Broadcasters oppose cap on cable tariff

Broadcasters and the cable industry have strongly protested the three-tier cap in the monthly cable pricing proposed by the Telecom Regulatory Authority of India (Trai).

According to sources, the Trai is preparing a new tariff-order that will impact pricing of cable channels and bouquets in 70 million households.

The proposed Trai tariff order puts a limit of Rs 275 per month per subscriber for cable TV services in the top 11 cities, and Rs 150-175 for the 39 B category and 50-odd C category towns.

Though these tariffs will guarantee consumers a fixed monthly cable bill, broadcasters and cable operators say it would lead to lower collections and impact the industry's growth.

Subscribers currently pay between Rs 50 (in slums and so on) and Rs 350 per month in areas where the conditional access system (CAS) has not been introduced.

According to pay-television broadcasters like Star, Zee, and Sony TV, this will adversely impact the growth of the cable industry, currently growing at 15-18 per cent per annum.

"Any cap of any kind on pricing of cable channels or bouquets results in loss of revenues for the industry. The first impact will be that cable operators will indulge in under-declaration so that they pay less money to the multi-system operators (MSOs) and the broadcasters," an industry source said.

When broadcasters get less money for their pay channels, they will have no choice but to cut budgets for content or convert their pay-channels to free-to-air channels.

"If Trai actually brings out such a tariff order, the subscription revenue may fall 50-70 per cent while fuelling the menace of carriage fees. Trai should leave cable pricing to market forces instead of capping it," said a senior executive in the Star group.

Carriage fees refers to payouts by broadcasters to cable operators to place their channels on the prime band for better channel visibility.

The proposed new tariff order may also cut down the growth subscription revenue generated from pay channels. Out of 270 cable television channels, there are 76 pay channels generating subscription revenue of about Rs 11,000-12,000 crore. Of this, 5-20 per cent goes to the broadcasters, while the rest goes to cable operators and MSOs.

"All this will be eroded, resulting in the slowdown of the cable industry," a sector analyst said.

Highly placed sources said Trai is also expected to put up the draft tariff order on its website inviting comments from the stakeholders, including the consumers, broadcasters, cable operators and MSOs. This marks the first time Trai has opted for this route.

Trai had enforced a price freeze in 2003 due to uneven monthly cable subscription bills across India.

However, cable households in parts of Delhi, Mumbai and Kolkata will be unaffected by this new tariff order as they come under the CAS regime through which Trai has already enforced pricing of pay channels, capped at Rs 5 per pay channel.