To protect consumer interests, the Telecom Regulatory Authority of India (Trai) on Wednesday has released amendments to the New Tariff Order (NTO). According to the new order, number of free-to-air channels has increased, pricing for pay channels has reduced and TRAI has capped the number of bouquets of pay channels offered by broadcasters.
Analysts say this move is likely to lower the average revenue per user (ARPU) for TV operators. It had surged by close to 60 per cent, on an average, after the NTO took effect. This would mean a lower share of revenue for broadcasters, who used to get almost 50 per cent share after the NTO came into being in February last year. It will negatively impact broadcasters’ revenue, which had grown 30-40 per cent year-on-year due to the higher share and increased ARPU.
At present, direct-to-home (DTH) or cable TV operators provide only 100 channels for a network capacity fee (NCF) levy of Rs 153. Now, cable operators will have to provide 200 channels for Rs 153.
There was no cap on the maximum number of channels in in the free-to-air (FTA) category in the earlier NTO, which implied that more niche channels will move towards the FTA. Under the existing system, subscribers had to pay at least Rs 153 a month regardless of the number of channels they watched. Operators now have also been mandated that they will not charge more than ₹160 per month for giving all channels available on their platform.
Trai has reviewed the pricing of channel bouquets compared to a la carte ones. The regulator has now set January 15 as the deadline for broadcasters to announce their new pricing structure. The telecom regulator has reduced the ceiling price of pay channels for inclusion in bouquets from Rs 19 to Rs 12. That simply means that channels having an MRP of Rs 12 or less will be permitted to be part of a bouquet.
According to the NTO 2019, consumers were given the option to pay only for the channels that they chose to watch, at the maximum retail price (MRP). Earlier, they were offered pre-set channel bouquets. The NTO was expected to bring monthly bills down, but it was the opposite that happened.
The lack of any caps on discounts offered on bouquets, compared to a la carte channel pricing, is being “misused to throttle market discovery of TV channel prices, by giving huge discounts on the bouquets," the regulator had said.
In order to address that, Trai has set two conditions to ensure the pricing of a-la carte channels does not become illusionary. First, the sum of the a la carte rates of pay channels forming part of a bouquet is not to exceed 1.5x the rate of the bouquet of which such channels are a part. Second, the a la carte rates of each pay channel, forming part of a bouquet, are not to exceed 3x the average rate of a pay channel of the bouquet of which the channel is a part.
For homes in which more than one connection is active in the name of one person, DPOs can charge a maximum of 40 per cent of the declared NCF on the additional connections. It has also permitted DPOs to offer discounts on long-term subscriptions (six months and above).
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