Less than one year after introducing a new tariff order (NTO) for the broadcaster fraternity, which led to chaos, the Telecom Regulatory Authority of India (TRAI) has sought to amend it. The amendment caps discounts that can be offered on bouquet pricing to 33% (vis-à-vis à la carte prices, from the existing average discount of 40-54%). This will reduce the bouquet price of a channel to `12 from `19. It has also introduced two conditions of capping the MRP of an à la carte channel in a bouquet: it may be up to three times the average price of a pay channel of that bouquet, and the monthly price of a pay channel may not exceed the price of the bouquet containing that pay channel.
Indian broadcasters have termed TRAI's amendment to last year's tariff regime as "micro-management" and "restrictive". The Indian Broadcasting Federation recently filed a petition in the Bombay High Court seeking relief against TRAI's amendment. TRAI had given broadcasters a deadline of January 15 to announce new MRPs and bouquets. The broadcasters did not comply with this timeline as the court accepted their petition against TRAI.
TRAI filed its response on January 22 justifying the amendments. The court will hear the case on January 30 when the broadcasters will file a rejoinder in response to TRAI's justifications.
According to industry watchers, TRAI introduced the new amendment because the first tariff order did not have the desired effect of reducing the consumer's bills. The NTO implemented in 2019 resulted in up to 23% surge in bills for subscribers, as per credit ratings agency ICRA.
The NTO had also aimed to shift consumer behaviour towards à la carte channels over bouquets. But ICRA finds that viewers continued to prefer the latter. "In spite of 15 years of regulations that sought to influence a consumer's choice for à la carte, the lay consumer still prefers bundling, a fact the regulator seems unwilling to accept," said NP Singh, MD and CEO, Sony Pictures Networks India, and president, IBF, at a press conference.
Uday Shankar, president, The Walt Disney Company, APAC, and chairman, Star and Disney India, believes that the first tariff order was not thoughtful, and pointed out that broadcasters had notified that the bills of consumers would increase post this. "By further reducing the discounting options, the regulator is setting the consumer up for having to pay more first," he said, at the same press conference.
TRAI has justified its move by noting that some broadcasters increased their à la carte channel prices by more than 100% after the implementation of the first NTO. "Such price increase is anti-consumer and forces regulatory intervention," the regulator said in a statement.
If TRAI has its way, "broadcasters would have to slash the number of tail channels to increase the average channel price of each bouquet, so as to safeguard the price proposition of driver channels to some extent to keep bouquet prices intact at earlier price levels," explains Rohit Dokania, senior VP-research, IDFC Securities.
However, he believes, this could be perceived as a lower value proposition by consumers compared to what they were enjoying earlier, as the number of channels gets drastically reduced from 24 to 11 for the same price.
Additionally, if the changes are implemented as scheduled by March 1, 2020, "DTH/ cable bills of subscribers could come down by up to 14% from the present levels and encourage subscribers to exercise their right to choose and opt for à la carte channels," ICRA states.
This could potentially lead to higher adoption of à la carte, which industry experts say, is not an ideal outcome as it would hit the adoption of niche long-tail channels.