Tariff should be Technology Agnostic

Tariff should be Technology Agnostic				demand, they will get the payments. All channels
				which need to be priced more than Rs. 5.35 can
� Lt. Col K K Sharma				fall in this category.
(Retd)

Prior to 1994, there were no pay channels and				- It is not practical to have pricing
thousands of cable operators provided video as				according to genres. There may be differentiation
well as FTA channels to the masses. When Pay				within a genre too. Hence to be fair to all kinds of
channels were introduced, broadcasters demanded				broadcasters, they need to be given the freedom
operators small lump sum amounts like Rs.				to choose their own pricing if they feel their
1000-2000 per month. The operators had				product is of premium quality. This calls for
requested the government at that time too to				Broadcasters to declare to the Regulator if their
allow these channels to be distributed only through				channel is FTA, ‘Normal Pay' (which can be
addressable systems which is the norm all over				part of a bundle and with a-la-carte rate not more
the world but the request was ignored.				than Rs. 5.35), ‘Premium' to include special and
				niche channels (not to have a regulated tariff) or
Consumers were too happy to get more and				Value added Service, to include VoD, ‘pay per
more content without paying additional money for				view' (like movie premiums) etc. Thus the system
that and the operators had to bear the burden to				will work the same way as the Public Distribution
keep their business going as there was no				System of the government which caters for the
addressability. The average tariff in cable TV has				masses selling at controlled prices.
almost remained the same since then where as
the pay channel rates have increased more than				Thus, the tariff structure can be divided in to
1000%. Pay broadcasters knew that the people				three different frameworks as follows:
will get addicted to their content and so kept on
forcing the operators to pay for these channels				- Non-addressable analog market
or face the wrath of the public as the				(Non-CAS)
government was too reluctant to control the				- Non-addressable Digital market
broadcasters. Not only this, these few popular				(Non-CAS Digital)
channels were bundled with newer and not so				- Addressable Digital market (CAS
popular channels forcing operators increased				Areas, Voluntary CAS areas, HITS and IPTV
bouquet rates but operators could not force the				networks)
subscribers to pay more.				Addressable Digital Market
				In the addressable markets where CAS is used,
Even when CAS was legislated in 2003, it were				the pay channel tariffs can be based on the MRPs
the pay broadcasters who convinced the				and the revenue share system can continue as it
government that the people were not prepared				is today. The system also should be made
for such a technology in-spite of it having been				applicable to all areas where voluntary CAS has
cleared by both the Houses of Parliament. It is				been implemented or the same pay channels are
this aspect of cable TV operation which has lead				being distributed through DTH or HITS or IPTV.
to the present state of chaos in the industry.				Also, dual feed of analog for FTA and digital for
				pay channels must continue on cable networks till
Although late, but Telecom Regulatory Authority				CAS implementation in the whole country is
of India (TRAI) has finally woken-up to resolve				completed.
the issue of tariff in satellite and broadcasting
industry in India in a comprehensive manner. This				In CAS notified areas retail tariff should comprise
time, the regulator has come up with three				of
consultation papers for deciding the tariffs for				1. Basic Package. (Min 50 FTA + 5 DD channels
cable TV services in CAS areas, in non-CAS				for Rs. 100/-). This is so because the number of
areas and for digital cable through HITS. The cable				FTA channels have increased and digital networks
TV industry has been experiencing a period of				can carry much more channels than analog. Also,
uncertainty for many years due to ad-hoc				this additional revenue will be an incentive to
regulations introduced either on the directions of				move to digital in the non-CAS areas.
the courts or for crisis management. This has				2. Normal Pay channels. Could be bundled (at Rs
hampered the growth of the Industry compared				5.35/ MRP as suggested by TRAI) and sold to
to its competitors like DTH, IPTV and Broadband,				subscribers in bouquets. However, they should be
which from the beginning started in a regulated				made available a la-carte as well if the consumer
manner.				so demands.
				3. Premium Channels. Since the pay channels have
Cable TV Tariff in CAS areas				adequate addressable market now, let the
				broadcasters decide if they want to sell their
It is good that the authority is reviewing the tariff				channels to an elite addressable audience or to
for Cable TV Services in CAS notified Areas now				mass audience. While selling to the masses, they
after three years of its implementation. However,				gain in viewership and get more ad revenue
market competition increased by introduction of				whereas, selling to selected addressable audience
DTH and IPTV is not fair to Cable. When all				they market to a fully accounted market with no
technologies compete in the same area under				worry of under-declaration and a market which
similar conditions, everyone gets a chance to				will pay them for their content, technology like
compete on equal terms. But by restricting the				HDTV and 3D and value added services.
CAS areas to a small portion of the three				4. Value Added Services. These services depend
metros, growth cannot be expected beyond a				upon the platform operators and can have no
certain limit. Saturation will reach sooner or later				regulation of tariff.
and curb the growth any further. Thus, operators
are not motivated to invest more.				There should be a relation between the a-la-carte
				price and the bouquet price of a Normal Pay
Tariff of Pay Channels has to be technology				channel to avoid any perverse pricing. The ratio
agnostic. Consumers of all addressable systems				should not be more than 1;1.5. That means
(Digital Cable, DTH, IPTV or Broadband) must get				a-la-carte price should not be more than 50%
the same deal from pay channels. Consumers are				higher than the average price of a channel in a
not much affected when they shift from Analog				bouquet.
to digital networks as far as the pay channels are
concerned. Since migration from a				Time to Look after the LCO
non-addressable system to an addressable one				Now, we have to move fast to a total
brings no major hiccups to consumers, there is no				digitalization era so as to compete with other
need for working out separate tariff as it will				technologies as well as move to triple play and
make regulations ineffective in the long run. These				other broadband services. It is the last mile
tariffs should also be applicable to voluntary CAS				operator who suffers the most in carrying
areas. This will give choice to consumers and				services of broadcasters and MSOs. He does not
encourage digitalization with CAS making the				get any carriage fee while carrying these services.
system transparent and more accountable.				Also, the quality of the service of both
				broadcasters and MSOs depend mostly on the
As far as consumer is concerned, he wants to				performance of the last mile networks. They get
pay the same amount for a particular channel of				no financial help for upgrading their networks.
his choice whether he views it on an addressable				They have been upgrading their networks with
system like CAS, DTH or IPTV or on				their own money to carry more and more
non-addressable system like the analog cable in				channels without any financial benefits for the last
non-CAS areas. What will differentiate is the				16 years. Hence, we feel that the revenue share
experience of service if any. Digital cable, IPTV				between broadcasters, MSOs and LCOs should be
and DTH can provide on-demand services and				40:25:35.
more value ads. There can be 3D or HDTV
version of a channel or a sports channel can have				All MSOs run many video channels (even up to 10
a multiple angle viewing experience, for which a				or more in some cases). They do not yet pay
consumer may like to pay more.				any registration to the government for them but
				earn a lot in terms of ad revenue and
The data given by TRAI for the existing CAS				sponsorships. They must pay carriage fee to the
areas in the Consultation Paper and the survey				LCOs so that they can upgrade their network's
report of CMS done for TRAI which is placed on				channel carrying capacity to carry these additional
the TRAI Website speaks volumes of what is				channels to the subscribers. Since MSOs earn ad
required in the tariff regime. They tell us about				revenue from the viewership provided by the
the existing scenario and how to go ahead for the				LCOs, this revenue should be shared between the
benefit of all.				MSOs and LCOs in the ratio of 50:50.

The following points emerge from the survey				While deciding the tariff issues, TRAI should also
done by CMS:				take in to account the number of subscribers who
				only watch FTA channels? There may be millions
1. Competition from DTH has forced Cable				of them. There is also a need to take in to
Operators to reduce their subscription from Rs.				account the number of black and white TV sets
200 to Rs. 185.				or old colour TV sets in India which receive only
				11-30 channels out of the 500 odd channels
2. Lowest Subscription is in Chennai (Rs 106) and				available in the country? Five Doordarshan
it is the only city with total CAS area coverage.				channels are mandatory to carry by all Cable
				Operators which leaves only 6 private channels
3. 75% Subscribers get the receipts from cable				for these subscribers. A similar argument applies
operators.				for old colour TV sets which can receive not
				more than 30 channels.
4. Majority of subscribers are not willing to pay
more for better services through digitalization.

5. People who want to pay more want to migrate				The Democratic Operator
to DTH. Initial installation charges for DTH, of				In case of cable
course is also a deterrent.				operators, who try to provide all popular channels
				to all their subscribers, they charge a differential
6. Better Quality and fast redressal of complaints				pricing at the retail level without the content being
are two factors for which some people are ready				different to accommodate different types of
to pay more.				subscribers. Moreover, as the operators belong to
				those areas, it is difficult for them to ask the
7. Channels watched by an average household				same price from a consumer having a large 42
range from 7-15 only.				inch LCD TV and another having a black and
				white TV having a limited channel reception.
Thus, to achieve a consumer friendly tariff for
cable TV service the following is required:				Thus a cable operator in the non-CAS areas has
				been selecting channels and subscription fee for
- Tariff for services as well as pay				his subscribers in a very democratic way
channels have to be affordable by majority of				considering-
the existing subscribers, preferably below Rs. 200				- Consumer Choice.
-.				- Affordability
				- Language of the region
- Operators must be given adequate				- Type of TV set owned
incentives for digitization to extend the CAS
implemented areas.
				Non-Addressable Digital Markets
- CAS must be implemented in the
whole country without any delay.				Basic Tariff- Should include a minimum of 50
				FTA+5 DD channels for Rs. 100/-
- MSO/Operators must be able to				and also cover the cost of
differentiate their services from others.				distribution on the network.
				Normal Pay TV – Should
- Customers connected to an				include a minimum number of Pay channels at a
addressable system anywhere in India (Cable,				fixed cost but number of channels and the
DTH or IPTV) should pay the same price for pay				cost to be more than the Analog networks.
channels. Only basic service charges should differ				Premium Channels- Left to the
from platform to platform.				choice of the operator.
				VAS- Left to the choice of the
- Manufacturing of digital equipments				Operator.
including STBs in India should be encouraged.
				Wholesale
- 29 Million addressable market is				Pay TV –Normal Pay channels to be available
adequate for the Premium Pay and Niche				a-la-carte. Decision to accept the bouquets on the
channels. As brought out above, digital addressable				Headend operators. A cap of Rs 2.40 to be made
cable has been confined to a universe of mere 5				for these channels to be paid to the Broadcaster.
million TV households where as, DTH and IPTV				Premium Channels- May be
have been given 140 million TV households to be				introduced by the Headend operator on his own
exploited. They have already reached a				choice to increase the value of his network and
connectivity of 23 million and 1 million till date. This				differentiate from others. If his area is higher
means that the addressable market in India has				income group, he may demand more
29 million subscribers. This should be adequate for				subscriptions from his subscribers.
the high priced channels which can be placed in the				VAS- As per the wish of the
premium category. Rate of these channels can be				Headend Operator.
left to the broadcasters. If they can create a

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Tariff should be Technology Agnostic