MxMIndia

Tag: TRAI

  • It's not the job of the TRAI to keep broadcasters happy at all times. Occasionally it should be looked at from the consumer point of view, which is clearly the case here

    Peter Mukerjea: Thank you, TRAI (Now, please enforce it!)

    By Peter Mukerjea

     

    News today that TRAI have finally put a cap on advertising time per hour for TV channels is a most welcome move in my opinion. I’m sure all broadcasters, other than the savvy ones, will see this as a backward and a retrograde step because it means that they will start to feel the pressure initially, but I can assure them that this is not so, and the effect will be exactly the opposite on their adverting sales revenue line of their P&L sheets.

     

    First, it’s a simple case of supply and demand economics. Shrink supply and prices should go up. We see that with every product category, be it food, petrol, deisel, cooking gas, etc etc and TV airtime is no different. This will clearly help broadcasters shore up their revenue lines once they’ve managed to get media buyers and clients to understand this logic. That’s not going to be easy, but whoever said that selling TV airtime was a piece of cake.

     

    Ad sales executives in the numerous stations will now, finally, have to earn their keep, rather than simply earning good money and even better bonuses, simply by pushing in more ads into the breaks of movies, sports coverage and news channels. Programmers will need to work harder to get better deals from content suppliers and movie producers alike, instead of paying grossly inflated prices for movie titles and then having to recover the cost by stuffing the movies with ads, such that the viewer experience is diluted to the point of nonchalance. Of course, broadcasters will be up in arms with this directive from the TRAI and will kick and scream and throw their toys out of the crib like all babies do when they don’t get what they want. It’s not the job of the TRAI to keep broadcasters happy at all times. Occasionally it should be looked at from the consumer point of view, which is clearly the case here. So, thank you TRAI.

     

    Second, consumer groups that have had to put up with the barrage of advertising breaks in their TV viewing experience, for years on end, should be feeling relieved that finally the regulator has paid some heed to their woes of getting blasted with increased decibel levels in ad breaks, getting masses of drop downs  during live sports coverage and getting news channel tickers carrying branding of all kinds within it, masquerading as news headlines. Enough is enough and this was all done under the banner of self regulation!  In fact, the shoe should be on the other foot now and TRAI should consider setting up a consumer group forum who should be tasked with monitoring the violations to the new standards, as laid out by the TRAI and report these to the TRAI for further action and enforcement. So, thank you TRAI for improving the viewing experience of millions of long suffering TV viewers across the country.

     

    Sure, there will be several broadcasters who will now be unable to keep carrying more and more ads to secure their bottom line, who will suffer and will be pained by this statute and may well go to the wall and eventually go out of business, but sadly that is the reality of life. Those channels owned by big groups will not suffer at all as they will be able to withstand the initial blips and will come through this just fine. They will then also be at the forefront of the list of beneficiaries in a few months from now, but the smaller ones who do not have the deep pockets to sustain this correction must recognise that this party was not going to last forever.

     

    They should have read the rule book before they started. If they didn’t then it’s entirely their fault , for the ad time cap has been around for a long time and would have known full well that this free for all amount of air time inventory status quo was going to come to an end one day. That day has come. Far too many broadcasters have started up recently on the basis of a never ending supply of airtime being the way to earning revenues. They then produce below average content which then gets below average ratings and that advertisers pay virtually nothing for. This brings the whole industry down by several notches and attracts below average talent who do the same thing day after day thus creating a downward spiral. Thank you TRAI for improving standards in the industry.

     

    There is, in case you hadn’t spotted it yet, however a bright future for the industry. The fact is that with an improving revenue line for broadcasters, there will be a growth in corporate valuations over time which will enable them to deliver better shareholder value and see more investments coming towards the category. For sometime now broadcast media companies have been struggling to get their valuations up and have seen so much of their values eroded. This directive from the TRAI will go a long way in correcting that and so for that I thank TRAI once again. So instead of being a bunch of sour pussies, broadcasters should stop whining and get on with the task of putting their businesses back on track and tasking the ad sales teams to get cracking and reforecast their revenues budgets upwards for the rest of this year (or else they should get no bonuses this year , on the basis that they have less air time time to sell).

     

    Excellent times ahead – thanks to TRAI.

     

  • Pradyuman Maheshwari believes the TRAI shouldn’t be policing broadcasters and says it's time the TV-wallahs get a good, powerful lobbyist

    Mediaah! Broadcasters suffer with ad restrictions while print & web publishers have fun

    By Pradyuman Maheshwari

     

    So the TRAI has finally chosen to subject the television channels to its regulation over ad duration in the guise of quality of service. Assorted politicians and consumer groups who’ve been complaining about the ads on telly should be happy, but I would see the development as unfortunate.

     

    Yes, some of the practices adopted by our broadcasters are reprehensible. They deserve to be damned.  But should the government directly or via a regulator like TRAI be getting into the act? I don’t think it should.

     

    Market forces will force channels to ensure viewer experience isn’t impacted beyond a point. In fact in the chase for ratings, the entertainment-wallahs have already done that.

     

    My heart goes out to the news channels who are going to be impacted the maximum. Ads in the form of tickers etc amount to revenues of around Rs 100 crore across channels, I was told.

     

    The battle is going to move to the Courts/TDSAT, I am told. I hope the learned souls there see reason.

     

    What about other media?

    If broadcasters get carried away with commercials and if the government and/or TRAI sincerely believe that they are taking consumers for a ride, then what about newspapers, radio and the internet?

     

    Full page ads on Page 1, half-jackets, ads flowing through editorial… etc etc etc. All of this in print.  Radio has ads camouflaged as RJ mentions. On the web: innumerable innovations, site captures, interstitials, awful and annoying innovations done by some of the trade sites.  And then innumerable advertising mailers. I must add here MxMIndia too carries site captures and while we don’t send more 5-6 mailers or at most 10 a day, guess we’re getting there.

     

    Now, other than our readers cursing the publications in question, there’s no one stopping the print and web players from carrying intrusive adverising. Also, the ad-edit ratio can well exceed 70-30 on big occasions like Diwali or Akshya Tritiya.

     

    Wanted a top quality lobbyist for TV!

    Perhaps the television industry must hire a top draw bureaucrat to lobby its case to the powers that be. The fact is that the Indian government policies are skewed against the television media. Even on issues like service tax, while advertisers don’t have to pay any levy for an ad in print, they’ve got to cough up the entire 12.36% for TV, the web and I guess radio too.

     

    Even though television has some rather powerful players, it’s evident that the print folks command more respect. Or at least the government tries to not meddle in their affairs.

     

    It’s not that established print players don’t have a broadcast interest… we have BCCL, India Today, ABP, Malayala Manorma, Lokmat, Sakal, Mathrubhoomi and Eenadu amongst others, but it’s just that they are more revered for print than television.

     

    Now that INS president Ashish Bagga also heads up the TV Today Network as CEO of the India Today group and the MCCS channels are better integrated in the ABP group, perhaps the old warhorses must exert pressure.

     

    Buzz me if you have a story to tell. Confidentiality assured. There are various ways you can reach me:

    pradyumanm[at]mxmindia.com, BBM 23050B5D, Gtalk pradyumanm@gmail.com, Twitter @pmahesh and of course the mobile: 98338 76278.

     

    Disclaimer: Although he is CEO and Editor-in-Chief of this site, Pradyuman Maheshwari’s views in Mediaah! are not necessarily those of the rest of the team and MxMIndia.com.

     

  • A new notification issued by the regulator on Monday limited the amount of advertising on TV channels and disallowed any shortfall in a particular hour to be carried over

    Broadcasters slam TRAI notification to limit ads

    By A Correspondent

     

    Broadcasters and advertisers have slammed Telecom Regulatory Authority of India (Trai) move to limit the duration of television advertisements to 12 minutes in an hour, and accused the regulator of exceeding its brief.

     

    A new notification issued by the regulator on Monday limited the amount of advertising on TV channels and disallowed any shortfall in a particular hour to be carried over. According to industry estimates, this could impact advertising revenues of broadcasters by 15-40 per cent.

     

    “Trai has no jurisdiction in the subject. Advertising is governed by the Cable and Satellite Act and the appropriate authority is the ministry of information and broadcasting,” said Uday Shankar, president of the Indian Broadcasting Foundation, and the chief executive officer of Star India. “The regulator is overstepping its brief,” he added.

     

    According to Mr Shankar, the low revenues from subscriptions give broadcasters no option but to rely on advertising inventory and revenues to survive.

     

    An Indian Broadcasting Foundation official said an earlier government guideline stipulated that Trai could issue an advisory with regard to advertising but not a notification.

     

    Sunil Lulla, managing director and chief executive officer of Times Television Network, which runs Times Now, ET Now and Movies Now channels, too criticised Trai’s decision. “This move is completely ridiculous. Self regulation is the best regulation,” he said.

     

    “This move will have an immediate impact because right now there is no other big source of revenue for broadcasters,” said Rohit Gupta, president of Multi Screen Media, the company which runs Sony Entertainment Television. The IBF will appeal against this new regulation, he added.

     

    Barun Das, chief executive officer of Zee News, questioned the timing of the regulation at a time when the entire broadcasting industry was going digital. “We have a limit mentioned in the Cable Act. If at all there is a need for regulating duration of advertising, it possibly could have waited some more time for the digitisation process to settle down.” he said.

     

    Mr Das said his channel had voluntarily cut its advertising inventory by 30per cent earlier this year. “We realise that too much advertising is a deterrent to viewership. We were not driven by regulations, rather we were driven by market forces,” he said.

     

    Mr Das said the viewers had choices not only of channels but also of media platforms. “I am not sure if advertising volume needs to be regulated. I would tend to believe that too much advertising would anyway drive away viewers,” he added.

     

    Sale of television rights have become an important source of income for sports bodies such as BCCI but the restriction on advertising will adversely impact the ability of broadcasters to recoup their investments, forcing them to scale down their bids.

     

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

     

  • The TRAI has issued a regulation that restricts ad duration to 12 minutes per clock hour with no allowance for carry over. Also, ads can henceforth be only full-screen.

    TRAI curtails ads to 12 mins per clock-hour, no part-screen ads allowed

    By A Correspondent

     

    First the good news: the Telecom Regulatory Authority of India (TRAI) is not going ahead with the suggestion of limiting ad duration to just six minutes per clock-hour for pay channels.

     

    And then the bad news (for the industry at least): Despite stiff opposition from broadcasters and industry associations, the TRAI has issued its Standard of Quality of Service (Duration of Advertisements in Television Channels) Regulations 2012.

     

    These are the prominent amongst the directives:

    1. Duration of ads in TV channels to be limited to 12 minutes per clock hour. Any shortfall in ad duration cannot be carried over.

     

    2. Ads during live broadcast of a sporting event to be only during breaks in the sporting action

     

    3. The minimum gap between two consecutive ad breaks to be not less than 15 minutes. In case of movies, this should be a minimum of 30 minutes. However, this doesn’t apply to live sports

     

    4. Ads can be only full-screen. Part-screen and drop-down ads aren’t permitted

     

    5. Audio level of ads cannot be higher than that of the rest of the programmes being broadcast

     

    Note the regulation does not specify special status for pay and free-to-air channels or for news channels.

     

  • Large cable distributors have said that one factor alone – a huge six-eight times hike in subscription revenues alone- would buttress their already profitable balance sheets

    Cable cos expect major hike in subscriber revs

    By A Correspondent

     

    TRAI’s argument that carriage fees paid by TV channels to cable MSOs are necessary to fund their digitisation appears to be falling apart scarcely a week after it was made. Instead, large cable distributors have themselves said that one factor alone – a huge six-eight times hike in subscription revenues alone as declarations spiral with addressability – would significantly buttress their already profitable balance sheets.

     

    With additional revenues from broadband and VAS, industry estimates also say that a bundled digital and broadband + VAS business model will result in the payback period being reduced by a year to 24 months, as opposed to 36 months under a standalone digital cable TV proposition. This comes even as industry reports –including one released five months ago– have been pointing out that all major national MSOs are already adequately funded for Phase I digital deployment (mandatory only in the four metros from July 1).

     

    Given that the government is also shortly planning to hike FDI for MSOs from 49 per cent to 74 per cent, industry analysts have questioned why TRAI assumed MSOs and cable distributors needed money in the form of mandatory carriage fees by TV channels – an annual recurrence – to fund their upgradation, which is only a one-time investment. This is especially inexplicable, as TRAI’s own April 30 Explanatory Memorandum to the DAS Regulations states: “In the addressable systems, due to transparency in ascertaining the number of subscribers, the subscription revenue is expected to go up. Therefore, the dependence of MSOs on the carriage fee, as a source of revenue, is likely to be reduced.”

     

    It has been well known that the cable distributors are the profitable, cash rich last mile, with even many smaller operators who under-declare subscribers/taxes, expanding into other activities like real estate, auto agencies, ancillary services, and so on — while most broadcasters have turned sick due to a killer combo of low ad rates, gross subscriber under-declaration and huge carriage/placement fees.

     

    The national MSOs, are, in fact, almost all profitable, with even newer ones like Den Networks having posted a 20.7 per cent yoy revenue growth in Q3 of the fiscal just ended, including a 6.6 per cent rise in its net profit. That is why the added bonanza of TV channels having to now mandatorily pay MSOs carriage fees caused MSO share prices to jump after the TRAI tariff order was announced– even as listed broadcaster scrips sank.

     

    Shares of Hathway Cable and Datacom had closed on May 2 at Rs185.40, 19.23 per cent above its previous BSE close, missing the upper circuit by a small margin, Den Networks also touched an intraday high of Rs116.90, before closing at Rs110.80, 2.12 per cent above its previous close.

     

    Earlier, a Media Partners Asia (MPA) report (Investing in Digital India) of December 2011 had projected a six times increase in subscriber revenues for MSOs, albeit with a 20 per cent subscriber churn to DTH – but MSOs themselves reacted very positively over the TRAI tariff order.

     

    Hathway Cable & Datacom MD & CEO K Jayaraman told a business daily last week, that his company expects revenue to go up by 250 per cent post-digitisation. “We have 9 million homes and, at the least, we expect to double the subscriber base as 80 to 90 per cent of the carriage revenue will go to MSO. Broadly, after taking churn and loss in the carriage fee, we expect revenue to go up by 250 per cent “, he said. The company’s CFO, G Subramaniam, said during the same interview, that while carriage fees would reduce, the subscription revenue would rise from 10-15 per cent of the revenue mix currently. “This increase is likely to be six-eight times, and will make up for the loss of carriage fee”, he added. Both said that digitisation would help them grow their broadband business – already significant, given that as per Mr Jayaraman,

    Hathway already had 4 lakh broadband subscribers and a Rs 150-crore topline, which he expected would double in the next couple of years.

     

    Mr Jayaraman also outlined the many sources for his company’s digitisation upgrade: IPO funds and a mix of internal accruals, debt and vendor finance. He said: “The capex will be Rs1,000 crore. Of this, Rs300 crore will be spent in Phase-I and the rest in Phase-II. Phase-I is to be financed from initial public offer proceeds. A mix of internal accruals, debt and vendor finance will be deployed in Phase-II. The funding plan for the second phase is yet to be finalised,” he added.

     

    The MPA report – which was released five months ago – also states clearly: “According to MPA analysis and interviews, all major national MSOs are adequately funded for Phase I digital deployment. The cost of digital software and hardware has also fallen since 2007, ensuring set top boxes plus the CA card will cost about $30-40 per unit in total including duties, compared with $60 three years ago”, and adds that a number of the MSOs (like Hathway, DEN) are also ordering digital STBs in larger volumes like 1 million per annum, by which costs are lowered to at least $30 per unit.

     

    For instance, this report also gave company-wise details on the impressive progress they had already made on digitisation, and outlined their excellent financial situation to achieve the same. For instance, it said that Hathway had a debt to equity of 0.3x and a high promoter holding (67 per cent), hence “the company has enough head room to raise further capital”. While it said that DEN had a “comfortable debt to equity stand of 0.2x with a net cash of Rs9.5crore”, it also had sanctioned loans of Rs200 crore, which had not been drawn at the time of the report’s release. Even regional MSOs like Ortel, which might have a comparatively higher debt to equity at 1.6x as per the report, appeared comfortable placed to take care of their digitisation upgrade.

     

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

     

  • The Minister was attending the 6th Annual Summit on Entertainment and Media organized by Assocham, Focus 2012: Digitization for Inclusive Growth

    Digitization is going to be the biggest reform in broadcast sector: Ambika Soni

    By Shruti Pushkarna

     

    High drama ensued at the Assocham event inNew Delhias local cable operators (LCOs) flagged black ribbons at the Minister for Information and Broadcasting, Mrs Ambika Soni. The Minister was attending the 6th Annual Summit on Entertainment and Media organized by Assocham, Focus 2012: Digitization for Inclusive Growth. As the theme suggests, one of the primary issues discussed at the event was Digitization of Cable television.

     

    The LCOs were protesting against the recent tariff order issued by the Telecom Regulatory Authority of India (TRAI), which they claim is an unfair order against all small operators. Following the heated arguments between cable operators present at the event venue and the Minister, one of the cable operators, Sandeep Mcgee who is based inEast Delhithreatened to commit suicide in front of the Minister. Mrs Soni, however, tried to pacify the operators’ fraternity and asked them to file a formal letter with all their grievances against the tariff order and the regulator. She also promised to address their concerns and, if need be, raise the same with the regulator.

     

    Addressing the concerns of broadcasters on the carriage fee mentioned in the same order, Mrs Soni said that the government will consult all stakeholders before taking a final call on the regulations decided by TRAI under which the Multi System Operators (MSOs) are allowed to charge a carriage fee from broadcasters.

     

    Earlier, in her inaugural address, the Minister emphasized the importance of digitization for the entire industry and all stakeholders: “Digitization is going to be the biggest reform in broadcast sector and enable operators to expand their revenue sources by providing more choice and variety to customers. Digitization is imperative to tabulate subscriber base and reduce carriage fee. Digitization will also help reduce all human error in the process.”

     

    Defending the tariff order issued by TRAI recently, she said that the government indulged in exhaustive consultations with all stakeholders on all issues including the carriage fee, and the main aim of the new regulations had been to benefit the consumer. Mrs Soni said: “The TRAI tariff order makes the viewer the most important beneficiary; the choice will be with the viewer.” As for the broadcasters, she said digitization would help reduce the dependence on TRPs and bring in transparency where every broadcaster would be in a position to identify exactly how many people are subscribing to the channel.

     

    On the issue of media regulation, Mrs Soni said: “Let’s not condemn self-regulation per se because even though self regulation is a slower way of correcting things, it is still a surer way as it involves converting minds and hearts in the process.” She added that in the whole race to growth, the provisions of the Cable Television Regulatory Act were overlooked and it was a fault in the functioning of the government that the act had been ignored.

     

    On the issue of Paid News, she said that while it was the worst phenomenon that existed, it’s not as easy to detect paid news. She was responding to scathing criticism of the media by the Chairman of Press Council of India, Justice Markandey Katju in his keynote address at the same event.

     

  • 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 TRAI chairman has said in a television interview that the TRAI will not relook at the recommendations on carriage fee

    No comebacks on Tariff Order: TRAI chairman

    By A Correspondent

     

    While the News Broadcasters Association has protested against the tariff order for digital cable TV issued by TRAI on April 30, saying that the order ‘legalized’ carriage fee, TRAI Chairman JS Sarma has maintained that there is no cause for dissatisfaction on carriage fee.

     

    In an interview to NDTV 24×7, Mr Sarma said: “Carriage fee is now a well-regulated issue and it should be transparent. We will intervene if required but we won’t relook at the recommendations.”

     

    The NBA claims, “The primary purpose of digitization 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 legalized the practice of ‘carriage fees’ and given distributors the freedom to unilaterally set the amount of ‘carriage fees’ broadcasters must pay.”

     

    The TRAI has also prescribed that the MSOs increase their channel carrying capacity. In its recommendation, MSOs have been mandated to carry a minimum of 500 channels by January 1, 2013. TRAI stated in its order, “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.

     

    The Indian Broadcasting Foundation (IBF) convened a board meeting to discuss the issues pertaining to the TRAI order. A press statement is scheduled to be released on the issue later today.

     

  • 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…