DTH/cable bills could drop up to 14 percent: Icra

DTH/cable bills could drop  up to 14 percent: Icra

The telecom regulatory authority of india(TRAI) amendments to the new regulatory framework for cable and broadcasting services could potentially lower DTH/cable bills by upto 14 percent from the present levels ,rating agency icra said .Last week ,the broadcast regulator amended framework the new regulatory framework for cable and broadcasting service under which cable tv users will be able to access more channels at lower subscription price.These changes come into effect from March 1.

The authority has also decided that only those channels which are having MRP of Rs. 12 or less will be permitted to be part of the bouquet offered by broadcasters. The regulator has also mandated distribution platforms to provide 200 channels for network capacity fee (NCF) of Rs 130. The 200 channels don’t include mandatory DD channels. The NCF has also been capped at Rs. 160 per month (excluding taxes)

"These changes in tariff could potentially lower the direct-to-home (DTH)/cable bills of the subscribers by up to 14 per cent from the present levels and encourage subscribers to exercise their right to choose and opt for a-la-carte channels," Icra said in a statement.

It noted that the tariff order of 2017 had aimed at giving the subscribers their right to choose by mandating the broadcasters to declare the nature of channels as free to air (FTA) or pay channel as well as declare a-la-carte pricing of all channels.

"However, contrary to Trai's expectations, given the high channel pricing of popular general entertainment channels (GECs) and sports channels (with 66 of the 330 existing pay channels being priced at ceiling rate of Rs 19 per month), the very purpose of the tariff order was defeated, resulting in up to 23 per cent surge in bills for subscribers (as per Icra's estimates) and continued dominance of bouquets in the subscription patterns," it added.

Giving more insights, ICRA Assistant Vice President Sakshi Suneja said, “After the recent changes in tariff, the prices of popular GECs and sports channels are expected to reduce from Rs. 19 per month to Rs. 12 per month, given the revised ceiling rates for a-la-carte channels, to be included in bouquets.

She added that the amendments also seek to improve the attractiveness of a-la-carte channels by reducing discounts that can be offered on bouquet pricing to 33 per cent (vis-a-vis a-la-carte prices, from the existing average levels of discounts of 40-54 per cent), as well as through introduction of two new conditions.

"Icra does not expect the bouquet prices to increase, though the channel offerings under the bouquet are expected to reduce. While an earlier bouquet price of Rs 349 i included 81 pay channels, the same is now expected to fetch only 51 pay channels. However, the same should not adversely impact the subscribers, as their viewing is largely restricted to few popular channels," she said.

According to ICRA Vice President Kinjal Shah said, “For broadcasters, the recent amendments will adversely impact their revenues. The subscription revenues are expected to reduce. Furthermore, given the reduction in the number of channels that can be offered in a bouquet (for a given price), bundling of non-popular channels with established ones will reduce, thereby impacting their reach and thus advertisement revenues for the broadcaster. This, however, would eventually lead to an increased focus on content quality.”

The amendments are expected to be a mixed bag of positives and negatives for DPOs. The overall reduction in NCF and the cap on NCF to be charged for additional TVs in a multi-TV home is negative for the DPOs.

TRAI has, however, allowed DPOs to offer different NCF across geographical regions (state/district/towns) as well as offer promotional schemes (on NCF / Distributor Retail Price – DRPs), up to 90 days at a time, twice in a calendar year. DPOs are additionally allowed to offer discounts on NCF / DRPs for long-term subscription plans.

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