Chaos Owing To TRAI’s Tariff Order Continues

A driver living in East Delhi’s Vinod Nagar probably sums up the impact of the new tariff order by the Telecom Regulatory Authority of India (TRAI) on the television consumer, when he says that his monthly cable bill of Rs. 300 remains the same, but he’s getting fewer channels. Missing from his pack is sports and cartoon channels, which his children used to watch.

In a press note, Sakshi Suneja, assistant vice-president of Icra, an investment information and credit ratings agency, said any subscriber who wishes to view two or more popular general entertainment channels (GEC) and sports channels is likely to either witness an increase in the monthly bill by 13-23%, or a substantial reduction in the number of pay channels. While earlier, a monthly subscription of Rs. 230-240 would give access to 250-300 channels, now it would fetch only three GECs and one sports channel, in addition to free-to-air channels, she pointed out.

TRAI’s new framework for the pricing of television channels aimed to give TV subscribers the right to choose their channels on an à la carte basis, and broadcasters were asked to declare the maximum retail price of each channel separately.

A recent survey by YouGov, a global market research and data company, also shows that although the new tariff regime is meant to offer affordable pricing to the end customer, more than half (54%) of those who have modified their channel subscription said they were paying more. The research was carried among 1,020 respondents in India in March 2019 among adult online users.

Mihir Shah, India vice-president of Media Partners Asia (MPA), a research and advisory firm, says that if the distribution platforms offer the same number of pay channels under the new broadcaster tariffs, the consumer ARPU (average revenue per user) will see a steep increase. However, some primary studies suggest that an average household watches no more than 20-25 channels. “Should the consumers subscribe to only those relevant channels, the ARPU increase will be nominal,” he said.

But, households with multiple televisions will no longer be able to avail a discount on their second or third TV connection. “Many consumers will be lured and may choose to migrate to online platforms, like Airtel TV and Jio TV, which offer live TV feeds of 300-500 channels for free,” said Shah.

The new tariff order isn’t boding well for the broadcasters either. An industry executive, requesting anonymity, said the reach of most pay TV channels has fallen. “As the television market matures, it should move towards pay TV rather than be advertising-driven. But the new order is killing the pay TV market.”

Broadcasters are also experiencing some loss in advertising revenue during this transition phase before viewership ratings settle down. “Advertisers are confused. They are gravitating towards what they think are known properties. For everything else, there is confusion,” said Jehil Thakkar, partner at management consulting firm Deloitte India.

MPA’s Shah agrees: Implementation of new tariff order has hurt the TV ad market. Channel reach across all leading genres has declined in January-March quarter. “According to MPA analysis, overall trade on TV was down by 15-20% through Februar,y as some ad categories chose to reallocate spends to other mediums.” Some advertisers are hoarding spends for high impact events like the general elections and Indian Premier League. “In general, advertisers remain committed to mass genres, while niche genres have lost business,” he added. In fact, broadcasters may re-evaluate the feasibility of certain channels in their portfolios. “For instance, Sony India recently shut down three premium HD channels—Sony Rox, Sony LePlex and Ten Golf,” he said.

According to MPA, as of mid-March, about 40% of direct-to-home subscribers and 70% of digital cable subscribers have migrated to the new regime. However, a majority of these customers have been made to migrate to “Best Fit Packs”, since back-end systems for most distribution platforms are not robust enough for consumers to exercise their right to choose à la carte channels. “The operator-created ‘Best Fit’ plans are not widely accepted by the consumers. Besides, to expedite subscriber migration, several cable networks have resorted to frequent black-outs. Industry stakeholders are therefore unable to capture true intrinsic demand for TV channels. More clarity will emerge in the coming months,”said Shah. For now, chaos prevails.

Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff.―Livemint