afaqs! news bureau

“DTH players' profitability could be impacted”: India Ratings and Research

Market analytics firm, India Ratings and Research (Ind-Ra) believes the Telecom Regulatory Authority of India’s (TRAI) tariff and interconnection regulations will require another six to eight months for effective implementation due to challenges related to revenue sharing between multiple system operators (MSOs) and local cable operators (LCOs).

However, Ind-Ra opines that the tariff order is likely to de-risk the business model of MSOs and LCOs as their revenue stream will contain fixed network capacity charge (NCC) from subscribers and content commission from broadcasters (BC), thereby effectively passing through content cost. DTH players, on the other hand, could see their profitability being impacted in the next six to 12 months since they have already sold long-term plans till the end of 2018 and DTH companies won’t be allowed to withdraw or reprice a plan that’s already in use.

Post TRAI’s removal of the 15 per cent discount cap on bouquet price versus à la carte channel pricing, broadcasters have started offering a bouquet of channels, at 20 - 60 per cent discount to the à la carte channel pricing, presumably to avoid any hike in the final price the consumer pays. However, despite similar costs, consumers will have access to fewer channels compared to the previous tariff regime.

India Ratings and Research (Fitch Group) shared a media statement stating that “Broadcasters’ business model will change from B2B (selling content to distributors) to B2C (selling content to consumers) as broadcasters will now market their channel bouquet to end customers rather than rely on MSOs. Broadcasters with a strong set of anchor channels across genres will benefit, as they will be able to create a comprehensive bundled offering and generate customer pull.

Sharing its view on TRAI’s Consultation Paper, the market research firm asserted that the TRAI’s consultation paper, released on August 4, 2019, primarily focused on making the existing order more end-user friendly. Its aspects such as reinstating cap on discount provided on bouquet pricing, moderating/regulating the number of bouquets, as well as number of channels, may face operational and legal challenges during execution. “Allowing a fixed discount on total prices of selected à la carte channels would empower end-customers to choose their preferred channels (even across broadcasters) and also reduce their monthly payouts, opines Ind-Ra,” the media statement read.

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