What TRAI proposals mean for viewers, satellite TV industry

Moneycontrol Bureau

Indian television industry is gearing up for a sea change once Digitalised Cable TV norms recommendations are rolled out by the Information and Broadcasting Ministry. According to the norms, television viewers will soon get to choose a minimum of hundred free to air (FTA) channels at a maximum retail price of Rs 100.

Cable operators will have to mandatorily offer a Basic Service Tier (BST) to viewers throughout the country. The Basic Service Tier would consist of 100 Free to Air channels including 18 mandatory Doordarshan channels plus the Lok Sabha channel.

The TRAI tariff order lays down 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 genres which TRAI has named are General Entertainment Channels (GEC) in English, GEC- Hindi, GEC - regional, music, news, movies, sports, kids infotainment, lifestyle.

Customers can also choose another option which includes some pay channels and pay a monthly price upto Rs 150, the TRAI rules state.

Here are some of the TRAI's guidelines:

Carriage Fees

1. Every broadcaster shall provide signals of its TV channels on non-discriminatory basis to every multi system operator (MSO) having the prescribed channel capacity. 
2. The MSOs who charge carriage fee are required to declare the carriage fee for carrying a TV channel. The carriage fee shall be charged in a non-discriminatory and transparent manner. Also the carriage fee can not be revised upward for a minimum period of 2 years. 
3. The details of the carriage fee is to be filed with TRAI. In case TRAI finds it necessary, it shall intervene and ask for appropriate modifications in the carriage fee. 
4. Every MSO may fix the carriage fee but applied in a uniform, non-discriminatory and transparent manner. The Carriage Fee cannot be revised upward for a minimum of two years. TRAI would intervene in case it is felt that the Carriage Fee is unreasonable.
5. The MSOs can fix the retail tariff, design package and price offerings. 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. 
6. The a la carte rate of any channel shall not exceed three times the average channel rate of the bouquet. 

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Must Carry

1. The majority of the broadcasters are in favour of mandating must carry provisions to balance out the ‘must provide’ clause prescribed in the existing interconnect regulations. They have suggested that the manner of offering network access should be on a non-discriminatory basis and the qualifying conditions may include openness to audit & transparency, non-discriminatory listing of channels and all channels should feature genre-wise in the EPG of MSO. 
2. 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 January 2013 or 1 April 2013 for smaller MSOs. 
3. However, considering the fact that the four metros of Delhi, Mumbai, Kolkata and Chennai are to go digital on 1st July, 2012, and many of the MSOs may not be able to create a capacity to carry a minimum 500 channels per headend by this date, in the first instant, they have been allowed to operate with a minimum capacity of 200 channels per headend. 
4. To allow MSOs to provide the access to its cable network smoothly, atime frame of sixty (60) days has been provided for in the regulations which is equivalent to the time frame given to the broadcaster under the must provide provisions.  

Unhappy News Broadcasters Association protest

News Broadcasters Association (NBA) has strongly opposed TRAI’s approval to allow Multi System Operators (MSOs) to collect carriage fees from broadcasters. 

Unhappy at the recommendations, NBA said that it is "shocked and dismayed at TRAI's new Notification dated 30.4.12 on digitising cable TV distribution."

"The Notification has legitimised the very practice the NBA had hoped would be ended, i.e. the payment of steep "carriage fees" by broadcasters," a press release stated.

This unfairly penalises broadcasters and threatens the very survival of the broadcasting industry. The association has requested the government to review the notification and “correct it urgently”.

Consumers’ last say

The new tariff order may just open up a new price war among the DTH players in the competitive market. Experts feel that consumers are most likely to have the last laugh in this price tug-of-war.

K Jayaraman, CEO, Hathway Cable Network was reported saying , while the move will spur the process of digitisation in India, the DTH players will either have to shift their complete focus to the upper class or will have to bring down their prices to half of existing rates.

Stock impact

According to an ICICI Securities report, major beneficiaries will be all broadcasting players, especially broadcasting networks and popular news channels. Broadcaster tariff capped at 42% of non-addressable rates is status quo and is far higher than prevailing market rates of sub-20% for DTH players.

Goldman Sachs reiterates 'Buy' on Dish TV as it stands to benefit from mandatory digitisation of cable TV, and expect the company to turn PAT/FCF positive in FY13/FY14.

Goldman Sachs also expects Sun TV to benefit from the digitization upgrade, but reiterate Neutral rating as the CBI/ED investigation overhang should limit near-term re-rating.