The Telecom Regulatory Authority of India (Trai) made DTH and Cable TV operators implement the key National Tariff Order 2.0 changes earlier this week. However, the biggest and major change is yet to happen. As you already know, Trai wants to bring transparency with the new amendments as broadcasters were offering heavy discounts on bouquets in the past. In NTO 2.0, a broadcaster or service provider will not be able to include a-la-carte channels priced over Rs 12 in bouquets. This is a major move and the reason behind why the Indian Broadcasting Foundation (IBF) which represents top broadcasters in the country is going against the regulator. Trai wanted the NTO 2.0 to fully become effective by March 1, however, that did not happen due to this ongoing battle.
Some Major GECs Priced at Rs 19 Per Month
The thing that we are referring to is the upper cap on the pricing of the major channels. As per the new rules charted by Trai, if the broadcasters have to package a channel into a channel pack, then that particular channel cannot be priced more than Rs 12. Previously, this limit was set at Rs 19. Inclusive of taxes, the subscribers were paying Rs 23 for the major channels included in the packs. Since Rs 19 was the upper cap allowed for the broadcasters, these channels could not have been priced more than this price limit. As such, all the major channels by the broadcasters had the same Rs 19 price tag.
If we were to pick up major channels from some of the most popular channel packs, for example, in the Star English pack, channels like Star Sports 1, Star Sports Select 1 are priced at Rs 19 and still they are part of the channel packs. Similarly, other popular channels from Viacom18 like Colors and Colors Kannada are priced at Rs 19. But, if the new rules are to be considered, then this cannot be the case going forward.
Broadcasters Losing Revenue
Now the thing to note here is that a small fraction of the channels makes up for most of the revenue for the broadcasters. A handful of sports channels and the GECs are the ones that bring the most eyeballs to the broadcasters. Hence, the broadcasters will have a choice to make here. Either the broadcasters will have to keep the pricing of the channels similar and lose on some viewers, or either they will have to retain the viewers by making the channels part of the bouquets but lose on some revenue.
Broadcasters Might Unbundle Major Channels
Undoubtedly, this would be a hard choice to make for the broadcasters since more viewers would mean more advertising revenue. But, at the same time, subscription revenue is also an important metric given that the number of subscribers in the industry are again on the rise. However, it is possible that since the broadcasters have already lost a little of their advertising revenue after the introduction of the Trai tariff regime, they might decide to skip the channel bouquets and could go for retailing the popular channels separately and individually. If this happens, then it would be the ultimate win for Trai as the regulator has been bullish on disrupting the discounted channel packs and has been rooting for more individual channels, as those represent the true essence of the Trai tariff regime.