revenue sharing between Multi System Operators (MSOs) and Local Cable Operators (LCOs).

     

    MxMIndia’s Shruti Pushkarna spoke to Mr Jagjit Singh Kohli, a veteran of the cable industry and CEO of cable distribution firm Digicable, on his reading of the latest order issued by TRAI and if he thinks the sunset date of June 30 is still achievable.

     

    What’s your first response to the Tariff Order?

    Well, the order is on expected lines, no big surprises there. Given the circumstances, I am happy with it, in the sense that we know the regulatory has been operating under tremendous pressure from various stakeholders, so given that situation, I am actually happy with the order.

     

    TRAI has observed that the Order will help profitability of channels. But carriage fee exists. Do you think the bottom line will be impacted for both broadcasters and the cable trade?

    The channel capacity is increasing to 500 channels, so automatically the pressure on carriage will reduce. So, although the carriage fee remains but the channel capacity itself is increasing so much that the price per channel will come down.

     

    Given the status as of today, do you see the implementation happening in the four metros before July 1?

    Now, that I don’t think will happen. We will need a postponement of at least three to four months. The tariff order has just come; there are so many other issues such as DAS licenses being not issued till date. To meet the deadline the industry needs to deploy atleast 150,000 boxes every day, only then will we be able to meet that deadline, and that’s impossible.

     

    What about the availability of set-top boxes?

    Even that is an issue. But even if set top boxes were to be made available, it would be very difficult to meet the deadline.

     

    Do you think the government is doing enough to promote the switch to digitization and explain the benefits to consumers?

    Yes, you can’t blame them on this. They have been quite aggressive on the timelines and in their campaigns.

     

    Are there any areas of worry in the run-up to digitization (given that we have just 60 days to go)?

    The only area of worry is that we will need some more time to meet the deadline, otherwise everything is fine.

     

    Photograph: Fotocorp

     

  • The much awaited TRAI order on tariffs is out paving the way for the digitisation regime in metros starting July 1

    TRAI issues tariff order for cable TV

    By A Correspondent

     

    The Telecom Regulatory Authority of India issued the Tariff Order and Interconnection Regulations for the Digital Addressable Cable TV Systems late yesterday.

     

    While the Tariff Order has been issued as an amendment to the existing Tariff Order for addressable systems, the Interconnection Regulation is comprehensive one for the Digital Addressable Cable TV Systems.

     

    As per the communiqué, here are the salient features:

     

    1. All channels (pay and free-to air) to be offered on a-la-carte basis to subscribers.

     

    2. There will be a Basic Service Tier (BST) consisting of a minimum of 100 free-to air (FTA) channels comprising at least 5 channels of each genre namely news and current affairs, infotainment, sports, kids, music, lifestyle, movies and general entertainment in Hindi, English and regional language of the concerned region. 18 channels of Public Broadcaster and Lok Sabha channel will also form the part of the BST. While Multi-system Operator (MSO) has to offer the Basic Service Tier, it is not obligatory for subscriber to subscribe to the BST. Instead subscriber can form his own package of a maximum of 100 FTA channels.

    In either case the MSO cannot charge the subscriber more than Rs100 per month.

     

    3. It shall be open to the subscriber to subscribe to the BST or one or more FTA channels or one or more Pay channels or bouquets offered by MSO or any combination of these.

     

    4. In case subscriber chooses Pay channel(s) with or without FTA channel(s) the MSO can fix a minimum monthly subscription not exceeding Rs150. If the total value of the channels/ bouquets opted by the subscriber exceeds Rs150 then actual subscription charges has to be paid.

     

    5. The basic purpose of digitisation is to ensure ample choice to the consumer as well as to enable him to budget his subscription according to his paying capacity. Accordingly, the Authority has mandated MSOs to carry a minimum of 500 channels from 1.1.2013. However, keeping in view that the smaller MSOs having less than 25000 subscribers may need some additional time for building the capacity, they have been given time up to 1.4.2013. Besides, to ensure that the consumer is not adversely affected, the Authority has prescribed that every MSO should have a minimum capacity to carry 200 channels from July 1, 2012. Authority expects that all the MSOs operating in areas of Phase-II onwards to take suitable measures to enhance the channel carrying capacity to 500 channels.

     

    6. Only those MSOs that have the requisite capacity, as mentioned above, can invoke ‘must provide’ clause. The broadcasters shall not provide their channels to MSOs who have channel carrying capacity of less than 200 channels immediately and less than 500 channels from 1.1.2013 or 1.4.2013 in case of smaller MSOs.

     

    7. The Broadcaster would enjoy ‘must carry’ provision from 1.1.2013 or 1.4.2013 as the case may be, for Hindi, English and channels in the regional language of the concerned area.

     

    8. The provision relating to amount charged by broadcaster to MSO remains unchanged. They can charge a maximum of 42 per cent of the rate, they charge in the non-addressable systems.

     

    9. The Authority has addressed the issue relating to the Carriage Fee. Keeping in view the fact that substantial investment for implementation of Digital Addressable Cable TV Systems is made by the MSO and the cost involved in carriage of channels, the Authority has decided that every MSO may fix the Carriage Fee. However, it should be published in the Reference Interconnect Offer and applied in a uniform, non-discriminatory and transparent manner. The Carriage Fee cannot be revised upward for a minimum of 2 years. The Authority would intervene in case it is felt that the Carriage Fee is unreasonable.

     

    10. The MSOs can fix the retail tariff and also package and price offerings. However, the sum of the a-la-carte rates of channels, forming part of a bouquet, shall not exceed 1.5 times the rate of the bouquet. Further, the a-la-carte rate of any channel shall not exceed 3 times the average channel rate of the bouquet.

     

    11. The July 2010 Tariff Order provides that the revenue share between the MSO and LCO shall be based on mutual negotiations. The Authority has now prescribed that in case the mutual negotiations fail, the revenue share shall be in the ratio of 55:45 (MSO: LCO) for BST or FTA channels. The revenue share for Pay channels or bouquet of Pay channels with or without FTA channels shall be in the ratio of 65:35 (MSO: LCO).

     

    12. Implementation of Digital Addressable Cable TV Systems will lead to better choice to consumers, variety and quality of content, adequate revenue to stakeholders and healthy environment for the industry in addition to bringing in transparency in the business transactions and subscriber base. It would also ensure that the Government receives the due revenue.

     

    Details of the Interconnection Regulations and Tariff Order are available on TRAI website: www.trai.gov.in.