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Should Trai have frozen cable rates?

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Business Standard New Delhi
Last Updated : Jun 14 2013 | 2:49 PM IST
Telecom Regulatory Authority of India
 
While I do not want to get into a debate with anyone on our order to freeze cable rates, the benefits to the consumers from the order is obvious.
 
The cable industry has grown in a completely unregulated environment because of which there have been no standards in tariffing or the way the sector is organised. The regulator had also got reports that operators were planning to hike cable charges, which would have been against consumer interests.
 
There is considerable uncertainty about different aspects of the Conditional Access System (CAS) regime and a detailed examination of various issues is required, including the rates for the broadcast and cable services in CAS and non-CAS areas.
 
Just to understand the background of our order, the Cable Television Networks (Regulation) Act, 1995, was amended in 2002 and Section 4A was inserted in the original Act that envisages "transmission of programmes through addressable system" (popularly referred to as CAS).
 
A notification dated January 14, 2003, was issued by the ministry of information and broadcasting, making it obligatory for every cable operator to transmit programmes of every pay channel through an addressable system in the Chennai metropolitan area, the municipal council of the Greater Mumbai area, the Kolkata metropolitan area and the National Capital Territory (NCT) of Delhi within six months from January 15, 2003.
 
Subsequently, the date of implementation was deferred and fixed within six months from March 1, 2003. Thereafter, areas in the NCT where CAS was to be implemented were exempted. The matter went to the Delhi High Court. To add to the confusion and delays, the cable operators of the notified areas partially withdrew pay channels from midnight, December 15, 2003, which led to TV blackouts.
 
At present, there are no standard rates or conditions at which services are provided by cable operators to subscribers. In this scenario, it was necessary for the Telecom Regulatory Authority of India (Trai) to intervene and take action.
 
We have begun the process of examining the relevant issues, including those relating to CAS, through a consultation process. Until such time that we are able to bring some certainty in the rates prevailing for these services, Trai has specified the rates prevailing on December 26, 2003, as the ceiling.
 
These are the charges that will be paid by cable subscribers to cable operators, by cable operators to multi-service operators (MSOs), and by MSOs to broadcasters with respect to both free-to-air channels and pay channels, and for both CAS and non-CAS areas.
 
This is only a temporary phase. In the long run, Trai would like to leave such issues to the market forces, like we have done in the telecom sector. But at this point in time, we felt that there was a need for intervention in the cable and broadcasting sector.
 
(As told to Thomas K Thomas)
 
Jagjit Singh Kohli
Chairman,
Broadband Pacenet (India) Pvt Ltd
 
The appointment of Trai as a regulator for the cable and broadcasting industry is a welcome step. We now have an independent body to regulate the industry that, so far, was being administered by the information and broadcasting ministry, which had allowed itself to be influenced by various vested-interest groups.
 
This resulted in utter chaos while implementing CAS. Recently, Trai announced the freezing of cable rates at December 26, 2003 levels, including the rates charged by MSOs and broadcasters. Though the intention is to protect consumer interests, the step may appear to be unjust in some cases.
 
For instance, there are cases where cable operators, even in cities like Mumbai, are still charging less than Rs 50 a month from a household. For Rs 50, consumers get all the free-to-air as well as pay channels. Such low rates exist for several reasons "" including cable operators honouring old contracts with residential societies.
 
The right step for Trai should have been to allow a rate increase in cases where a cable operator charges less than Rs 150. Similarly, in the case of broadcasters, Trai should have allowed pay channels to increase their price wherever cable operators have not declared increased connectivity.
 
Though it is difficult to judge the connectivity issue and come up with a fair formula, there are other issues where Trai must take immediate action. For starters, the capping of subscription charges by pay channels is a controversial issue.
 
Broadcasters insist they should have the freedom to charge whatever they want for their channels, their argument being that there is no restriction on other consumer products like white goods or electronics.
 
Besides, broadcasters also cite the problem of under-declaration by cable operators as a reason to increase rates. Four years ago, the extent of under-declaration was reported to be 25 per cent. Ever since, the channels have hiked rates by 1,000 per cent.
 
Further, cable operators insist on bundling, which means the broadcaster is paid for all channels, irrespective of its strength or viewership. Thus, the only logical approach for Trai to address the contentious issue of rate and connectivity is to hold consultation not only with various stakeholders but also take the help of individual industry experts and research agencies to formulate a policy.
 
But the biggest problem the cable industry faces is the virtual territorial monopoly of cable operators and, therefore, the lack of choice for customers.
 
This is surprising as even in licensed sectors like cellular service, basic telephony and Internet service providers, the subscriber has the freedom to choose the service provider; but in an industry that is not franchised or licensed by territory on paper, there is no choice available to the subscriber. If this issue had been addressed, CAS would have been an automatic voluntary by-product rather than a forced nightmare as we see today.
 
Therefore, one of the most important tasks for Trai will be to ensure a must-carry and must-provide clause that means that no cable operator/MSO can be denied content by any broadcaster and, similarly, no broadcaster can be denied carriage by any MSO/ cable operator. This will ensure competition and multiple choices to consumers.

 
 

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First Published: Jan 21 2004 | 12:00 AM IST

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