Last month TRAI asked for comments on a draft Tariff Order and draft Interconnect regulations fr0m all stake holders. This exercise of amending the regulations for digital addressable systems is being carried out to amend some clauses in the original regulations which were set aside in a TDSAT judgement given on four to five cases filed by the MSOs and LCOs against the unfair DAS regulations on 19 October 2012. Some of these regulations were even commented upon in the TDSAT order as 'Bad in Law'.
For a national regulator to get pointed and criticized like this, does not speak well of the efforts put in to restructure and regulate an industry, particularly considering the fact that TRAI was handed over the industry for the purpose in 2004. By now the Regulator should have understood the industry very well and considering its weaknesses, should have done the needful to restructure and regulate so that all stake holders in the industry are benefitted and get an opportunity to grow their business.
At present the situation is very confusing. All that we understand is that through these amendments all FTA channels operated by many small broadcasters have been brought at par with the pay channels run by large media groups. Just about two to three large media groups controlling less than 200 pay channels out of a total of 850 channels registered with government are being helped to make more revenue handing over the control of the country's television market to them, making it tough for the small players to survive.
Already 18 months have passed since commencement of DAS in the four metros and consumers have not benefitted in any way fr0m the mandatory process. This indicates that there is something drastically wrong in our implementation.
It is unfortunate that TRAI started implementing the Digital Addressable System ignoring the ground realities and experience in the international market. The Regulator assumed that-
All 150 million cable and satellite homes in India are the existing 'Pay TV' market and all consumers and cable operators are most dishonest people because they don't give due revenue to 180 odd pay channels out of a total of 850. which are owned by just three or four large media groups out of a total of 368 companies owning all these channels.
Another assumption of the government and the Regulator is that all the 700 million population of India who view television are rich enough to buy an STB and can pay for the pay channels, whatever the broadcasters demand.
"Already 18 months have passed since commencement of DAS in the four metros and consumers have not benefitted in any way fr0m the mandatory process."
The result is that we have a chaotic situation in the cities where DAS has been implemented. Regulator is only trying to meet the aspirations of a few 'Pay' channel broadcasters using all kinds of tactics to achieve success in their task. TRAI made some impractical regulations that have not stood the test of time even for a few months. Since many of these regulations have not yet been tested in the market, we expect such drafts will keep coming for consultations for some more years and life will go on in this uncertain manner. What will happen after the 2014 Elections is any body's guess. We have the experience of 2004 when CAS was deferred and industry was placed under TRAI for regulations. In these 10 years industry has gone fr0m bad to worse and is running directionless.
All matters are going to courts and we may not see a solution in the near future as more and more LCOs are waking up to the situation and approaching the courts. Consumers have yet to realize the complexity of the situation because they have not faced the impact of getting their packages and a-la-carte choice.
Pay TV- The root cause of all problems
Consumers in India do not understand the meaning of 'pay' channels yet. Since in the analogue regime they pay for the cable services without distinguishing between 'pay' and FTA channels, paying for a total package, they cannot even think of paying for a single channel.
This is a fact that pay channels existed in India for many years but only for cable operators and DTH companies because they were made to pay for them. There is a necessity to regulate 'pay' channels so that consumers pay for them and consider them differently fr0m the FTA channels. TRAI's effort should have been to create a legitimate place for them so that consumers pay for them voluntarily rather than force the consumers to pay for bouquets. Where TRAI followed a wrong approach is given below:
a) First TRAI recommended a total migration to digital cable fr0m analogue without considering the existence of small cable operators. Then it recommended impractical time lines that can never be met. Regulations made were only to benefit the pay channel broadcasters who are already enjoying large monopolies.
b) After that the Ministry and the Regulator start threatening the stake holders, particularly the MSOs not directly supported by Pay broadcasters and the LCOs blaming them for not complying with the law , indirectly forcing them to become slaves to the large MSOs who are being helped to create monopolies.
c) After that it gave show-cause notices to some independent MSOs and withdrew their licences, further demoralizing them. These licenses were given to them provisionally after having served the consumers for more than 20 years because Ministry considered them unfit to run their business.
d) The regulator also supported the Ministry against all small players or those who are not in direct support of the Pay Broadcasters. A dozen of them are selected to be made an example for not complying with TRAI orders and court cases are initiated against them.
e) The matter starts reaching the Supreme Court and we find the industry divided into two. Government, TRAI, large 'Pay' Broadcasters (NBA, IBF) and their MSOs are on one side and small operators, independent MSOs and some large MSOs not supported by Pay broadcasters are on the opposite side.
TRAI or the Ministry has not registered any case against any broadcaster or MSO who are rampantly violating regulations (twin conditions, 12 minute cap on ad duration, content code, advertising code etc.) all the time. In fact TRAI has allowed the broadcasters to a phased adherence to the ad duration cap based on their own solution.
Eighteen months pass by this time and nothing is achieved on the ground except Rs 4000 crore worth of foreign exchange has gone to China and other countries for importing lowest quality vanilla MPEG2 STBs without any standards, BEE rating and interoperability. Large Media Groups are laughing away to the banks with the hard earned money of the poor subscribers.
After having threatened LCOs and achieving nothing, the regulator is now threatening the consumers to obey its order or else get their cable connections cut off.
FTA channels should be treated differently
TRAI wants to bring all 640 odd FTA channels at par with 184 pay channels and make same rules for them. If we analyze the tariff Order, there is nothing that favours the consumers for whom total-digitization is being implemented in the Cable TV industry. Everything focuses on the pay TV broadcasters so that they get their share, rest can wind up and go.
It really surprises that how- a regulator having such competent group of people can think that it is possible to achieve in a poor country what the developed countries like the USA and UK could not accomplish even in ten years.
What the Regulator failed to understand is that-
a) Tariff Regulations must support the ground reality. Indian consumer will take time to adjust with the pay TV system as he is unable to distinguish between a 'Pay' channel and an FTA channel.
b) System of 'pay' channel distribution is not transparent. Tariffs must be such that subscribing to pay channels is not painful for majority of subscribers when we are forcing them to change to a completely alien system. In a country like India FTA channels, regional channels and local video channels have the largest viewership. They must be made affordable to the consumers. Let the Pay channels remain premium for the elite and not the masses. These Pay channels can be afforded by not more than 20-30% of the top economic bracket in India. So regulator has to ensure that all FTA channels are available without any discrimination and reach the masses.
c) Pay channels must start their innings afresh or become as cheap as FTA channels. We can never force them on consumers.
d) Pay channels are full of advertisements and their content is repeated many times and is presented dubbed on regional channel which is not acceptable to the consumers. Regulator must make a separate quality of service regulations for them if they want more revenue fr0m consumers.
e) Tariff must support the business of existing stake-holders as well as aspirations of consumers and not based on assumptions. Existing LCOs deserve a hearing fr0m the regulator.
f)TRAI cannot arm-twist the consumers the way it is doing now. We should remember that the industry needs revenue fr0m subscribers to keep alive. Subscribers will pay if they get the services of their choice.
g) TRAI must follow the example set by the LCOs where they kept the industry alive and growing to its present status for 25 years by looking after the interest of all category of consumers, rich as well as poor with differential pricing. Industry cannot afford to lose a single connection now as it involves loss of revenue.
So far 'Pay' broadcasters relied on getting their revenue by forcing pay channels in bouquets on independent MSOs even if those channels were not watched by the subscribers. They resorted to arm-twisting by switching off their decoders to extract more revenue. Such tactics will not work with consumers. TRAI must ensure that all MSOs comply with the a-la-carte offerings else, all these orders will be futile.