Saturday, 8 June 2013

Better late than never

Trai issues Tariff Orders for Supply of STBs/CPEs
after Phase-1 & 2 have been completed
The Telecom Regulatory Authority Of India (TRAI) on 27 May 2013 issued two tariff orders prescribing standard tariff packages for set top boxes (STBs) for digital addressable cable TV systems (DAS) and Consumer Premises Equipments (CPEs) for Direct to Home (DTH) services. The prime objective of these tariff orders, TRAI says, is to ensure effective commercial interoperability.

The said tariff orders have been finalized after receiving responses on the draft tariff orders for supply of STBs placed on TRAI website on 11 April 2013. These orders have been framed to make available STBs / CPEs at a reasonable price and, lucid and easy to understand, terms and conditions as well as to take care of the interests of the service providers. This would also promote healthy competition amongst the operators which would ultimately benefit all the stakeholders of the sector, including the consumers.
The tariff include standard packages as prescribed by TRAI and customized packages as decided by each MSO. The standard tariff packages for STB/CPE on rental basis are to be offered mandatorily by MSO/ cable TV operators and DTH operators.
The charges which have been mandated by TRAI include the installation fee, activation fee, smart card viewing charges, and repair and maintenance for three years.
The regulator has said that, while these packages are mandatory, service providers can also make other offers to subscribers. It has also stated that these specific packages are prescribed for "plain vanilla STBs/CPEs" and not for the exotic ones with recorders and HD and 3D STBs.
The standard Tariff Package for Cable TV and DTH operators has been worked out on the basis of the following facts and figures as provided by the Industry stakeholders Associations.
a)The total cost of STB/CPE has been taken as Rs 1750 for Digital Cable and Rs 2250 for DTH.
b)Life Span of STB/CPE has been taken as three years.
c)The residual value has been taken as nil
d)Rental per month is based on cost of STB on Equated Monthly Installment (EMI) Basis@15% per annum (@1.25% per month) for a period of 36 months.
Some experts in the industry have questioned this methodology of fixing a price for the basic STB. According to market sources price of a basic cable STB is only Rs 1200 and DTH STB costs only Rs 1500. TRAI has not mentioned if this price fixed by them in the mandatory package includes the cost of CAS and middle-ware too.
ServiceSecurity Deposit (Rs)Monthly Rent (Rs) (Excluding taxes)Refund of security deposit
DAS40055.66Security Deposit would be refunded after 3 years or on surrender of STB/CPE within three years
DAS40046.80The security deposit gets adjusted over 3 years. If STB/CPE is surrendered within 3 years, the unadjusted portions of the security deposit would be refunded. Details available in Tariff Order.
1000043.33Another question is will the 25 million STBs already seeded in the market after taking activation charges ranging from Rs 800-1500 be regularized under this Tariff Order? If so MSOs will have to pay a huge sum as VAT which they have avoided till now saying that they are not selling any STB and all STB imported from abroad are their capital assets and they will keep depreciating their value every year and finally write them off. 
After Digitisation in Phase-1 & 2 all MSOs have shown their profits increasing. It is perhaps this unaccounted activation charge that has done the trick because as per our sources, no MSO has started charging the DAS package rates since their SMS are not fully operational.
Bringing out a Tariff Order benefitting consumers after 25 million people have already been duped is itself speaks of the non-serious attitude of the government towards consumers. Implementing this will be another task. Any way, like they say ‘it is better late than never’.


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