Press Release

Some good news at last

1 May 2012

It looks good. The new tariff order released by the Telecom Regulatory Authority of India (Trai) late on Monday night could help the process of digitisation in the Rs 33,000-crore Indian television industry. It takes away almost every excuse that distributors (called multi-system operators/MSOs), broadcasters and cable operators have had for not pushing ahead to meet the June 30 deadline for the four metros.

The master stroke is the legitimising of carriage fee, the charge for carrying a channel on a bandwidth-constrained system. The order states that carriage fee has to be made public. It must be the same for all broadcasters and it cannot be revised upwards for two years.

This could bother MSOs because carriage fee, which is negotiated for each channel (not network) separately, is a source of MSO margins. If it is uniform, transparent and non-discriminatory, then charging higher carriage from new channels will become difficult.

Says Ashok Mansukhani, president of the MSO Alliance, “All the incentives that were to be given to this industry (higher FDI, tax breaks or infrastructure status) have been held back and carriage fee has been capped.”
Uday Shankar, CEO, Star India thinks, “The detailing of the reporting mechanism (in the order) ensures that the slush nature of the business gets addressed.”

More than 70 per cent of the money collected on the ground does not come back into the system. 

Not that broadcasters get whatever they want. Trai has pushed for transparency in revenue sharing too. While Shankar and his ilk don’t agree with the principle of government-mandated revenue share, given the factitious nature of the business it is critical at this stage.
The order states that revenues will now be split 55:45 (for free channels) and 65:35 (for pay channels) between MSO and cable operators. This seems fair given that MSOs will bear the burden of digitisation.
Most broadcasters and channel distributors agree. “Within the constraints of having to align the interests of all the stakeholders and creating a level playing field (for cable) with DTH, this is a good order,” says Shankar. “It will actually help us digitise faster,” adds Gurjeev Singh Kapoor, COO, Mediapro Enterprises, a TV distribution firm.
“It is a very confused order and it puts too much burden on the MSO. It seems to be anti-cable and pro-DTH,” thinks Mansukhani.
The long, tough road to digitising India’s 146 million TV homes has just begun. Expect lots of more arguments then before we reach the end in 2014.
Source: Business Standard
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