Trai's tariff order is unimplementable, says Harit Nagpal

This tariff order is unimplementable and we are supposed to implement it by May 2, says Tata Sky CEO

The Telecom Authority of India’s (Trai’s) October 2016 draft tariff order is about to become a reality by May 2. This, even while STAR India has filed a case in the Madras High Court questioning Trai’s right to price content. The order’s rather regressive stance on channel pricing has upset many big players in the Rs 58,800-crore industry. Now the estimated Rs 5,000-crore Tata-Sky, one of India’s largest DTH operators with 12 million active subscribers, has decided to take the telecom regulator to court. Vanita Kohli-Khandekar spoke to Tata Sky chief executive officer Harit Nagpal. Edited excerpts:

Where is the case being filed and why?

We will be filing a case in the Delhi High Court next week. This tariff order is unimplementable and we would like to know how we are supposed to implement it by May 2.

We have created packages by genre and made it easier for the customer to select them. If you want a sports or movies package, you can choose specific bundles offering those. But the order asks us to offer channels à la carte, and link it to the bouquet price (The order contains several restrictions on how the channels can be priced à la carte and as a bouquet). If you expect people to use an app and order one channel, it’s not going to happen.

Indians want to speak to a human being and it costs my call centre Rs 7 a minute to handle a call. At an average revenue of Rs 300 per subscriber, my margin is 20 per cent or Rs 60. If a consumer speaks for eight minutes or more, I incur loss on that customer. Typically, package selection calls take 30 minutes. If I go out of business answering calls of consumers who want single channels, how does that help an operator or even a customer?

Have you represented your case to the Trai?

Yes, I did explain this in person, and we have sent it to them in writing as well. But now, I am faced with a situation where the order is notified and I have to put prices up on my website by May 2. It is too complex.

Why has this tariff order caused so much consternation?

Where is the need to do this? This order will make life more difficult for consumers. They have never had it better. India is the cheapest market for television, not just by Western standards but also compared to our South-East Asian neighbours. Malaysia is at $35 (per home per month), Indonesia and the Philippines at $25, while India is between $4-6. And these are countries with similar per capita incomes. It has been five years since digitisation was started. My bet is that even today, DTH, despite being only 30 per cent of Phase I and II (of the digitised market), pays 80-90 per cent of the service tax and entertainment tax in the digitised area. The aim should be to complete digitisation and bring full transparency to set the relationship between the MSO (multi-system operators) and LCO (last-mile cable operators) right.

What will this tariff order achieve?

The compliant will have to become more compliant and the non-compliant will remain so. Cable is still not offering tiered packages. They haven’t even been able to implement tiered packaging at genre level. The single step that will increase transparency is making the category prepaid and ensuring that the MSO collects the money, just like the DTH operators do. That way, the government can keep tabs and ensure transparency. Since my margin is at 20 per cent, it is leaving no incentive for the enterprise to innovate, which we have been doing by providing HD, DVR, Interactive services, On Demand, etc. The proposed carriage fee structure also makes channels catering to smaller communities unviable because they will be forced to pay for being carried. In any case, why should any channel have to pay a fee to be carried on a platform. A prepaid subscriber, recharging a day after zero balance will be charged a reconnection fee. Is that fair? He could have been out of station, his kids could have exams or he may have been short of cash.

Why are none of the major broadcasters or DTH operators talking or doing something about this?

I wouldn’t have an answer to that, but all I can say is the brand that is best equipped to manage the implementation of this order is Tata Sky, because of the processes and the transparency we have. If we can’t implement it, no one else can. But your question remains valid, as Trai has filed caveats in 10 plus courts across the country against Tata Sky.