DTH Operators Could See Profitability Going Down After New Trai Tariff Regulations: Ind-Ra

Ind-Ra says that there will be multiple challenges faced by multiple system operators (MSOs), local cable operators (LCOs) and DTH operator during the implementation of changes to tariff regime

Highlights
  • Trai went hard on broadcasters to providing multiple bouquets with similar channels
  • Ind-Ra believes the new tariff rules will take at least six-eight weeks for implementation

The Telecom Regulatory Authority of India (Trai) is planning to bring some major changes to the broadcasting tariff regime which stirred the entire DTH and Cable TV sector earlier this year. Trai, last week, released a consultation paper, in which it sought the views from shareholders on various aspects which will make the tariff regime more transparent. Market research firm, India Ratings and Research (Ind-Ra), says that the new changes to be implemented by Trai will take at least six-eight months to become fully effective due to the challenges involved. In the consultation paper, Trai discussed various aspects including variable NCF charges, discounts on long-term channels packs, count of bouquet packs from broadcasters and so on.

Trai’s New Tariff Regulations Will See Profitability of DTH Operators Going Down

Ind-Ra says that there will be multiple challenges faced by multiple system operators (MSOs), local cable operators (LCOs) and DTH operators while implementing the changes to tariff regime. Even though there are challenges involves, Ind-Ra believes that the tariff order is likely to de-risk the business model of MSOs and LCOs as their revenue stream will contain fixed network capacity charge (NCC) from subscribers and content commission from broadcasters (BC), thereby effectively passing through content cost. DTH operators, on the other hand, will likely see their “profitability being impacted in the next six to twelve months since they have already sold long-term plans till the end of 2018 and DTH companies won’t be allowed to withdraw or reprice a plan that’s already in use plan.”

After the removal of 15% discount on bouquet price versus à la carte channel pricing by Trai, broadcasters started providing a bouquet of channels at 20%-60% discount to the a-la-carte channel pricing, probably to avoid any hike in final consumer price.

Trai Warns Broadcasters to Reduce the Count of Bouquet Packs

In the consultation paper, Trai has warned all the broadcasters to reduce the number of Bouquet packs offered by them to the subscribers. Ind-Ra believes that broadcasters’ business model will change from B2B to B2C as they will now have to market their channel packs to end rather than rely on the service providers.

“Broadcasters with a strong set of anchor channels across genres will benefit, as they will be able to create a comprehensive bundled offering and generate customer pull,” said Ind-Ra.

Trai Consultation Paper Focused on Making Tariff Regime More User-Friendly

Furthermore, Ind-Ra says that the new Trai’s consultation paper issued on August 16, 2019, is focused on making the existing order more end-user friendly. But the research firm raised some concerns as well.

Ind-Ra believes that certain aspects in the consultation paper such as reinstating cap on discount provided on bouquet pricing, moderating/regulating the number of bouquets, as well as number of channels, may face operational and legal challenges during execution. Allowing a fixed discount on total prices of selected à la carte channels would empower end-customers to choose their preferred channels (even across broadcasters) and also reduce their monthly payouts, opines Ind-Ra.

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AshokDebuAshokAmit Kumar Meena Recent comment authors
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Debu
Debu

New tariff regime is totally useless. We should get the value of Rs 153 (paying channel price value of 153). Just for watching 2 channels i am paying 180 pm.

Amit Kumar Meena
Amit Kumar Meena

TRAI must remove their new tarrif regiim..paying more even getting less channels..If TRAI want customer pay only for they want to see channels then why we are paying Rs.153 for free channels, we don’t want to see these free channels.

City
Jaipur
Operator
Jio
DTH
DishTv
Ashok
Ashok

Rs.153 was Network carriage Fee (NCF) like broadband provider charged Rs.500 for Internet. You can view only free content on Internet for Rs.500/- like that we can view only Free channels for Rs.153.

Ashok
Ashok

Don’t compare Internet with DTH. If I have sufficient speed of Internet I can watch any TV channels in Internet (I am using oreo, airtel xtream and jio TV apps) which is for better than my previous TATASKY DTH. Now I pay only Rs.558 for 82 days and I am getting 3. 4GB data/ day in Airtel 4g and this is more enough for my daily usages. Kindly note that Tatasky tamil regional packs start with Rs. 199/month and this is only for watching TV channels and I am not able to watch Internet content for this amount

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