Tuesday, 21 October 2008

CARRIAGE FEE

A Bone of Contention
On 3rd of September two private channels, Total TV and Chardhikala Time TV approached TDSAT against Prasar Bharti’s move to increase the fee for carrying their channels on its DTH platform DD Direct. Prasar Bharti had last month increased the carriage fee for their DD Direct+ DTH platform from 25 lakhs to 60 lakhs.
TDSAT directed Total TV to deposit a sum of Rs 25 lakh with the respondent towards the carriage fee on a provisional basis. The respondent will continue to carry the channel. The channels had submitted that there was no provision for any carriage fee either in the TRAI Act or any regulations issued by TRAI itself. They further submitted that not only DTH operators but Multi System Operators were also charging carriage fee from them. 
Even Zee Group went to the TDSAT against Prasar Bharati‘s decision to remove three of their channels; Zee Smile, Zee Jagran and ETC Music from their DTH because of non payment of increased carriage fee and received the order in their favour getting their channels restored but only on payment of a carriage fee of 60 lakhs. 
Earlier, Total Tele films had also approached the Delhi High Court against the Ministry of Information and Broadcasting and TRAI challenging the carriage fee being charged by DTH operators, distributors, MSOs and cable operators. While issuing notices to the Ministry of Information and Broadcasting and TRAI on 29 August, the High Court had expressed that there was a need to have rationality in fixing the charges. This prompted the Ministry to ask TRAI to form a regulatory structure for the carriage fee. 
In the third week of September 2008, TRAI called all stake holders to present their view points regarding Carriage Fee. This brought forward divisions among the various stakeholders.
Currently, there are no norms for carriage fee – the money that is paid by broadcasters to cable operators for placing their channels on the network at a band of their choice. Right frequency is important to ensure a good viewership of a channel and get high TRPs. 
Carriage fee has become a contentious issue between the broadcasters and the cable distribution companies as there are about 400 television channels registered by the government looking around to be viewed, while the analogue cable distribution platform can carry only 70-80 channels. The visibility of a channel is further affected by black & white TV sets or old color sets which do not have facility to tune in to some of the TV frequency bands like Super band or the UHF band. Prime Band comprising of Ch5 to Ch 12 has the highest visibility being available in 100% TV sets. This has led to manifold increase in carriage fees paid by the broadcasters to the cable companies.
“Says a CEO of a channel: “The problem is that the broadcasters are not united. Many of them don’t want to divulge their accounts and share it with the regulator. As a result, the cable operators are doing dadagiri.”
In case of DTH, due to limitation of transponders, it is not possible to accommodate every channel on a DTH satellite. Thus, the carriage fee ensures placement of a channel on the DTH platform ensuring it a coverage area of the whole country.
Some of the broadcasters have suggested auctioning parts of cable spectrum as a possible solution towards fixing the ground rules for carriage fees that is charged by the large cable operators from broadcasters. This is not possible as the spectrum of a cable network is a private property and can not be auctioned in the same manner nation wide. It is not an “air wave” which is omnipresent and available to every one to be exploited. It is encapsulated in a cable network built by a cable operator with his own money and is limited to the type of the network and equipment used. 
Multi System Operators (MSOs) have called for terming carriage fees as ‘placement fees’. They have also demanded these should be left unregulated the way advertising rates are on television. 
The direct-to-home (DTH) firms are not keen on fixing any sort of legal norms for carriage fees because, like in a cable network here too, the availability of frequencies to carry the channel signals depend on number of transponders owned by the operator, type of transponder and type of technology used. All these processes involve private investments and will vary from one DTH operator to another. Thus, cost of carriage will differ and same rule can not be applied to all.
“The main reason for payment of placement fees by broadcasters is to maximize their advertising revenue…. It happens in retail business too, where product manufacturers pay placement fees to the retailers to get a better visibility for their products,” said MSO Alliance.
Cable operators say that the government is neither creating an environment conducive to digitalization so that more channels could be added in their network, nor implementing CAS so that they could pick and choose the channels for their networks depending on the requirement of their subscribers. They feel that distribution cost of a TV channel is an important part of business plan of a broadcaster and carriage fee is a part of it which should be catered for rather than fretted upon. Operators feel that carriage fee can go a long way in helping them to digitalise their networks but unfortunately, it does not reach the last mile operators and stops at the MSO level or independent operators.
The TRAI has now asked broadcasters to submit their profit and loss and costing accounts, which many of them are unwilling to share, before they can come to any conclusion. It wants to assess the amount of carriage fee paid by the broadcasters to the MSOs. 
According to industry estimates, Rs1,200-1,400 crore is paid by broadcasters annually to the cable industry for carrying their channels. On the DTH platform, currently the carriage fees paid by the broadcasters is estimated to be in the region of Rs 30-50 crore. Broadcasters say that as much as 30 percent of their cost of running a channel goes into paying carriage fees. If one considers it the distribution cost, it is too little for a market of 78 million TV households. Actual number of connections is much more as many households have more than one TV set.
Carriage Fee is a world wide phenomenon and can not be wished away. Even in a digital cable network, band width limitations exist and as the channels keep increasing, bandwidth will keep becoming scarce. What is needed is how to cope up with up-gradation of networks to keep up with the increasing services. This could be done by canalizing part of the carriage fee into a central fund to help digitize networks and upgrade them with the help of latest technology. Also, it should not stop at MSO level and must trickle down to the last mile networks as they are also an important part of the whole distribution chain.

Source:
http://cablequest.org/articles/col-kk-sharma/item/1441-carriage-fee.htmlSource: http://cablequest.org/articles/col-kk-sharma/item/1441-carriage-fee.html

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