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March 2019

NEW TARIFF ORDER ROLL-OUT


TRAI emphatically rolled out its new tariff order, effective 1st February, 2019. This was less than a month TRAI withdrew its Special leave Petition (SLP) in the Supreme Court, on 3rd January, 2019.

Given the short time frame, the plethora of channel selection options, more than 300 bouquets by broadcasters & widely varying prices, consumers have been bewildered. In fact, many of the clauses of the New Tariff Order (NTO) have not been understood and/or implemented even by MSOs. As expected, the implementation is currently chaotic.


The NTO Was Rolled Out Less Than 30 days After The Supreme Court's Final Hearing.


It was informally understood that TRAI would permit a grace period of about a week from Feb 1, to implement the New Tariff Order (NTO).

Around 10th February, TRAI pushed for implementation of the NTO. Some cable & DTH platforms continued to support consumers, by continuing their signals on the old plan.


Pay Channels Will Charge NTO Payments Effective 1st Feb



TURMOIL

On 13 Feb 2019, Pay TV broadcasters under the IBF banner issued a circular stating that the NTO was under implementation since 1st February & all pay channels would commence billing their new tariffs, from 1st February itself.

As a result, a large section of undecided DTH & CATV consumers found their TVs go blank, overnight.

On February 13, TRAI claimed that approximately 65% of cable TV subscribers & 35% DTH subscribers had already exercised their option for a subscription package under the NTO.

There are approximately 100 million cable service TV homes and 67 million DTH TV homes in the country.




BEST FIT PLANS

In a knee jerk reaction, TRAI issued a press release, asking all DPOs to introduce a 'Best Fit Plan' for undecided consumers, which stated:

"The 'Best Fit Plan' shall be designed based on Consumers' usage pattern and language spoken. It should preferably be a blended combination of various Genres, while making 'Best Fit Plan' for a subscriber, DPOs should ensure that pay-out per month of the 'Best Fit Plan' generally does not exceed the pay-out per month of existing tariff plan of the subscriber."

At the time of going to Press, (end February) almost all undecided consumers have been shifted to "Best Fit Plans" that have been created independently by MSOs and DTH platforms. These packages provide a continuation of services for many of the popular channels but often do not meet consumers' specific needs.


TRAI Expects DPOs, Not Broadcasters To Discount The 2nd STB


However, the resumption of services seems to have once again lulled consumers into a 'No Action' period.


NCF TURMOIL

The New Tariff Order requires each consumer to pay a Network Capacity Fee (NCF) of ₹ 130 + 18% GST for delivery of 100 TV channels. Delivery of additional channels is priced @ ₹ 20 + GST per block of 25 channels.

The NCF is to be shared 55:45 between MSOs & LCOs, and this sharing formula has become a contentious issue.

If consumers opt for 150 to 200 channels, as they have been accustomed to, the NCF will increase substantially.



2ND STB BUCK PASSED TO DPOS

The new tariff order does not provide any discount for the 2nd STB in a consumer's home. When consumers realised this, they protested.

Responding to consumers' demands, TRAI simply declared that DPOs could discount the NCF on the 2nd STB, if they wanted to. This was hardly new information or a fair solution. DPOs are anyway authorised to discount the NCF as they please, on even the 1st STB.

What the consumer wanted was clearly a discount on the Pay channel amounts charged on the second STB, similar to the situation prior to the new tariff order.



DPO PACKAGES

Informal reports indicate that more than 85% of consumers have opted for DPO packages - either Best Fit or a DPOs bouquet.

If this trend continues well into the New Tariff Order, it would mark a radical shift in the power play equation between Pay channel broadcasters and DPO platforms.

DPO platforms may now be able to exert huge influence & control over consumption of Pay TV channels.


Informal Reports Are That 85% Of Consumers Have Opted For MSO / DTH Bouquets - Not Broadcasters' Bouquets, Shifting Control From Broadcasters To DPOs.



BROADCASTERS NERVOUS

The lack of uptake of broadcasters' packages by consumers has made broadcasters nervous.

Many have reduced their Pay Channel bouquet rates while others have created new Pay Channel bouquets at lower prices. However, since there are already more than 300 broadcasters' Pay channel bouquets thrown at confused subscribers, it seems most unlikely that consumers will even notice the revised Pay channel bouquets from broadcasters.



31 MARCH DEADLINE

To alleviate consumers' problems, TRAI's press release extended the deadline for consumers who have not selected their channels and Pay TV packages under the NTO, to 31st March.

The deadline extension is not applicable for those subscribers who have already exercised their choice under the new tariff order.

Further, TRAI has conveyed that all DPOs (DTH, CATV, HITS & IPTV) must compulsorily migrate all undecided consumers to the "Best Fit Plan" and bill them the rate of the Best Fit Plan.

All undecided consumers who select their NTO plans before 31 March 2019, will be shifted to the new plan within 72 hours.

Consumers who do not select their NTO plans by 31st March will be assumed to have opted for continuing their Best Fit Plan, and will be billed accordingly every month. They can of course exit the Best Fit Plan to any other plan. But if this shift is selected after 31 March 2019, they will be shifted only in the next month's billing cycle.


LOOKING AHEAD

Implementation of the new tariff order is in a very preliminary stage. It is not yet clear how the consumer will react.

Will the consumer select only a few pay channels a-la-carte and a total of less than 100 FTA + Pay channels? That would reduce the monthly bill but also reduce DPO revenues, which are much needed for distribution to upgrade and enhance its service.

On the other hand, will consumers prefer to opt for several 100 channels, as they did before the new tariff order? This would require them to pay a much higher monthly tariff.

Looking inward, if consumers primarily opt for DPO bouquets rather than broadcaster bouquets, the balance of power within the industry will shift from Pay TV broadcasters to DPOs. n


200 FTA FOR BASIC NCF

For Free To Air channels, besides the 26 compulsory Doordarshan channels, consumers can even select their FTA channels on an a-la-carte basis. This adds a huge load on the Subscriber Management System.

Many DTH platforms have therefore decided to offer a huge bouquet of approximately 200 FTA channels, under a single authorisation, for the initial NCF of ₹ 130 + GST.

The NCF for Pay channels is charged extra.

In view of the fiercely competitive market, MSOs may be forced to offer similar ofers, which could further anger revenue starved LCOs.