We expect TRAI to tweak the new tariff order – GTPL

GTPL Hathway, one of the country’s largest cable feed providers and the biggest MSO in Gujarat, said it expects media regulator TRAI to make further changes to the TV tariff order introduced in February this year.

Speaking to analysts after announcing the quarterly earnings of the cable feed provider, officials — including MD Aniruddhasinhji Jadega and Head of Strategy Piyush Pankaj — said they did not believe the new tariff regime has achieved its final shape.

“Issues that have been pending due to legal issues, like the 15% broadcaster cap, MRP to the broadcaster, [revenue sharing] between DPO to the LCO.. pushing a-la carte in place of packages…These are changes that are yet to be carried out by the regulatory side and will come in the second or third quarter,” they said in their interaction with analysts.

“These are changes..will come in the second quarter [July-September] or third quarter [October-December].”

The comments come in the wake of ongoing litigation by some cable operators intended to force the telecom regulator to implement some of the clauses of its original legislation introduced in 2017.

TRAI did not try to implement some parts of the tariff order after these were contested in the court.

Among the most crucial of these is the question of who has the right to form ‘channel packages’.

Before the tariff order, the right to form channel packages rested with distribution platforms such as cable networks and DTH operators.

In fact, TRAI’s 2017 tariff order was intended to transfer this right to the consumer, so that people could form their own packages by choosing only the channels they wanted to watch, instead of having to buy the packages designed by their cable or DTH operator.

However, due to a legal challenge to the new regulations by Star India and confusion arising out of pronouncements in the matter by the Madras High Court and the Supreme Court, TRAI chose not to implement some of the key provisions of the new tariff order.

The ‘unimplemented’ bits included an ‘85% clause’ that was crucial to the transfer of ‘packaging power’ from the distribution platforms to the consumer.

The new tariff order — as it ultimately came to be implemented — did result in the taking away of the ‘packaging power’ from distribution platforms like DTH and cable.

However, instead of vesting this power in the hands of the consumer, the implementation transferred it straight into the hands of broadcasters like Star, Zee and Sony.

As a result, consumers — who were earlier forced to subscribe to channel packages created by cable and DTH operators, are now more or less forced to choose between channel packages created by broadcasters.

The situation has also created a massive inconvenience for cable and DTH operators as they ended up being forced to resell broadcasters’ packages whether they liked it or not.

This forced some of the cable and DTH companies to approach various judicial and quasi-judicial forums — including the TDSAT — to seek a full implementation of the 2017 TRAI tariff order.

In their post-results interaction, GTPL officials said the regulator is trying to overcome the problem and increase consumer choice by enabling them to truly pick the channels they want to watch, instead of having to buy packages that contain unnecessary channels.

According to the officials, one of the key areas the regulator is focusing on is the implementation of the 15% rule, which prohibits channel owners from making individual channels super expensive when purchased alone.

According to the 15% rule, the price of a channel — when sold alone — cannot be more than 15% more expensive than when it is sold inside a package.

At present, channels are anywhere from 100% to 300% more expensive when purchased alone, compared to when they are bought as part of a package designed by the channel owner/broadcaster.

Because of this price difference, consumers are forced to buy channel packages that contain unnecessary and ‘junk’ channels, instead of buying just the channels they want. Channel companies use this strategy to force consumers to pay for junk channels that nobody would otherwise bother to watch.

Jadeja said he did not expect their to be further litigation over the implementation of these new changes.

“Whatever will come will come via consultation. I don’t see any legal battles further,” he said.

GTPL officials also said that the reintroduction of the 15% rule will not have much impact on the revenue of cable and DTH companies.

They pointed out that cable and DTH companies get most of their revenue from the ‘network capacity fee’ or NCF, which will be untouched by such a move.

“If 15% or something will come, that’s not going to impact the ARPU at the consumer level or the DPO level,” he said, adding that the key stakeholders are the pay channel broadcasters and the consumers.

GTPL had reported a strong improvement in its revenue and profit margins for the Apr-Jun period due to the introduction of the new tariff order, after seeing some starting trouble in the Jan-Mar quarter.

The company said an average consumer is paying around Rs 250 per month, excluding taxes. Out of this, about Rs 130 is the network charge component, and the remaining is pay channel costs.

Out of the Rs 130 that is collected as network charge, about 70-75% is kept by the local cable operator and the rest is retained by GTPL, the company said.

GTPL also said it is seeing a trend of consumers ‘trading up’ as far as their channels packs are concerned, as they grow more comfortable with the new tariff scheme.