afaqs!

"Market forces at play; benefits of new tariff order will be visible soon": TRAI Chairman RS Sharma

By Anirban Roy Choudhury, afaqs!, Mumbai | April 18, 2019
The chairman of the Telecom Regulatory Authority of India spoke to us about BARC India, FDI on cable and many other aspects of the New Tariff Order.

RS Sharma

RS Sharma

TRAI Chairman

The Telecom Regulatory Authority of India (TRAI) has been making headlines for its 'New Tariff Order' (NTO) which marks the beginning of a new regulatory framework in the broadcast space. The new regime enables consumers to subscribe and pay only for channels they choose. So far, the new framework has fetched mixed feedback. Consumers and local cable operators (LCO) criticised the NTO while broadcasters and Multi Service Operators (MSO) welcomed it.

Another development that caught many eyeballs was TRAI's directive to the Broadcast Audience Research Council (BARC) India. BARC India stopped publishing weekly data on its site as it believed that - "Without looking at the larger context of the NTO rollout and resulting volatility that could be misleading, it can lead to confusion and be counter-productive." However, it continued to make data available to its subscribers, as usual.

In an exclusive interview with afaqs! TRAI chairman, R S Sharma explains why the regulator thought it was necessary to intervene. He also spoke about the ongoing MSO-LCO tussle.

Edited Excerpts


Apart from the consumer, which other stakeholder will benefit from the effective implementation of the NTO?

The regulatory framework has benefits to all other stakeholders owing to the underlying principles of transparency and non-discrimination. All stakeholders, including the Pay and Free to Air (FTA) broadcasters, MSOs, DTH operators etc. are expected to benefit.

On the 15 per cent discount cap, in terms of discounting while making bouquets, you had moved to the Supreme Court, but later withdrew. Since the broadcasters forcing weaker channels onto consumers via bundling was the main premise of the NTO, do you think that without the cap it goes back to where it was? The broadcasters are allegedly still bundling channels even now and LCOs are clueless about educating consumers.

The averment that the discount cap of 15 per cent on bouquet price vis-a-vis the a-la-carte prices has been struck down is incorrect. Let me explain the nuances, The Tariff Order, vide proviso to clause 3(3) provides that price of a bouquet of pay channels cannot be less than 85 per cent of the sum of a-la-carte rates of the channels constituting that bouquet. However, a Hon'ble Judge in the judgement of the Hon'ble High Court of Madras observed that the 15 per cent cap on discount on the MRP of a bouquet is arbitrary and hence, unenforceable. In this regard, the Authority has approached the Hon'ble Supreme Court which was withdrawn owing to the verbal observation that the judgement dated October 30, 2018, sufficiently reinforces powers of TRAI and, therefore, the review was not necessary. As such, at present, the 15 per cent cap is not being implemented for the bouquets being made by the broadcasters. We are monitoring the implementation of the NTO by the service providers and take appropriate action as and when deemed necessary.

Giving consumers the power to choose and subscribe to channels that they want is a good thought, but what are the disadvantages of broadcasters forcing bouquets of channels down consumers' throats?

In the old regime, in the name of bouquets, customer choice was being compromised. They were adopting discriminatory practices; the actual price of a channel was not known to customers. This was creating a distortion in the market and a number of disputes were taking place. The new regulatory framework ensures that a real and informed choice is made available to consumers. A consumer can see the price for every channel on the Electronic Program Guide (EPG). They are empowered to choose the channels of their choice and the choice has to be provided in a time-bound manner. This will encourage broadcasters.

There is criticism that the NTO is unfair to consumers living in smaller towns and cities. Previously they would get about 350 channels for Rs 150 per month. Now, for double that, they get only half the number of channels. The criticism is that the purchasing power parity was not taken into account by TRAI. Your comments...

Previously, consumers were being provided with a large number of TV channels, some of which they may not have been watching at all. This practice utilises the TV channel carrying the capacity of the distribution platform unnecessarily, thereby blocking new TV channels from coming up on the platform. The new framework stipulates that subscribers will not be pushed with unwanted channels, rather they will have the freedom to choose only those channels they want to see and pay accordingly.

Ninety per cent of subscribers, as per the viewing pattern given by BARC, view or flip 50 or less channels. Further, if a consumer carefully chooses channels for the complete requirement of a family, the amount payable may be less than the present payments being made per month. The published prices, as declared by broadcasters, are offered prices and not the final market-determined prices. The Authority expects markets forces to stabilise the prices soon, based on economic principles.

You stated that the NTO would reduce litigation and, therefore, attract foreign investors or large investments. Can you elaborate? How would it attract investment as digitisation of cable services failed to get anticipated FDI in that sector?

In the era prior to the new regulatory framework there were a large number of disputes among the various stakeholders due to non-transparent and discriminatory practices. These might not have won the trust of the foreign investors.

The new regulatory framework is focused on enhancing transparency and non-discrimination, which may lead to a reduction in litigation and higher growth of the sector, thereby making it attractive for foreign investors. An attempt is being made to create a conducive regulatory framework which is expected to bring fruits in time.

TRAI's direction to BARC India to publish the weekly data and make it public made headlines in the industry. BARC India said they were publishing the data on the website as suo moto just to help those who could not afford to subscribe to its ratings service each week. Why did TRAI find the need to intervene? BARC India is an autonomous industry body which is not only a joint industry body but is mandated to follow MIB guidelines?

BARC has been granted permission by the government to carry out television rating services. It is mandated to provide credible and unbiased ratings of TV viewership. We noticed that BARC India stopped publishing the viewership data on its website during the migration to the new regulatory framework.

During the migration period, there could be some changes in the preferences of the subscribers and TV viewership patterns may see some changes due to the exercise of choice by consumers. In our view, such changes reflect the market reality and dynamics and, therefore, it was not appropriate for BARC to restrict rating information of channels, in contrast to stated practice. These changes are the outcome of consumer choice and a real reflection of market changes. Accordingly, TRAI directed BARC not to stop publishing ratings during migration.

Did MIB, at any time, suggest that TRAI intervene on tariff issues and issues regarding BARC India and the publication of audience measurement data?

The Authority performs its functions as per the TRAI Act 1997. As per the ACT, Interconnection, Tariff and Quality of Service is the exclusive domain of the Authority.

What is your view on the tussle going on at ground level between the MSO and the LCO on sharing of the minimum carriage fees etc.? What is the distribution set for each right now?

In the distribution of Cable networks, the MSO and LCO manage the network by agreeing to roles and responsibilities and share their revenue as per a mutual agreement. The framework has been clearly prescribed through the Regulations and the Tariff order. However, sometimes, due to non-availability of complete information or understanding, some confusion may arise. Yet, such issues have been broadly settled as of now and I am sure that all the service providers are striving to provide the best services to consumers.

ALSO READ: TRAI's New Tariff Order: An Analysis

Will the government and TRAI also intervene on issues related to OTT content and that content, curated or user-generated, which is streamed after TRAI has taken care of the voice OTT services?

OTT in the broadcasting sector is also an important issue as a number of OTT providers are providing broadcast type of content. TRAI is overseeing the developments and will take appropriate action as and when necessary.

ALSO READ: TRAI's New Tariff Order: Huge marketing challenge for channel heads?

How challenging was it for you personally, to attempt and execute such a huge project?

It was challenging indeed, due to the number of stakeholders involved. It impacts all consumers. TRAI had to face legal hurdles in implementing the framework. I am happy to note that after overcoming those hurdles, the new regulatory framework has been successfully implemented. Market forces are at play now and the benefits of the NTO will be visible shortly.

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