Vanita Kohli-Khandekar: Why price regulation for TV?

For some years now, Indians have had the pleasure of paying next to nothing for their newspapers. At anywhere between Rs 1 and Rs 4 a copy, Indian newspapers retail at a fraction of the Rs 15-20 they take to produce, not including fixed costs.

Most Indians rejected pay radio. Just about 175,000 people had subscribed to pay Rs 135 a month for WorldSpace radio, more than eight years after its existence in India. (WorldSpace has since shut down.) All that talk of superior music or ad-free content did not work for most Indians. They were happy multi-tasking with the prattle of radio jockeys on the 200-odd free FM radio stations.

On the other hand, Indians are perfectly happy paying Rs 150 and more for a ticket to watch a film at a multiplex or Rs 50 to watch it on a pay-per-view channel on DTH.

In none of these markets was price regulation ever discussed. Most have structural issues that would take several governments and many headaches to resolve. In films, for instance, under-declaration is rampant in single-screen theatres. The only reason the industry is showing growth is the proportion of multiplex screens, with computerised and transparent ticketing, has been going up. So, a whole lot of the money which was not being seen is now coming into the system.

The point — any market for any good or service usually finds its own level. If there is enabling regulation like in telecom, it finds it faster. If there isn’t any enabling regulation, it still finds its level, albeit with some trouble, like in films.

Most media industries are no different from TV. They are chaotic, fragmented and have a weak regulatory framework.

Yet, the Ministry of Information and Broadcasting has never sought to regulate newspaper prices or those of film tickets. Why then is the regulator spending time, effort and taxpayer money on regulating the prices at which TV channels are shown? The latest Telecom Regulatory Authority of India (Trai) tariff order on cable and pay-TV pricing is another example of the regulator and the ministry’s desire to micromanage, instead of facilitate, growth.

For those who came in late, the order puts a cap of Rs 100-250, depending on what you are buying on cable. On DTH, the cap works as a percentage of cable. Much of this is just stretching earlier tariff orders further. The order “makes a bigger mess of an already messy situation”, says Jagjit Singh Kohli, managing director and CEO, Digicable Network. Dinesh Jain, the former head of Zee-Turner, agrees: “Price regulation doesn’t help anybody.”

The Rs 30,000-crore Indian television business suffers from several structural flaws. The biggest being the lack of pay revenues that are distributed equitably between the wholesalers (multi-system operators, or MSOs) and the broadcasters. Of the Rs 15,000-odd pay revenues collected by cable operators, only 10-15 per cent comes back to the broadcasters.

This has led to a ceaseless conflict between operators, broadcasters and MSOs. The regulator has periodically tried to stem it by forcing digitisation (the CAS Amendment in 2003) or by price regulation.

This displays a complete lack of focus. Both the regulator and the ministry should be working to create a framework that facilitates growth — by incentivising alternative distribution technologies or licensing cable for instance. There is no overarching broadcast regulation and all guidelines and policies, while well-intentioned, are too hung up on the current situation and technologies.

There seems to be, within the regulating bodies, a deep desire to micromanage. So, there is the move to get into audience ratings, fix prices, fix technology standards for set-top boxes and keep a tight lid on the communication satellites that DTH operators can use. Much of Trai’s attempts at price regulation, from 2004 onwards, have only created more and more complications and fights that the Telecom Disputes and Settlement Tribunal is constantly arbitrating.

If almost every other media industry, in fact every industry, can work without price regulation and find its own level, why not TV?

Vanitakohli@hotmail.com