IBF Expresses Concerns On Untimely Consultation Paper By TRAI

The IBF notes with some concern, the issues raised for consultation by TRAI in the Consultation Paper issued on August 16, 2019. These issues strike at the very heart of the new MRP based tariff regime which TRAI made effective from February 1, 2019 (NTO). It is fair to say the implementation of the NTO has resulted in massive changes in the distribution landscape. Nevertheless, with the support of all stakeholders including broadcasters, DPOs and the end consumer, the transition to the new regime is being managed relatively smoothly. Broadcasters, on their part, along with other stakeholders, have done their best to ensure a smooth transition without disruption of services. TRAI itself has stated at several fora that over 90 percent of consumers have migrated to the new tariff regime by choosing channels and/or bouquets of their choice.

In compliance with the NTO, pay broadcasters have published their Reference Interconnect Offers (RIOs) pricing their channels in a la carte and bouquet formations in accordance with the regulations. DPOs, in turn, have offered these channels both on a la carte basis and bouquets customized to meet the choice of their subscribers. In fact, it was TRAI that mandated DPOs to offer their subscribers a “best fit” plan of a la carte and bouquets to encourage a seamless transition to the new tariff regime.

Surprisingly barely a few months after the commencement of the NTO and even before the industry at large and more importantly the end consumer has fully adapted to the new regulatory regime, TRAI proposes a fresh CP seeking to make fundamental changes in channel pricing and bouquet formation. This goes against all norms of a stable regulatory regime so necessary for the economic advancement of any industry. TRAI’s CP proceeds on the assumption that consumers are being denied their choice of channels by excessive discounts on bouquets. IBF wishes to point out that the cap on bouquet discounts under the NTO was struck down by the Madras High Court as “arbitrary”. Further, the global practice in the television and cable industry is the offering of content in bouquets customized to meet the diverse needs of consumers.

A report published by the prestigious think tank, the Indian Council for Research on International Economic Relations (ICRIER), in March 2019 indicates that given a choice consumers, even internationally display a preference for bouquets. A 2004 FCC report concluded that mandating a la carte for cable consumers in the USA would very likely harm new and niche channels and reduce choice to consumers. An evaluation of a similar proposal in Canada in 2014 concluded that “unbundling” could have adverse effects for the broadcasting sector and could result in 26 percent of the current channels becoming unviable. As per CASBAA, in a study of broadcast regulations in 10 countries, apart from India, no country mandated a la carte and bouquets were the choice of consumers. The NTO itself allows broadcasters and DPOs to offer channels both a la carte and in bouquets giving the consumer the freedom of choice. In fact, the basic tier mandated by the NTO of 100 FTA channels for Rs 130 is itself a bouquet offering. Thus, the impression being created that broadcasters are gaming the system to push bouquets is incorrect.―Business World