Saturday, 21 August 2010

Create Level-Playing Field

Indian consumers don’t want to shell out more than Rs 200/- per month for a decent TV viewing experience, the fact that was revealed by a Centre for Media Studies (CMS) survey for cable TV services in non-CAS areas. While 90% consumers were ready to pay more in the last survey done, three years back, today the figure has come down to 25%. It was an eye-opener for all of us who always talk about consumer’s interest at each and every stage but we never tried to actually make this happen on ground.
In order to do this, actually the industry as a whole has to establish dialogue with its consumers and that can only happen through the LCOs. But the dichotomy is that the broadcasters, instead of strengthening the LCOs, are trying to destroy this huge network of 60,000 cable operators by adopting various means including the business malpractices. Today, in non-CAS areas there is no level playing field. When it comes to digital addressable cable, it is confined to a limited and very small area, thus curtailing its growth. Operators have lost their interest as years pass by without any improvement. It is clearly evident that growing competition from DTH and IPTV service providers is eating into the 90 million cable TV market. It was alright if the competition was fair but here the technologies which bring broadcasters direct to the consumers are being given more importance by the Government and various regulatory bodies, leading to a glum fast spreading among the cable operators who are scared of investing their hard-earned money into a business which is gradually moving into dark. To top it all, TRAI has even recommended a lower FDI of 26% for LCOs as against the 74% in other digital carriers. Digital addressable cable has been confined to a universe of mere 5 million TV households whereas, DTH and IPTV have been given 140 million TV households (All TV Households in India) to be exploited. DTH and IPTV have been further encouraged by reducing their pay channel payments from 50% to 35 % of the rates existing in the non-CAS areas as per the latest recommendations of TRAI. As against this, operators in the non-CAS areas have been asked to pay 9% more to the broadcasters for the pay channels and collect less from the subscribers now. Maximum subscription in the non-CAS areas has been capped at Rs 250, reduced by rupees ten from the earlier Rs. 260. I wonder what logic did TRAI apply in this process as pay channel rates have been increased due to inflation but subscriptions have been reduced as if inflation has an opposite effect on subscribers and cable operators. It is a known fact that a-la-carte distribution of pay channels to the subscribers is the best for them. Today all pay channels are digital and addressable till the cable head-ends. If cable operators/MSOs are given the benefit of demanding a-la-carte channels based on the choice of their subscribers, subscribers can be served much better. This can also reduce the subscription amount paid by the subscribers giving them their choice of channels instead of large bouquets of unwanted channels which they are forced to receive now. However, it is very strange that TRAI does not think so. TRAI has assumed that all MSO/LCOs are dishonest people and only broadcasters can look after the interest of the subscribers. That is why they have not recommended a-la-carte choice to the MSO/LCOs saying that technology constraints make it impossible for the benefit of a-la-carte to reach the subscribers. TRAI has not put any cap on the pay channel rates in the non-CAS areas but want subscribers to pay Rs 200 for 20 pay channels. This means that 20 pay channels should have an MRP of Rs 100 only since Rs 100 will go to the LCO for his services. In a way Rs 10 should be the MRP of a pay channel in non-CAS areas. The question is if there is no a-la-carte, no restriction on making large bouquets of pay channels by the content aggregators and no cap on pay channel rates, how can we achieve this pricing system? How will a cable operator or an MSO decide on the 20 pay channels so that their total cost does not increase more than Rs.100? Such questions arise when one goes through the recommendations of TRAI on the tariff in non-CAS areas as submitted before the Supreme Court. Wonder what is in TRAI’s mind while giving such recommendations which can not be practically implemented. I feel we need to think on a much larger perspective if we really want to look after consumer interest. Some possible actions are given below. Measures to be Taken • All Components of the delivery chain i.e Broadcasters, MSOs, Cable Operators and Subscribers must be governed by similar and supporting rules and regulations so that there is no scope for exploitation of one by the other in the garb of regulations. • All Technologies of delivery of content like Cable, DTH, Internet and Broadband are treated in the same way. It means our regulatory mechanism must create a level playing field for these technologies. • Sufficient competition must be created in the market so that the prices can be kept low. • Consumer must be given sufficient choice so that he does not pay for unwanted content and get whatever he wants at a reasonable cost. The above can only be achieved through addressability. We need a proper, well thought out strategy to implement this. Only setting a sunset date for digitalization will not help. Here again, TRAI’s recommendation of 2013 as the sunset of analog is not practical. These methodologies have been discussed at the highest level (PMO) number of times since 2003 and must benefit all rather than a few.

Source: http://cablequest.org/articles/roop-sharma/item/1349-create-level-playing-field.html

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