The detailed key conditions prescribed by TRAI in the new tariff order (pertains to pricing framework and offerings from broadcaster to distributors and distributors to consumers) and interconnection regulations (pertaining carriage, placement, marketing fee, LCO:MSO share and audit requirements). We note that these regulations are applicable to DAS markets (phase I, II and III as of now). We have captured key clauses pertaining to pay channels as the impact on Free-to-Air channels would be negligible, if any.
- Channel offering and pricing by broadcasters—(1) all channels should be available to distributors on a-la-carte basis, (2) maximum retail price (MRP) of a ‘pay’ channel should be uniform for all distributors (irrespective of DTH/Cable) and (3) there is no price cap on pay channel, per se. However, a-la-carte price (MRP) of any channel cannot exceed Rs19 if broadcaster wants to include that channel in any bouquet offering.
- Bouquet pricing by broadcasters. Broadcasters are free to offer one or more bouquet of pay channels to distributors provided (1) MRP of such a bouquet is >=85% of the sum of a-la-carte prices of channels in the bouquet, (2) a bouquet cannot have (a) both FTA and pay channels, and (b) both SD and HD variants of the same channel (essentially, broadcasters will form a separate bouquet of HD channels or sell HD on a-la-carte basis).
- Distribution fee (Distributor’s share in subscription revenues). Every broadcaster will pay a minimum of 20% of MRP of pay channels or bouquet to distributors; it will be uniform across all platforms. In addition, a broadcaster can offer discount of up to 15% of MRP to distributors on transparent and non-discriminatory basis and such that eligibility parameters for discounts are measurable. At an aggregate level, distribution fee and discounts should <=35% of MRP.
- Carriage fee. For every channel, Broadcaster will pay carriage fee of up to 20 paise/month per subscriber for entire subscriber base of a distributor. However, it will progressively decline with increase in penetration from 0-20% and will be nil if 20% of the subscriber base opts for the channel. We note that Distributors can offer up to 35% discount to broadcasters on transparent, measurable and non-discriminatory terms.
- Placement and marketing fee. Broadcasters can pay placement fee to distributors for securing a certain positioning (channel location) for a channel within applicable genre. Broadcasters can also engage with distributors to carry out marketing of its channels. However, both these dealings have to be transparent, reported in interconnection agreements and permitted within the limit of 15% (maximum permissible discount).
Distributor to subscriber offerings
- Network capacity fee (Access fee). Subscribers will have to pay a maximum of Rs130/month to distributors for access to 100 SD channels and up to Rs20/month for every additional slab of 25 SD channels (each HD channel will be equivalent to two SD channels). We note that this is only for access to channels (irrespective of FTA/Pay channels). In addition to this, subscribers will have to pay subscription fee for pay channels.
- Channel offering and pricing by distributors—(1) all channels carried by the distributor should be available to subscribers on a-la-carte basis at distributor retail price (DRP). DRP of any channel cannot exceed corresponding MRP declared by broadcaster. A distributor is free to pass on a part or entire discount it receives from broadcaster to subscribers by pricing the channel lower to that extent (DRP at discount to MRP), (2) distributors can construct a bouquet from channels/bouquets of one or more broadcasters. DRP of such a bouquet should be >=85% of the sum of DRPs of channels in the bouquet, (3) Distributors have flexibility to construct its own bouquets, but it cannot break broadcasters bouquet to form smaller bouquets.
- Subscribers can choose and pick FTA/Pay SD or HD channels on a-la-carte basis or bouquet and pay applicable access fee and subscription cost.
- MSO:LCO revenue share at 55:45%. The revenue share between MSO and LCO will be on mutual agreement. However, in the event of lack of agreement, TRAI has prescribed sharing of access fee and distribution fee in 55:45 (MSO:LCO) ratio.
Key differences between this tariff order and draft version (Oct 2016)
- Removal of genre-wise price cap. We note that TRAI has done away with genre-wise price cap suggested in the draft version. There is no price cap on any channel including HD channels. That said, a restriction that no channel with MRP of more than Rs19 can be a part of bouquet, means implicit price cap of Rs19 for most channels.
- Uniform MRP across markets. TRAI allowed variance of channel prices across states in the draft version; however it has prescribed uniform MRP across all markets in the final order. This move would reduce administrative and audit effort to a large extent even as it takes away flexibility of broadcasters to have price differentials across focus/relevant markets and other markets (especially regional channels)