Consumer VOICE

Bouquet deals will have to ensure protection of consumer interest: TRAI

Emphasis on transparency, non-discrimination, consumer protection and create an enabling environment for orderly growth of the sector.

New Delhi, 3rd March, 2017: Distributors of television channels have to offer at least one bouquet to consumer & the broadcasters will have to declare their channels as ‘Pay’ or ‘Free-to-Air’ (FTA). Broadcasters have been given complete flexibility to declare maximum retail price (MRP) of their pay channels to subscribers with no restrictions as
long as such channels are provided to consumers individually. This is to ensure protection of interests of consumers as bouquet deals are oblique to individual channel prices.
The Telecom Regulatory Authority of India (TRAI) has today released the Telecommunication (Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff Order, 2017. According to the order digital addressable television distribution platforms are envisaged to provide several benefits to consumers of broadcasting services including better quality of signals, choice of channels, availability of multimedia services etc. With the completion of first three phases of digitization to a large extent, though the addressability, capacity and quality of signal have improved, issues related to consumer choice, transparency and non-discrimination still continue.

Broadcasters want freedom to price their channels. Their contention is that since pricing at retail level is with distributors of television channels, the flexibility to maximize the revenue through advertisement and subscription fee has been compromised. News broadcasters, who primarily provide free-to-air (FTA) channels and have advertisements as only source of revenue, claim that many a time their channels at retail level are priced in such a manner that even  pay channels are cheaper than their FTA channels.

In the present framework distributors of television channels feel that they are totally dependent on effective negotiations with broadcasters for monetization of their investment and due to non-transparency in the system, they end up at a loss while bargaining with the broadcasters. Subscribers are equally unsatisfied. They feel that the pricing of channels is
skewed resulting effectively in no choice of individual channels. They feel lack of transparency. Questions are raised time and again as to why same channel is priced so differently by different distribution platform operators.

In order to address all the issues related to tariff in broadcasting sector, a Consultation Paper on “Tariff issues related to TV services” was issued on 29th January 2016 for seeking stakeholders’ comments. In response, a total of 60 comments and 10 counter-comments were received from stakeholders. Two Open House Discussions (OHDs) were held, first on 8th April 2016 at New Delhi and second on 21st April 2016 at Raipur, Chhattisgarh. In order to maintain complete transparency while bringing change in existing regulatory framework, TRAI issued the draft Telecommunication (Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff Order, 2016 (draft TTO) on 10th October 2016. Stakeholders were asked to offer their comments, if any, on proposed tariff framework. Based on the comments/views of the stakeholders and the analysis, various provisions of the Telecommunication (Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff Order, 2017 have been finalized.

While prescribing the new regulatory framework, the TRAI has kept in mind the discussions in the Parliament on the motion for consideration of the Cable Television Networks (Regulation) Amendment Bill, 2011, wherein the then Minister of Information and Broadcasting stated that TRAI would establish a system wherein consumers would be free to choose a-la-carte channels of choice and they would not be required to subscribe to bouquets.

While framing this Tariff Order, the emphasis of the Authority has been to ensure transparency, non-discrimination, consumer protection and create an enabling environment for orderly growth of the sector. The new framework attempts to address all the issues raised by broadcasters, distributors of television channels and subscribers. The broadcasters will have to declare their channels as ‘Pay’ or ‘Free-to-Air’ (FTA). Broadcasters have been given complete flexibility to declare maximum retail price (MRP) of their pay channels to subscribers with no restrictions as long as such channels are provided to consumers individually. However, if a pay channel is provided as part of a bouquet, MRP of such pay channel cannot be more than Rs. 19/-. This is to ensure protection of interests of consumers as bouquet deals are oblique to individual channel prices. The new framework in no way restricts or curtails the freedom of broadcasters to price their channels. Provisions have also been made to ensure that no additional charges are levied for subscribing to FTA channels.

Distributors of television channels are permitted to charge a Network Capacity Fee of maximum Rs. 130/- (excluding taxes) per month from a subscriber for subscribing to a network capacity of 100 SD channels. This will ensure reasonable rate of return to the DPOs on investments in the existing distribution networks as well as incentivize them for additional investment to ensure better network quality for providing value added services and broadband to subscribers.

In order to provide choice to the subscribers and to curb skewed prices of a-lacartechannels as compared to bouquets, the Authority has mandated that a broadcaster can offer a maximum discount of 15% while offering its bouquet of pay channels over the sum of MRPs of all the of pay channels in that bouquet. The restriction of maximum discount of 15% on formation of bouquet is to ensure that a subscriber is not forced to take a channel which he doesn’t want. Forcing of non-driver channels to subscribers not only reduces choice of  subscribers but also eats away bandwidth of distributors of television channels restricting entry of new and more competitive channels. It is hoped that new framework will bring transparency, level playing field, encourage consumer
choice and growth of the sector.

 

The salient features of the Tariff Order are:
  •  Broadcasters to declare maximum retail price (MRP) (excluding taxes ), per month, of their a-la-carte pay channels for subscribers.
  •  A broadcaster can also offer bouquets of its pay channels and declare MRP (excluding taxes) of bouquets for subscribers. However, MRP of such bouquets of pay channels will not be less than 85% of the sum of maximum retail price of the a-la-carte pay channels forming part of that bouquet.
  • Separate bouquet for pay channels and free-to-air channels.
  • Charges payable by a subscriber for distribution network capacity and channels have been separated.
  •  The distribution network capacity required for initial one hundred Standard Definition (SD) channels can be availed by a subscriber by paying an amount, not exceeding, Rs. 130/- (excluding taxes) per month to the distributor of TV channels.
  • Within the capacity of 100 SD channels, apart from the channels to be mandatorily provided to subscribers as notified by the Central Government, a subscriber will be free to choose any free-to-air channel, pay channel, or bouquet of pay channels offered by the broadcasters or bouquet of pay channels offered by the distributor of television channels or bouquet of free-to-air channels offered by the distributor of television channels or a combination thereof.
  • No separate charges, other than the Network Capacity Fee, to be paid by the subscribers for subscribing to free-to-air channels or bouquet of  free-to-air channels.
  • The additional capacity, beyond initial one hundred channels capacity, can be availed by a subscriber in the slabs of 25 SD channels each, by paying an amount not exceeding Rs. 20/- per such slab, excluding taxes, per month.
  • Every distributor of television channels shall offer all channels available on its network to all subscribers on a-la-carte basis.
  •  Every distributor of television channels shall declare distributor retail price of each pay channel and bouquet of pay channels payable by a subscriber:
  •  A subscriber can choose a-la-carte channels of its choice.
  • Distributors of television channels are permitted to form bouquets from ala-carte pay channels and bouquet of pay channels of broadcasters. However, distributor retail price of such bouquets of pay channels shall not be less than 85% of the sum of distributor retail prices of the a-lacarte pay channels and bouquets of pay channels of broadcasters forming part of that bouquet.
  •  A subscriber has to pay separate charges, other than the Network Capacity Fee, for subscribing to pay channels or bouquet of pay channels.
  • Distributors of television channels have to offer at least one bouquet, referred to as basic service tier, of 100 free-to-air channels including all the mandatorily channels to be provided to the subscribers as notified by the Central Government. This bouquet will be one of the options available for subscription to customers. It will be the subscriber who will be free to exercise his option.
  •  Any pay channel having a-la-carte MRP of more than Rs 19/- per month (Excluding Taxes) shall not form part of any bouquet either by the broadcaster or by the distributor of television channels.
  •  Any bouquet formed either by the broadcaster or by the distributor of television channels shall not contain both HD and SD variants of the same channel.
(Sudhir Gupta)
Secretary, TRAI
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