What is NTO and why broadcasters are opposing it?

What is NTO 2.0?
According to the New Tariff order (NTO 2.0), the rates of individual TV channels have been capped at Rs 12 from the existing Rs 19. It also stipulates that consumers be allowed to access 200 channels of choice for Rs 130.

This is the second attempt by the telecom regulator to protect consumers from the “deceptive practices” of cable providers. The new order is expected to reduce monthly bills.

However, the broadcasters have opposed the move since the order was passed in January 2020. They also filed a petition against it in the Bombay High Court.
What broadcasters said in their petition

A petition was filed by the Indian Broadcasting Foundation (IBF), which is a representative body of TV broadcasters, the Film and Television Producers Guild of India, Zee Entertainment Ltd and Sony Pictures Network India challenging the NTO 2.0 in the Bombay High Court.

In its petition, IBF claimed that the new regulations were “arbitrary, unreasonable and violative of their fundamental right”.

TRAI defended the regulation stating that its purpose is to ensure transparency in the cable providers practices.

The telecom regulatory body told the court, “NTO 2.0 recommends a linkage between a-la-carte price and bouquet by mandating that sum of the a-la-carte channels in a bouquet will not be more than 1.5 times that of bouquet price. It has also prescribed a condition that the maximum retail price of an a-la-carte channel should not be more than Rs. 12 per month to be part of the bouquet, which was Rs. 19 earlier.”

The verdict
The high court on June 30 upheld the constitutional validity of TRAI’s 2020 order. A division bench of Justices Amjad Sayyed and Anuja Prabhudesai ruled against the broadcasters, saying “The challenge to the constitutional validity of the 2020 rules and regulations of TRAI fails.”

However, one of the rules was struck down. “One condition related to the average pricing of a channel in a bouquet is arbitrary and hence is struck down,” the court order said.

The condition that was stuck down said that the a-la-carte rates of each channel i.e. MRP shall not exceed three times the average rate of the channel in a particular bouquet.

The deadline
The deadline for implementing the NTO expires on August 12 but most broadcasters are yet to file the new pricing structure with TRAI. The regulatory body can take action against them for non-compliance of the order.

The broadcasters have stated that they need time till the end of the month to file the new Reference Interconnect Offer (RIO), which will declare the new prices as required by the amended order.

They also moved the Supreme Court, which refused to stay the new tariff order on August 6 and set August 18 for the next hearing.

What broadcasters say
The broadcasters have argued that the new order will hurt them immensely, cutting into their subscription revenues at a time when the industry has been hit hard by the pandemic.

The new order has only been partially implemented and broadcasters fear that the order could take subscribers away from bouquets and bundle to a-la-carte subscription structures. They also claim that this will eventually lead to massive losses and a reduction in their subscriber base.

The pandemic and expensive subscriptions have already driven many consumers to OTT platforms, that too at a pace faster than anyone expected. CNBC TV18