Pro-consumer, but…

Trai order on DTH broadcasters ignores industry dynamics

The broadcasting tariff order of the Telecom Regulatory Authority of India (Trai), asking direct-to-home (DTH) television platforms to give their subscribers only what they want to watch and charge them accordingly, is a pro-consumer move. But it would be wrong to assume that this order would necessarily bring down the monthly bill for users. Typically, broadcasters bundle a certain number of channels of varying genres and argue that a consumer pays more for less. However, consumers are unlikely to watch all the channels being thrust on them in the bouquet. As such, Trai has argued, why should users pay for what they don’t want to watch.

Through this order, Trai wants broadcasters to charge separately for every pay channel (that is, a la carte) so that the choice of consumers is not compromised. In such a scenario, those who want to watch only a limited number of channels and genres may pay less than the prevalent bouquet system. However, there is a flip side. It is quite possible, indeed quite likely, that those opting for an elaborate mix of channels will end up paying more than what they do at present. The Telecommunication (Broadcasting and Cable) Services Tariff Order has been validated by the highest courts for its pro-consumer objective and comes into effect on December 29. It mandates DTH operators and broadcasters to be transparent on individual channel pricing, be non-discriminatory across distribution platforms, and have parity with cable TV rentals and pricing.

There’s no doubt that broadcasting platforms and TV channels have often ignored and hoodwinked customers with an eye on revenues. It is also true that Trai’s argument that bundling channels isn’t always the most cost-efficient option for consumers might be true in many cases. And yes, to check any unfair practice, the regulator must act but in doing so, it must not thwart industry dynamics. For example, the regulator should have realised that DTH operators and multi-system operators in the cable universe cannot be treated as equals because they function differently and their business models are distinct from each other. Also, like in any other business, platform owners and broadcasters have a right to do mutually negotiated agreements. With the Trai order, the room for negotiations would get limited.

Look at the other aspects of this decision. For one, broadcasters and platform owners are worried that they may lose business, as bouquet pricing allows them to package some less popular channels with TRP (television rating points) churners. This practice sustains the balance for the electronic media business. If the transition to the new regime means a blackout of the rating or the TRP system for some time, it would also impact advertising.

The regulator’s heavy intervention in tariff matters may not be the best road ahead for the industry. Like in the case of telecom, where tariff is under forbearance, the regulator should maintain an arm’s length from the industry. At best, Trai’s role in fixing TV channel prices should be light touch and not overpowering. It’s not that Trai has not attempted getting into tariff areas in telecom. Its rule on checking predatory pricing, which was seen harming the incumbent telcos, was set aside by the Telecom Disputes Settlement and Appellate Tribunal recently.