The move would increase the monthly subscription fees of consumers.
The monthly cap of Rs 5 per pay channel in areas under conditional access system (CAS), which was imposed by the Telecom Regulatory Authority of India (Trai), might be relaxed with the regulator allowing certain genres of channels like sports, lifestyle and others to charge a higher rate from consumers.
The move would increase the monthly subscription fees paid by consumers in the CAS areas.
It could also lead to a more dramatic shift of customers from cable to other platforms like direct-to-home (DTH) or Internet Protocol Television (IPTV) as the subscription differential will go away.
Under CAS, consumers get to watch pay channels via a set-top box and pays only for the channels subscribed. New channel distribution platforms like DTH, Headend-in-the-sky (HITS) and IPTV also require a set-top box for accessing the channels. CAS has been enforced in select areas of Delhi, Mumbai and Kolkata since January 1, 2007.
The proposed action, however, would bring relief to broadcasters who pay a huge amount for their programming but are unable to make money at such a low rate of subscription. Sports channels like ESPN Star Sports, in fact, went to court saying that considering the high cost for broadcasting live cricket or football there is no way that they can make money by charging only Rs 5 per month from each subscriber. Instead, they had demanded that the cap should be raised to Rs 25 to Rs 30 and differential pricing should be allowed based on the expenses incurred by a channel on programming.
However, CAS has neither seen further expansion in the three metros, as originally planned, nor has been rolled out in 55 cities as proposed by Trai.
“There is thinking within Trai that instead of removing the Rs 5-price cap on all pay channels under CAS areas, we can introduce genre-linked pricing for select genres like sports and lifestyle. So these genre of channels will have flexibility in pricing under a different ceiling as their input cost are very high compared to other genres,” a senior Trai official told Business Standard.
He also added that it is unfair to cap pricing of pay channels for broadcasters in CAS areas and not do the same on other platforms like DTH or IPTV.
However, Trai is likely to put a different price-ceiling for genre-based pricing on addressable platforms.
Currently, pay channels on DTH platform have to price their channels at 50 per cent of the declared prices in non-CAS areas. Such an arrangement may get extended to the new platforms like HITS and IPTV, sources said.
For example, if ESPN is priced at Rs 44 in non-CAS areas, it has to price its channel at not more than Rs 22 for the DTH platform, while its price is fixed at Rs 5 per month for consumers in CAS areas.
