Scatmag.com

December 2018

TRAI ORDER: HIGHLIGHTS


As indicated in the November 2018 issue of Satellite & cable TV Magazine, the Supreme Court has emphatically rejected Star India's appeal against the TRAI's 2017 Tariff & Interconnection orders.


NO A-LA-CATE TO BOUQUET PRICE CAP

By the regulator's own admission, it is not clear if the 15% cap on the a-la-carte to bouquet discount price is to be implemented. The price cap was not specifically appealed by Star or TRAI in the Supreme Court.

TRAI has promised TDSAT that the regulator will issue a clarification in 7 days.

The new Tariff, Interconnection & QoS orders will come into effect from December 29, 2018.


TRAI Has Told TDSAT It Will Clarify 15% Cap By 5th December 2018



AUG 2018 REVIEW ARTICLE

In the August 2018 issue of this magazine, we have reviewed in detail, the TRAI's Tariff, Interconnection & QoS orders.

For ready reference of our readers, you can read / download the article from our website at: www.scatmag.com/ traiorders.pdf


The New Tariff, Interconnection & QoS Orders Will Be Implemented From December 29, 2018.


This month, we are only highlighting salient points of the new TRAI's orders under implementation.

The 2017 tariff order dictates a completely new tariff regime, where Broadcasters declare maximum consumer prices for their channels & distributors (MSOs, DTH, HITS & IPTV) platforms receive a separate 'Network Capacity fee' for providing service + at least 20% Of MRP As Distribution Fee.


No Consumer Discount For Multiple STBs



REPERCUSSIONS

Broadcasters have made some significant changes to their Pay Channel pricing, due to implications of the new TRAI orders. Some of these are as expected, while others are contradictory.

Some prominent changes include:


FTAs TURN PAY

The industry expected that many pay channels will turn FTA. On the contrary, Star India, for example has turned all its FTA channels to pay Channels! This is to enable including these channels in Pay bouquets to ensure they are bundled to subscribers.

This bundling has in fact been facilitated by the fact that no price cap is being implemented between a-la-carte & bouquet pricing. the consumer is again forced to take channels via an enlarged bouquet, and not only pay high bouquet prices for channels they do not want to buy, but also pay the 'network capacity fee' for the un-viewed channels!




₹ 19 MAX MRP

Every channel, from every broadcaster now carries an a-la-carte price tag of ₹ 19 or less. this includes HD channels of all genres, including sports.


Broadcaster's Declared Prices Are To The Consumer Not MSO



MUST CARRY, NOT MUST RECEIVE!

The I&B ministry has declared more than 20 channels as 'Mandatory Channels' which must be carried on all Cable TV, HIT, DTH & IPTV platforms.

These Mandatory Channels are now included in the 'Basic Service Tier' of 100 FTA channels that every DPO must put together.

The 'Network Distribution Fee' is to be paid by consumers on the 'Basic Service Tier.' It is not compulsory for consumers to opt for this tier. Hence the Mandatory Channels, are mandatory only for carriage, and not for subscribers to receive them!


For a detailed review of the New TRAI tariff, Interconnection & Tariff Orders, Read SCaT August 2018 Issue or read online at:

www.scatmag.com/traiorders.pdf



IMPORTANT HIGHLIGHTS



FEES TO MSOS

Distribution platforms (MSO, DTH, HIT or IPTV) can now collect the following revenues:

  1. DISTRIBUTION FEE: 20% commission on MRP of pay channels & bouquets delivered to consumers
  2. NETWORK CAPACITY FEE: of at least ₹ 130 (+ Tax) from consumers
  3. CARRIAGE FEE: From FTA & Pay Channels
  4. PLACEMENT FEES: (not regulated) To be independently negotiated between distributor and Broadcaster.

FEES TO LCOS

The MSO is compulsorily required to share only the Distribution Fee & Network Capacity Fee.

It is not compulsory for the MSO to share Carriage & Placement fees received.


Broadcasters & MSOs Must Create Separate Bouquets & A-La-Carte Pricing For Consumers



PRICES

All prices (from Broadcasters & MSOs/DTH) are the MRP to consumers,

Consumers are to be shown these prices on their TV screens via the EPG and on the broadcasters' & DPO's websites.


MULTIPLE BOUQUETS TO CONSUMERS

Broadcasters and MSOs are to create their separate bouquets and offer them to subscribers, who can chose what they want.

Consumers must be compulsorily be offered:

  1. A-la-carte prices by Broadcasters
  2. Bouquet prices by broadcasters
  3. A-la-carte prices by MSOs
  4. Bouquet prices by MSOs

However, in the absence of an a-la-carte to bouquet price cap regulations, consumers will once again to forced to take and pay for channels they do not want.


STB PRICES NOT FIXED

The price of STBs for consumers has not be fixed or limited. This enables DPOs to offer a wide variety of STBs to consumers.

However, installation charge is limited to ₹ 350 and one-time activation fee to ₹ 100.


Consumers Must Compulsorily Get Pre & Post Paid Payment Options From MSO or LCO



COMPULSORY POST PAID OPTION

The Quality of Service Regulations dictate that consumers must be offered BOTH - prepaid and Post paid payment options.

This will come as a relief to may LCOs, who have seen revenues slipping out of their control, as MSOs pushed for compulsory pre-payment of the monthly dues.

The tariff order permits Consumer billing either by the MSO or LCO.

Consumers can request upto 3 months temporary suspension of service every year.


TEDIOUS DATA ENTRY

A-la-carte selection from a list of 800+ TV channels per consumer, for thousands of consumers, is impossibly tedious and prone to data entry errors.

Cable, HITS & DTH operators will soon have to shift to online selection of a-la-carte channels by consumers, to minimise billing errors. In fact an online portal has been made compulsory, along with a 24x7 telephone service for customer care.


BROADCASTERS' BOUQUETS

  1. Pay Channel Only From Broadcast Company
  2. Cannot Include Channel Priced Above ₹ 19
  3. No FTA Channels In Pay Bouquet
  4. SD & HD Channels In Separate Bouquets
  5. Price Is CONSUMER Price (Not Price To MSO)
  6. Same Price For MSO, HIT, DTH & IPTV
  7. Same Price For Large Or Small MSOs
  8. Must Also Offer Each Channel A-La-Carte

COMMENT:

Prices indicated are payable by consumers

MSOs get at least 20% of broadcaster's a-la-carte & bouquet MRP as Distribution Fee.

Many Broadcasters have converted all FTA channels to Pay Channels priced at ₹ 1, so that they can all be included in Pay channel bouquets, ensuring them carriage.

All Broadcasters have priced their channels (including HD channels) below ₹ 19 per month, so that they can be included in bouquets.



DISTRIBUTOR / MSO BOUQUETS

  1. Can Combine Pay Channels from Multiple Broadcasters
  2. Can Combine Different SD & HD Channels
  3. Cannot Include SD & HD versions of the same channel
  4. Cannot Include Channel Priced Above ₹ 19 By B’Caster
  5. Cannot Combine Pay & FTA channels.
  6. FTA Bouquets Can Include FTA Channels From Multiple Broadcasters
  7. No Charge Allowed For FTA Channels Except Network Capacity Fee
  8. All channels must also be offered a-la-carte, but cannot exceed B'Caster's a-la-carte price.
  9. All broadcasters' bouquets must also be offered without modification, at the broadcaster's price

COMMENT:

MSOs can create bigger and more attractive bouquets than broadcasters.

MSOs may offer a-la-carte channels cheaper than broadcasters



BASIC SERVICE TIER

Every distributor (MSO, DTH, HITS or IPTV) must offer a 'Basic Service Tier' bouquet of 100 FTA channels, including all 'Must Carry' channels, containing at least 5 channels of each of the following genres:

  1. Devotional
  2. General Entertainment
  3. Infotainment
  4. Kids
  5. Movies
  6. Music
  7. News & Current Affairs
  8. Sports
  9. Miscellaneous

COMMENT:

It is not compulsory for subscribers to opt for the Basic Tier Bouquet.

These 100 Channels will be included in & charged the Network Capacity Fee



NETWORK CAPACITY FEE

Every distribution platform is permitted to charge the consumer a "Network Capacity Fee" as follows:

  • Upto ₹ 130 (+ taxes) for the first 100 SD Channels.
  • Upto ₹ 20 for additional 25 SD channels.
  • Each HD channel = 2 SD channels for capacity fee.
  • Every FTA & Pay Channel Opted By Subscribers Is Levied the Network Capacity Fee.

DISTRIBUTION FEE

Every pay channel broadcaster must provide DPOs (MSO / HIT / DTH / IPTV platforms)

 "Distribution Fee" = 20% of Broadcaster's a-la-carte or bouquet MRP.

 Exactly the same Fee For all DPOs, Big or Small.


CARRIAGE FEE

DPOs can charge broadcasters a "Carriage Fee" to carry a channel on the distribution platform's network. The following rules apply:

  • Carriage Fee Cannot exceed 20 paise / SD channel & 40 paise / HD channel.
  • Same carriage fee Must Apply To All Channels (FTA & Pay)
  • The carriage fee can be discounted upto 35% by the distributor.
  • The Carriage Fee can be discounted by Upto 35% But Discount Must Be Quantifiable & Levied Uniformly To All Broadcasters.
  • All DPOs must declare their carriage fees on their website

CALCULATION OF CARRIAGE FEE

The maximum carriage fee charged must reduce as more subscribers of that platform view the channel. The following additional limits have been set by TRAI:


Channel Opted By % Of Subscribers Carriage Fee Payable
Less Than 5% Full Carriage Fee
5% but less than 10% 75% Carriage Fee
10% but less than 15% 50% Carriage Fee
15% but less than 20% 25% Carriage Fee
20% or more Zero Carriage Fee

Table 1: Max Carriage Fee Chargeable By Distributors To Broadcasters



PLACEMENT FEE EXTRA

DPOs can charge broadcasters additional 'Placement Fees' or marketing fees for FTA & Pay channels.

  • Can be charged for including in a particular bouquet
  • For numbering or placing a channel in the top 3 numbers of a bouquet.
  • Not Regulated At All
  • To Be Decided Via Mutual negotiations Between B'caster & DPO.

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