The published RIO rates are often used as a means to arm-twist the distribution platforms from going the RIO way and to dissuade the end consumer from being able to make a-la-carte choices as per his/her preferences.
For the last few months, it has been observed that the several of the Pay Broadcasters are offering their content only on RIO rates. These rates are much more than the rates offered to some preferred MSOs and DTH operators in packages. Even the RIO rates are not the same for all distribution platforms. Broadcasters have their own criteria to distribute content on differential rates in RIO that depends on size, type or demography of the network area.
Apart from the content being offered to linear television distribution platforms, the same content is made available on some OTT applications free of cost. Some of these OTT services are owned by the broadcasters themselves, like HotStar, Sony Live and Ditto TV. Not only this, many programmes are distributed on YouTube, available free of cost to consumers. Which means the programs/contents of Pay TV channels, which form a part of the separate distribution agreements executed with each of the DTH/ Cable Service Providers for re-transmission after paying heavy licence fee are also made available on OTT Applications free of cost.
It has been pointed out that the actual content deals for most broadcasters with the distribution platforms take place at a 10%-20% of the published RIO rates (see the table). The published RIO rates are often used as a means to arm-twist the distribution platforms from going the RIO way and to dissuade the end consumer from being able to make a-la-carte choices as per his/her preferences.
DTH Operators’ Association has approached a number of broadcasters and also the TRAI, apprising them of this serious anomaly. They have told the regulator that the OTT Application gets 5-7 million monthly visitors online, while it has been downloaded 15 million times (This was highlighted in an article dated 23rd March, 2015 published in Live Mint).
This situation is becoming serious because number of consumers utilizing OTT services is increasing exponentially with the growth of broadband subscribers, particularly on mobile platforms. According to the Association, this is not only discriminatory but is also jeopardizing the very existence of Pay TV business model and would thereby defeat the purpose of paying humongous license fees under the respective distribution agreements entered with broadcasters.
In raising this issue with TRAI, DTH operators have suggested for making regulations for OTT Services to align the tariffs with that of linear TV services.
Association has also suggested to the Pay TV broadcasters to create equilibrium amongst the respective business models and make availability of contents/ programs on OTT Application on payment of subscription fees. They have also requested to window the contents and programs on OTT Applications in such a manner that the contents/ programs are made available only after a period of at least six months post the re-transmission of the same set of contents and programs via the television channels.