Cable operators seek flat 35% distribution fee on MRP of TV channels

Expressing concerns over the present regulatory regime for cable operators, distribution platform operators (DPOs) have requested the Telecom Regulatory Authority of India (TRAI) to provide them with a flat 35% distribution fee on the MRP of a-la-carte television channels.

Distribution fee is what DPOs and local cable operators (LCOs) get from their customers on the total price of the channels, which is determined by broadcasters. Presently, DPOs get 20% distribution fee. They have an option to avail 15% more subject to conditions like ensuring 90-95% penetration of the broadcaster’s channels in the total customer base, said an industry insider.

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To elaborate with an example, if a channel is priced at Rs 20 by a broadcaster, the DPO gets 20% of it from the customer while 80% goes to the broadcaster. So, the DPO makes Rs 4 from this channel worth Rs 20. It can get 15% more (that is three rupees more), if it ensures broadcasters that 90-95% of its customers have subscribed to those channels.

In their final submission to TRAI on its consultation paper on ‘Review of Regulatory Framework for Broadcasting and Cable Services’,
accessed by e4m, the cable industry operators have sought that the conditions to avail 15%more distribution fee be done away with and they get a flat 35% fee from customers while 65% goes to the broadcasters. “The practice of offering incentives, and that too based on penetration for channels, is against the spirit of the regulatory regime. Moreover, in most of the cases, DPOs are hardly receiving the additional 15% due to undue demands and conditions from the broadcasters, to penetrate their channels to 90% to 95% of the DPO consumers, which is clearly mentioned in their RIO.

“Practically, the same can be done for a single broadcaster and not for all broadcasters, therefore a DPO is bound to lose on the 15% from the rest of the broadcasters, just to gain benefit from one of the broadcasters,” All IndiaDigital Cable Federation (AIDCF) has told TRAI. “We, therefore, would request Authority to mandate flat 35% distribution fee to DPOs and prohibit the broadcasters from offering incentives on any unlawful and undue conditions as well as mandate broadcasters to price their channels at wholesale price and DPOs to be allowed to make their own DRPs (distribution retail prices),” said the letter to TRAI, accessed by e4m.

According to an industry veteran, DPOs also pay 50% of what they get to the LCOs which leaves them with nothing. “From the 20% we get as distribution fee, DPOs have to give 50% to LCOs, which leaves us with nothing,” said the expert. The letter also said that, as per the present regulatory regime, “DPOs are shackled under the regulations, for all of its revenues.” Pitchonnet