After the introduction of the national tariff order by the Telecom Regulatory Authority of India (Trai), the industry has undergone a change across many verticals. Whether it is viewership, channel prices, or revenue, every parameter has either gone up or down. But, amidst this, Cable TV service providers have come under the pile of dominos that stumbled as the result of the new regulatory framework. These operators have been facing declining revenue and their earnings have come down significantly as subscribers continue to migrate to different operators, and as channel costs rise. In such a situation, these operators are now planning to levy a service charge for maintenance.
Earnings for Operators Sliced in Half After New Tariff Regime
The new problems come at the hem of the latest Trai mandate which has caused the earnings for the cable operators to decline. Before the order, each cable operator used to get around Rs 175 to Rs 200 per cable connection, however, after the Trai tariff regime, these earnings have come down to only Rs 90. With this reduced income, cable operators are finding it hard to give out salaries to their employees who carry out the maintenance work like the collection of subscription fee or servicing of equipment. The cable operators’ association in Kolkata got together and decided to write to the Telecom Regulatory Authority of India (Trai) to ask whether they can levy a service charge or not. As per a member of the association, it would be difficult to serve the subscribers without collecting an additional service fee of Rs 20 to Rs 25.
The cable operators association also raised concerns saying that fixing cables and collecting subscription fee is round-the-clock work. They added that on an average, an operator employs at least five-six people, however, but with this reduced income, it would be impossible to serve the customers.
Paying Employees Becomes Hard for Cable Operators
What’s interesting to note is that although pay channel prices have gone up, the earnings of the operators have come down. As per the new system, 80% price of the pay channels goes to broadcasters, while the rest 20% is kept by Multi-system operators (MSOs) and cable operators. Out of the base fee which is charged for the first 100 FTA channels, operators get to keep Rs 75. For a package priced at Rs 200, operators earn around Rs 80, whereas for a package priced at Rs 300 they net above Rs 95. A package priced around Rs 400 nets the operators around Rs 110.
The operators’ association in Kolkata, emphasised that it will be hard for the companies to maintain the current employee count as the reduced earnings would mean less budget for handing out salaries. Minal Chatterjee of MSO Bengal Broadband also said that services might get delayed too. He also said that subscribers might have to visit the offices of the operators to pay their monthly subscription fee since, given the current situations, the workers collecting subscription fee will be laid off.
Now, we are yet to see how Trai intervenes in this matter and whether or not the regulator allows the operators to levy a service charge so that they can carry out easy subscription-fee collection and repairs for the subscribers.