Wednesday, 11 February 2015

Consumer Tariffs hiked by TRAI

After some broadcasters had challenged TRAI’s Tariff Order of 2004 for non-addressable Cable TV subscribers in 2007 and the matter reached Supreme Court, the Court directed TRAI to consider the issue of Non-Addressable Cable TV Tariff  ‘de novo’ as regards all aspects and give a report to the Hon’ble Supreme Court. 
TRAI submitted its report to the Supreme Court on 21st July 2010.  Since then a number of important developments have taken place. Accordingly, as part of the consultation process, a revised draft Tariff Order, was uploaded on TRAI’s website on 1st December 2014, seeking views/comments of stakeholders. This consultation process has resulted into two Tariff Amendment Orders – 
(i)  the Telecommunication (Broadcasting and Cable) Services (Second) Tariff (Thirteenth Amendment) Order, 2014 which was notified on 31st December 2014, and 
(ii) Tariff Amendment Order i.e. the Telecommunication (Broadcasting and Cable) Services (Second) Tariff (Fourteenth Amendment) Order, 2015 issued on 06 January 2015. 
The Tariff Order dated 31 December 2014 gives the limits of retail tariff for subscribers in Non-DAS areas with effect from 01 January 2014.  The price ranges from Rs 117 for a minimum of 30 FTA channels to Rs 292 for a minimum of 30 FTA channels and more than 20 Pay channels. This will mean that after adding 12.5 % Service Tax and Entertainment tax as applicable in a state, a subscriber will have to pay from Rs 150 for just FTA channels and up to Rs 400 for FTA and more than 20 Pay channels.   
Manner of offering of channels dealt with in this Tariff Order include:-
a)  A-la-carte offering of channels at the wholesale level. 
b) Mechanism for pricing of bouquets to take into account conversion of a channel from FTA to pay or vice versa and discontinuation of a pay channel, forming a part of the bouquet.
c) Relationship between a-la-carte and bouquet rates (‘twin conditions’).
d) Mandatory Offering of pre-2007 bouquet.
The TRAI has said that Bills to subscribers for dues as well as acknowledgement for payment made by the subscriber should be mandatory for the MSOs and cable operators, as the case may be. 
Bills should have all the relevant details such as number of pay and FTA channels offered, applicable taxes etc. The first bill should also have the list of channels provided and, subsequently, whenever there is any change in the channels provided. 

Industry Comments
Although, the Tariff Order is meant for Non Addressable areas that fall under Phase III & IV of Digitisation, its impact will be felt all over the country since rates in addressable systems are at present a percentage of the rates in non-addressable system as directed by the Supreme Court. 
Consumers are not even aware what is FTA, Pay channel, a-la-carte, bouquets, basic package etc. They still get channels full of disturbing advertisements, poor signals, poor quality STBs with no repair or replacement facility, no interoperability, non-availability of STBs in open market. They are being charged activation fee, inspite of TRAI declaring it illegal. TRAI has drafted this Tariff Order for the Non-DAS areas that cover more than 70% of the market. Majority of the population is in villages and semi-urban areas where cable operators are operating very small networks, providing only a few channels (20-50). Only in towns, there may be some MSOs extending their services with 80-100 channels. There is also not much demand of so called ‘Pay’ channels as cultural values and languages are very different in these regions. 
Rates given in the three slabs in Tariff Order lead to an average price of a ‘Pay’ channel as about Rs. 5/-, same as was worked out for CAS. Whereas this is reasonable and consistent with CAS regime price that has been accepted by all without much problem, how will TRAI ensure this price as Pay channel costs in DAS areas average at about Rs 15, three times more than the rates in slabs made by TRAI? Sports channels costing between Rs 30-50 are out of reach of these 100 million households in that case.


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