As per the rating agency Icra’s statement on Tuesday, Trai’s amendments to the new regulatory framework for cable and broadcasting services could potentially lower DTH/cable bills by up to 14 percent from the present levels.
How Did This Happen?
The broadcast regulator amended the new regulatory framework for cable and broadcasting services under which cable TV users will be able to access more channels at lower subscription price last week.
These changes will come into effect from March 1.
According to this amendment, the regulator capped at Rs 160 the amount consumers will have to pay monthly for all free to air channels and reduced the maximum Network Capacity Fee (NCF) to Rs 130 (excluding taxes) for 200 channels.
How Would These Changes Affect?
While talking about the advantages of the amendment, Icra said, “These changes in tariff could potentially lower the direct-to-home (DTH)/cable bills of the subscribers by up to 14 percent from the present levels and encourage subscribers to exercise their right to choose and opt for a-la-carte channels,”.
The Assistant Vice President at Icra, Sakshi Suneja said that after the recent changes in the tariff, the prices of popular GECs and sports channels are expected to reduce from Rs 19
She also 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 percent (vis-a-vis a-la-carte prices, from the existing average levels of discounts of 40-54 percent), as well as through the introduction of two new conditions.
According to the Vice President at Icra, Kinjal Shah, the recent amendments will adversely impact revenues of broadcasters.
Why Would They Bring A New Amendment?
While talking about the reasoning behind this amendment, they 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.
They added, “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 percent surge in bills for subscribers (as per Icra’s estimates) and continued dominance of bouquets in the subscription patterns,”.
Suneja said “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 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 a few popular channels,”.
Shah also explained that the subscription revenues are expected to reduce due to the subscription charges for a-la-carte channels will reduce and also due to the expected shift of subscribers from bouquets to a-la-carte selection.
While talking about the content quality, Shah added “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,”.