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Pricing of TV channels

Kashmir Times. Dated: 2/7/2019 11:41:02 PM

New TRAI guidelines will provide consumers greater choice and transparency on pricing of television channels

The new guidelines and order issued by the Telecom Regulatory Authority of India (TRAI) and becoming effective from February 1 this year giving consumers the right to pay for only the channels they want to watch is a welcome step. This decision will save the consumers from being fleeced through flat rates by the cable services distributors across the country. Till now the consumers have been forced to pay hefty amounts for installation of cable connections and pay a flat monthly tariff even for the television channels that are free to air. Under the new scheme announced by the TRAI, there is also a maximum price for pay channels declared by the broadcaster, which is reported to the TRAI, bringing about greater transparency in their pricing for both the broadcaster as well as the distributor. The set top boxes that have been encrypted for receiving the channels under Direct To Home (DTH) and cable services have also been brought under the ambit of the TRAI regulation. Moreover, each and every channel will be available on an a la carte basis and the consumers can choose to watch the channels, they want to watch besides the free to air television channels. The effect is that the consumers' subscription cost on a base package of 100 standard definition television channels is fixed in the form of a network capacity fee. And even within this group, there is freedom to choose channels, with a provision for appropriate revision for any pay channels for the consumers. This is a welcome departure from a set regime where combinations of free and pay channels were decided by distributors and broadcasters as bouquets that did not reflect actual demand for individual channels. Efforts to introduce a la carte choice were thwarted by pricing individual channels almost as high as the bouquets they were part of. Bouquets are enabled in the new scheme, but with the stipulation that at least 85 percent of the total price of all channels that form part of a bouquet be charged, removing the advantage to distort prices. Distributors including cable and DTH platforms, and advertisers, should welcome the order, which strengthens price discovery and eliminates inflated claims of the subscriber base. Some of the broadcasters and distributors wanted to have monopoly over the availability of services to the consumers and maintain their freedom to charge fee at their sweet will in the absence of any regulation in the past many years. This scheme will also allow a level playing field to the newcomers in this field in the country.
Since the conventional format of television has changed in the era of Internet, there is emergence of new distribution possibilities around the world. The new possibilities have also posed a challenge to the broadcasters, who have been forced to provide their content free on numerous platforms including YouTube and through other phone applications and giving them the freedom to reach global audiences. Over The Top (OTT) providers such as Netflix, Amazon Prime and some other Digital Online Stores have opened a new front and are competing for viewers, who get advertisement-free and break-free programming streamed on subscription basis. TRAI has also made it clear that since broadcast licensing does not apply to such new technology platforms, these do not come under price regulation. In the fast-changing competitive landscape of home entertainment, conventional TV must now compete on the strength of transparent pricing and better programming for subscription revenue growth and viewer time that attracts advertising. The television industry figures show that there are about 197 million homes in India with a TV set, and 100 million more homes without one represent scope for growth. This can be achieved through regulatory schemes that empower broadcasters and subscribers alike. TRAI has done well to put up a calculator on its website to help consumers calculate bills under the new regime before signing up for a package with the operator and the distributor. The broadcast and digital industry must welcome the new scheme that promises to remove distribution bottlenecks and empower consumers with choice.