The recent amendments to its tariff order for broadcasting industry by the Telecom Regulatory Authority of India is arbitrary and will be hugely disruptive, top executives of leading broadcasters said on Friday.
Chief executives from top media houses like Sony TV, Zee Entertainment, Viacom18, Star and Discovery came together under the aegis of the Indian Broadcasting Foundation. The overwhelming mood was that the new amendments, which further cap channel prices will affect the quality of content as also impact future employment opportunities in the sector.
The broadcasters say they will use all available constitutional means to get their issues addressed.
TRAI had implemented a new tariff order in 2019. Earlier this month, the regulator announced further amendments, which will be effective March 1.
Through the new amendments, the maximum retail price of individual channels, which are part of any bouquet has been capped at Rs 12 per month, compared with Rs 19 earlier.
Furthermore, the a-la-carte MRP of the paid channels can't be more than one and a half times of the price of the bouquet they are part of. Also, MRP of any a-la-carte channel can't be more than three times the average price of other channels in the bouquet. This will effective reduce discounting and cap bouquet prices.
Broadcasters are miffed over the amendments, which have been introduced less than a year after the new tariff order was first introduced.
While the TRAI's motive is that consumers will benefit from lower prices, broadcaster point that prices didn't come down, rather only went up when the tariff was first introduced.
"In order to offer wider choice to the consumers through affordable bouquets, which is practiced world over, the broadcasters will either have to price their premium channels very low, hampering the ability to provide quality content or increase the price of other channels," said NP Singh, MD and CEO of Sony Pictures Networks.
Another likely fallout is that the number of channels in a bouquet will have to be reduced, which will in turn decrease value provided to consumers, said Singh, who is also the president of Indian Broadcasting Foundation.
Executives say the arbitrary reduction of prices to Rs 12 from Rs 19 was substantial and without any logical rationale.
"India is already the cheapest cable market in the world. There is no evidence of market failure or high channel prices in India compared to other developed or developing countries, that warrant TRAI to fix cap on prices," said Megha Tata, MD - South Asia at Discovery Communications India.
The new amendment will impact equilibrium between stakeholders in the media industry and the "future of this sector is in jeopardy with such micro regulations," she said.
Uday Shankar, chairman of Star India and The Walt Disney India, said that the industry had already spent Rs 1,000 crore in educating the consumers and the ecosystem about the new tariff structure last year and despite the shortcomings the tariff order passed in 2019 had been taking off well and suddenly new changes had been introduced now.
"This kind of trigger happy regulatory intervention at a very fundamental level clearly is not good for the industry and the regulator not seems to care about that part of its job is also to create enabling framework for the industry to grow and all stakeholders welfare and for consumers to get a range of content," said Shankar.
Of the total bill a consumer pays, 60 per cent goes to distributors, 15 per cent is tax and only 25 per cent goes to broadcasters, say executives.
If TRAI really wanted to bring down prices to consumers then it should also have looked at the network capacity fee of Rs 160, which it allows cable operators to charge for providing free-to-air channels, said Shankar.
The smaller channels will be "wiped out" as they will find it difficult to survive and compete increasingly with streaming services for content, Shankar added.
The new tariff regulations were introduced last year by TRAI so that consumers could pay for channels that they wanted to watch rather than the default bouquets of channels that were being offered. The move was expected to bring prices down. However, it has been observed that consumers are paying more if they subscribe to similar option of channels as earlier.
Credit ratings agency ICRA feels that the changes in tariff introduced this month could reduce consumers' DTH/cable TV bills by 6 per cent to 14 per cent.
