Apex broadcasters' body decries Trai's new cap on channel pricing

IBF says it may consider legal options against amendments made to February 2019 order

The Indian Broadcasting Federation (IBF), the apex body of broadcasters, on Friday expressed its displeasure at the telecom regulator’s latest notification, saying the move would hamper industry growth and lead to shutting down of channels and unemployment.

IBF will now strategise its future course of action, including evaluating legal options, based on feedback from its member channels and networks.

The Telecom Regulatory Authority of India (Trai) had issued amendments to its February, 2019, tariff order earlier this week. Among other things, Trai reduced the cap on the maximum retail price (MRP) of individual channels that can form part of a bouquet to Rs 12 per month from an earlier cap of Rs 19. The regulator has also sought to impose twin conditions for bouquet formation, effectively introducing a cap on bouquet pricing, which was left untouched in the new tariff order (NTO).

The IBF said this was done without giving any “logical reason” and termed it arbitrary. It noted that coming barely a few months after Trai notified the NTO, effecting a disruptive change of the distribution ecosystem, these amendments would severely impair broadcasters’ ability to compete with other unregulated platforms and adversely affect the viability of the sector.

The broadcasters claimed that Trai was trying to micro-manage what was arguably the cheapest rates for news and entertainment in the world. In the past 15 years of regulating the broadcast sector, Trai has issued 36 tariff orders and ancillary regulations.

“This goes contrary to the government’s stated position of ensuring the ease of doing business. While Trai claims the amendments are in consumers’ interest, it appears to have conveniently forsworn the interest of broadcasters,” IBF said. It added that this change would only benefit distribution platform operators (DPOs) as they have been allowed to charge as much as Rs 160 for the channels that are supposed to be free.

In a recent report, India Ratings had said it believed Trai's  amendments to the tariff and interconnection regulation were largely neutral for multiple system operators (MSOs) and negative for broadcasters. The amendments have focused on a reduction in the final customer price, resulting in broadcasters bearing the largest burden in the value chain, it said.

The industry body noted that broadcasters had pleaded with Trai (in response to its consultation paper) to allow the industry to come to terms with the NTO before making further changes.

In changes to February 2019 order, Trai has reduced the cap on the MRP of individual channels that can form part of a bouquet to Rs 12 per month from an earlier cap of Rs 19 

• The regulator has sought to impose twin conditions for bouquet formation, effectively introducing a cap on bouquet pricing, left untouched in the new order

• IBF will evaluate legal options based on feedback from member channels and network

• The IBF says the change was done without giving any “logical reason” 

• It observes that these amendments will severely impair broadcasters’ ability to compete with other unregulated platforms

• It accuses Trai of trying to micro-manage what was arguably the cheapest rate for news and entertainment in the world

“In fact, Trai itself had acknowledged this need by proposing a two-year moratorium on further regulation. It appears all IBF’s pleas have been ignored. Unfortunately, in this exercise, content creators and owners have been disempowered and the entire authority has shifted to middlemen," the IBF said.

The changes are likely to have ramifications. IBF felt that at a time when the economic environment was tough, the order would force many channels to shut down and lead to unemployment in the sector. After the NTO, the ecosystem had settled down with about 200 million consumers choosing their favourite channels.