Disney Star, Sony and Zee have cut their transmissions to cable operators after disagreements over NTO 3.0.
On February 18, three broadcasters - Disney Star, Sony and Zee - cut off their transmissions to around 10 major cable operators, after the All India Digital Cable Federation (AIDCF) members dismissed the former’s February 15 notice asking them to sign a new reference interconnect offer (RIO) for new tariff order (NTO) 3.0.
Of the 65 million homes with a pay TV connection, these 10 operators offer their service to at least 30 million homes.
The AIDCF condemned the broadcasters for their 'dictatorial' and 'high-handed' behaviour.
The next day, the Indian Broadcasting & Digital Foundation (IBDF), the apex body of TV broadcasters, released a statement accusing the AIDCF of making inaccurate remarks regarding the new price regime.
"The AIDCF is not only in defiance of the law, but also holding less than 25 million subscribers hostage, solely for its own commercial reasons, and circulating misleading information," the statement said.
The IBDF also urged the impacted viewers to reach out to other operators to subscribe to their favourite channels.
What is the face-off all about?
The Telecom Regulatory Authority of India (TRAI) had notified the amended regulations and NTO 3.0 on November 22, 2022. It was set to come into force on February 1, 2023.
Broadcasters say the price increase will be in the range of 5-15% and this is the first such hike in four years. However, cable operators say the price hike could go up to 60%, an exorbitant amount in a price-sensitive market.
“The price increase will result in a cost of close to Rs 5,000 crore to Rs 8,000 crore per annum to consumers, which will largely benefit the broadcasters," the AIDCF said in a statement.
The broadcasters had notified cable operators, asking them to sign the RIO for NTO 3.0. However, since the Kerala High Court is hearing a case related to its implementation, the AIDCF members decided not to raise channel pricing.
The High Court will be hearing the matter on February 22.
The AIDCF includes top cable companies such as Reliance Industries-owned Hathway, Den, GTPL, Hinduja Group's NXTDIGITAL, Rajan Raheja Group-owned Asianet Digital Network, and regional cable operators like Kerala Communicators Cable and UCN Cable Network.
What is NTO?
TRAI first issued the NTO in December 2018. It was expected to make channels cheaper for the consumers and offer more choices, as it allowed them to pay only for those (channels) they watch at MRPs set by broadcasters, instead of the pre-set bouquets offered earlier. However, in reality, the opposite happened, as the cost of like-to-like channel options went up.
After facing several legal challenges and opposition from the broadcasting industry, it was implemented in February 2019. Eventually, it led to a major shakeup in the TV distribution industry, as consumers had to pay more for their favourite channels, while some niche channels were also impacted due to lower viewership and revenue.
In January 2020, TRAI introduced an amended version of the tariff order, known as NTO 2.0. It reduced the cap on the MRP of individual channels, which can form part of any bouquet, to Rs 12 per month from Rs 19. It also offered customers double the channels (200) under the base network capacity fee (NCF) slab.
The IBDF had said this decision was not backed by any logical rationale or consumer insight. It moved the Bombay High Court against the amended order, seeking that it should be declared constitutionally invalid. When the HC didn't rule in its favour, it even approached the Supreme Court in July 2021. However, in February 2022, it withdrew its petition and began a consultation process with TRAI in May.
After almost three years of litigations and discussions, TRAI brought out NTO 3.0 in November 2022. It decided to continue with the MRP ceiling of Rs 19 for a channel to be a part of a bouquet.
NTO 3.0 gave subscribers the flexibility to choose between one channel or a bouquet of channels. The maximum monthly subscription fee for a channel to be included in a bouquet was again hiked to Rs 19 from Rs 12. It also allowed broadcasters to offer a maximum discount of 45% when pricing its bouquet of pay channels over the sum of the MRPs of all pay channels in that bouquet.
While broadcasters welcomed the amended NTO, distribution platform operators (DPOs) expressed concerns, as they believed that it would drive customers away from pay TV towards DD FreeDish and over-the-top (OTT) platforms.
However, the AIDCF approached the Kerala High Court in the first week of January, requesting the court to stay the implementation of the order. It requested the court to instruct the TRAI to review the NTO and set genre-wise maximum retail prices for TV channels, with a cap on the price of any channel.
It informed the court that TRAI hasn't addressed the major challenges faced by the broadcasting and cable services industry, leading to a constant decline in the subscriber base for multi-system operators (MSOs) and direct-to-home (DTH) operators. Several local cable operators too raised similar concerns.
Meanwhile, broadcasters revised their pricing in December last year and filed their RIOs.