Broadcasters Gaming New Tariff Rules Through ‘Perverse’ Discounts, Says TRAI
The telecom regulator is studying whether discounts by broadcasters on pay television channels should be capped.
As new consumer-friendly pay television rules shrunk viewership and sent rankings topsy-turvy, Indian broadcasters found a way around. The telecom regulator is now studying whether discounts should be capped.
The television tariff rules, rolled out in February end, allow subscribers to pay for what they view, and is aimed at curbing the practice to bundle unwanted channels in bouquets. Paying Rs 130 a month gives access to 100 free-to-air channels, and viewers can choose more by paying a maximum of Rs 19 per channel.
Yet, the number of bouquets has not come down and broadcasters were offering as much as 70 percent discount on the combined price of channels offered in bouquets, the Telecom Regulatory Authority of India said in a discussion paper released on Aug. 16. Some broadcasters have cut bouquet price by 80-90 percent, it said. They have been confusing consumers with too many bouquets with very few changes, becoming a hurdle in selecting channels a la carte, it said.
There were “reasonable expectations” from broadcasters that they would “exercise the flexibility granted to them in a fair and responsible manner with due consideration to the rights and aspirations of the consumers”, it said. “However, this appears to be not the case.”
TRAI has sought views from stakeholders if discounts should be capped, or number of free-to-air channels should be increased.
Broadcasters including TV18, Zee Entertainment Enterprises Ltd., Star India Ltd. and Sun TV Network Ltd. have yet to respond to BloombergQuint’s emailed queries on the discussion paper.
The new rules have in part helped shrink pay television subscribers base by a third. And the rollout earlier this year upended rankings—little-known free-to-air channel, Dangal TV, was catapulted to the top while English entertainment genre collapsed. Cheap data is allowing streaming services such as Netflix and Amazon Prime to wean away users. Broadcasters could face more disruption if the regulator moves ahead to cap discounts.
The new tariff order has a provision for a discount of up to 15 percent on the bouquet rate. But it didn’t enforce the rule as the Supreme Court, ruling on a challenge by broadcasters, upheld TRAI’s right to regulate interconnect fee and tariffs but didn’t specifically say anything on discounts.
But the regulator’s discussion paper said subscribers are forced to take bouquets as the a-la-carte rates of the pay channels are much higher.
“This results in perverse pricing of bouquets vis-à-vis individual pay channels,” it said, reiterating the stand it took in the Supreme Court. The public ends up paying for unwanted channels, thereby blocking newer and better channels and restricting subscribers’ choice, it said.
The regulator, in the discussion paper, said Prices of single channels were kept exorbitantly high with a purpose to force the consumer to take only bouquets and reduce choice, it said. Broadcasters were also pricing the driver or popular channels with high viewership at Rs 19 each.
“Evidently, the formation of bouquets by broadcasters is not based on consumer demands,” the regulator said. “It is purely driven by the motive of earning higher revenues at the cost of consumers. Such bouquet formation has least consideration of consumer choice.”