In this episode of Digging Deeper, we discuss the impact of the new TRAI regulations on your TV bill
Harish Puppala | Rakesh Sharma
For the 197 million homes that watch TV on DTH or set top boxes, the monthly cable bill might rise soon. Well, the Telecom Regulatory Authority of India (TRAI) claims it won’t but critics say it will. Today, we’re taking a look at this change that could impact millions of families.
So what’s all this about a bigger bill then?
The Telecom Regulatory Authority of India put forward a new set of rules from February 1 for the broadcast sector. According to the new rules, TV viewers in India only need to pay for channels they wish to watch. You know, outside of ‘packages’ or preset plans. Broadcasters have fixed the maximum retail price for each channel, while cable TV or DTH operators have created their own package deals for customers. The overall bill for consumers may change, of course, depending on the channels they choose. The new rules change plans, packages and pricing of TV channels by operators like Airtel DTH, Tata Sky, Dish TV, Hathway Cable, Siti Cable, Sun DTH, etc.
On the face of it, the new tariff order by TRAI, in most likelihood, will reduce the price you pay for watching cable TV if you make a judicious choice of channels. Post the new order, broadcasters like Sony, Star, Zee, Discovery, Disney, National Geographic and Sun TV have announced individual pricing of all their TV channels. In addition, they have also come up with bouquets of several channels at discounted packages.TRAI’s new approach is intended to usher in transparency and uniformity, and could afford greater freedom of choice to viewers - as stated earlier, it allows consumers to select and pay only for the channels they wish to view, and requires TV broadcasters to disclose the maximum retail price of each channel and that of bouquets.
How does that affect me?
Let’s talk about the base package. We had to choose a minimum preset plan to use that set top box. The new framework mandates all operators, including DTH, cable service provider or multi-system operator, to have a base package of 100 channels. You have the freedom to choose free to air (FTA) or pay channels or any bouquet of several channels in that list. Now onwards, service providers cannot charge more than Rs 130 for the base package (excluding GST of course.) If you want to watch a pay channel you will have to pay more for every such choice you make. Airtel DTH and Tata Sky are offering a base pack, which begins from Rs 99. The latest list by TRAI shows that there are 330 pay TV channels and 535 FTA channels.
The regulatory agency has come up with a portal that lists the prices of all pay channels and the bouquet packages of all broadcasters. A master list, if you will. And the range of prices in huge. A Livemint report stated that there are 24 channels that cost 10 paise while the most expensive channel costs a massive 1800 rupees. Yes, one thousand and eight hundred for one TV channel. The prices mentioned in the list are MRP and none of the distributors can charge more than the maximum retail price declared by a broadcaster. That said, the distributor could choose to offer discounted tariff plans. Say you select a certain base package and want to add some pay channels - in such a scenario, you will have to un-select some FTA channels and add an equal number of pay channels. That will leave you with a total number of 100 channels as specified for the base package.If you choose to watch more than 100 channels in the base package, you can top up with more channels. For every 25 channels you add to the list, you pay 20 rupees more. For instance, if you pay 150 rupees (again, excluding GST, of course) you get access to 125 channels. Further, you will have to pay extra for any pay channel you include on the list. If you have already subscribed to an annual plan, your cable or DTH distributor will provide services till the remaining period without changing the old tariffs. If you switch to a new package after February 1, the balance amount of the existing package can be used for the new package.
Backlash, and a clarification
The new rules have not been well received by the junta. People took to Twitter to complain about higher TV bills than before while opting for the a la carte method for choosing channels. Many also complained about inconsistent services from operators. A majority have not even migrated to the new regulations. TRAI wants to fix this issue and has offered a solution to migrate subscribers to the new regulations while ensuring fair prices for all.
For those subscribers who haven't yet made the switch, TRAI has directed operators to offer a new Best Fit Plan. The Best Fit Plan is for those subscribers who want to sustain their existing billing amounts but want to make the switch to the new regulations. The regulator explained that subscribers will be free to change their best fit plan at any date and time on or before March 31, 2019 and the DPO, or distribution platform owner, will convert their best fit plan into a desired pack (opted by the consumer) within 72 hours of subscribers making their channel preferences known. The new plan will be automatically applied after March 31, 2019, the new extended deadline.
It also said the Best Fit Plan shall be designed based on consumers' usage pattern and preferred language. Its statement said, “It should preferably be a blended combination of various genres, while making 'Best Fit Plan' for a subscriber, DPOs should ensure that payout per month of the 'Best Fit Plan' generally does not exceed the payout per month of existing tariff plan of the subscriber.”
What that means is, DTH and cable operators are required to design a channel pack for the remaining subscribers on the basis of their preferences. As India Today explained in its report, “...(if) a person subscribes to Bengali channels along with English and Hindi channels, operators should suggest him/her a pack that offers most of the channels based on the subscriber's preferences. At the same time, the operator should ensure that the total bill for the new pack shouldn't exceed the amount that the subscriber pays under the old rules.”
The regulator also said operators cannot charge TV viewers more than their usual monthly outgo under this 'best fit plan' that will be offered during the transition period. It also asserted that it will take action on any complaints that it received in this regard.
TRAI Secretary SK Gupta said, “TRAI has clearly asked...DPOs...to ensure that for consumers, the monthly outgo under the best fit plan should not exceed the payout per month of existing plan of the subscriber.”
He added, “TRAI has directed DPOs to give best fit plan to customers who have not exercised their option as of now, in order to protect their interest and ensure that they do not face any inconvenience.”
Apart from the bespoke plans, TRAI has also directed operators to offer convenient options like a call centre number, allowing subscribers to use mobile apps or websites for any assistance that they require etc. Operators will also have to reach out to subscribers in order to ensure smooth transition to the new regime. Additionally, they have been instructed to ensure no subscriber faces disruption in services.
TRAI claims nearly 65% of all cable subscribers and 35% of DTH subscribers have already exercised these options. However, it acknowledged that not all subscribers are equipped equally to understand and make the switch. Consequently, TRAI extended the deadline for making the transition to March 31, 2019, as mentioned earlier.
There’s a devil in them details
Global analytics company Crisil begs to differ from TRAI’s line. It claims the network capacity fee and channel prices announced by broadcasters and distributors according to the new guidelines could increase the monthly bills of most subscribers.
Crisil senior director Sachin Gupta told PTI, “Our analysis of the impact of the regulations indicates a varied impact on monthly TV bills. Based on current pricing, the monthly TV bill can go up by 25 per cent from Rs 230-240 to around Rs 300 per month for viewers who opt for the top 10 channels, but will come down for those who opt upto top 5 channels.”
Crisil also claimed that the new regime could drive consolidation in the broadcasting industry as content will be the king and key differentiator. It explained, “Subscription revenues of broadcasters would rise around 40 per cent to Rs 94 per subscriber per month compared with Rs 60-70 now. With viewers likely to opt for popular channels, large broadcasters will have greater pricing power. Conversely, broadcasters with less-popular channels will find it tough to piggyback on packages, and the least popular ones will hardly have a business case and could go off air.”
The rating agency said the new rules are a mixed bag for distributors. Crisil director Nitesh Jain said, “OTT platforms could emerge as the big beneficiary because many viewers could shift because of rising subscription bills. And low data tariffs also encourages viewership on OTT platforms.”
It added that while content cost will become a pass-through, protecting them from fluctuations, they may lose out on the benefits of value-added services such as bundling content across broadcasters, customisation, and placement revenue.
Sunil Kumar, secretary of the Telangana Cable Operators Federation told Livemint that TRAI is trying to benefit broadcasters and multi-system operators and not the consumer. He explained, “Earlier, for ₹150-250, we were giving you around 350-plus channels and you had the freedom to watch whatever you wished to. Now, TRAI is saying not more than 50 channels are viewed by a customer and this could be right. But in a family not all people watch the same channels."
Mint’s analysis claimed that under the previous regime, cable TV consumers in urban areas paid up to Rs 250 a month and rural consumers paid up to Rs 150 for cable TV for 350-plus channels. With the new rules, if cable TV subscribers opt for more than three pay channels, they will end up paying more. The Crisil report claims if you opt for three pay channels along with the fixed base price of Rs 130, your total bill including taxes would come up to Rs 192 a month. This may be higher in some locations than what customers currently pay. So, the ones who gain are those who are on existing high-value plans from direct broadcast satellite television providers such as Tata Sky and can now curate their playlists according to what they will actually watch.
Sachin Gupta said, “Consumers who restrict themselves to 100 SD channels are likely to see their TV bills reduce. However, consumers who opt for the top 10 channels and up to 100 SD channels may see their TV bills going up by 25%.”
The top 20 channels account for over 80% of the total viewership. (The Pareto principle in action there, by the way.) So, according to a Livemint analysis, “even if you rationalise your consumption, you are likely to opt for at least 10 of the top 20 viewed channels. Top 10 channels plus the fixed base price and taxes would push up your bill to ₹298 a month. If you’re in a big family and have people across age groups who prefer watching different kinds of content or prefer having many options, restricting your consumption to top 10 channels may not be possible. In such a scenario, if you opt for 25 top channels, you’ll end up paying ₹438 a month. The price will further increase if you add more HD channels and pick more paid options. But in some cases this will be cheaper than the higher value plans subscribers were on.”
TRAI dismissed Crisil’s findings summarily. TRAI Chairman Ram Sevak Sharma said the report was prepared based on "inadequate understanding" of the TV distribution market. Financial Express reported that, in a press conference in Delhi on 6 February, Sharma said the initial data they received from the broadcasters show that bills have gone down by 10-15% in metros and 5-10% in non-metros.Another TRAI statement said, “The report is based on choosing top-rated channels on all-India basis and considers only one weekly report dated January 25, 2019, from TV Rating Agency, BARC.” The regulator’s Secretary SK Gupta said, “In three months, we expect prices of various channels to go down.”