You have 3 monthly subscriptions to gift as an added subscription benefit.

Gift now
INDIA

RISING MONOPOLIES

Trai’s broadcast revolution

will not be televised
Trai wanted to protect TV viewers from high DTH and cable TV bills. What it
did instead was empower big broadcasters and OTT players

Pratap Vikram Singh, Pranav Balakrishnan, 1 Oct 2019

Trai’s new tariff regime for the
cable and broadcasting sector
has proven disastrous
Broadcasters and distributors
have gamed the system,
offering heavily discounted
channel packs that detract
from Trai’s aim of promoting a
la carte channel purchases
One operator made 4,000
packs, even though the number
of channels is approximately
900
And even as the subscriber has
suffered, so have smaller
players—both broadcaster and
distributor. The big winners,
meanwhile, are Jio and Airtel

Read a 200 word free summary.

SHOW SUMMARY

Trai’s broadcast revolution will not be televised

 Over the last few years, the Telecom Regulatory Authority of
India (Trai) has been on a crusade. This crusade was meant to
shield the TV-watching consumer from the cloak and dagger
tactics of the broadcast and cable services industry.

The problem, as the regulator saw it, was simple—

broadcasters and distribution operators transmit hundreds of
television channels to subscribers. Despite viewers only
watching a few select channels—say, sport or news—they
have little choice but to subscribe to and, therefore, pay for
the entire gamut.

So, since 2016, Trai has formulated one policy paper after
another, all aimed at addressing the woes of subscribers. To
do this, it sought to control and establish a level playing field
between mighty content behemoths and the companies which
transmit this content to subscribers. This resulted in the Tariff
Order 2017—which required broadcasters to declare prices for
individual pay channels and capped the pricing of a pack of
channels at no less than 85% of the sum of their a la carte
pricing.

Notified in 2017 and enforced on 29 December the following

year, Trai expected the order to aid in price discovery of
individual channels. This would allow subscribers to choose
only the channels they wanted and effectively spend less on
their direct-to-home (DTH) or cable TV bill. It would also let
Trai keep tabs on the exclusive deals between broadcasters
such as Sony, Star and Zee and distribution operators like
Tata Sky DTH, Airtel DTH and Hathway, which have led to an
unlevel playing field.

But the road to hell is paved with good intentions. After

broadcasters challenged Trai’s order in the courts—which
ruled the discount capping of packs was arbitrary—a wave of
disruption has been unleashed in the space.

Just not in the way Trai had hoped.

Broadcasters and operators began creating hundreds of

heavily discounted channel packs—confusing viewers and
dissuading them from opting for standalone channels. Today,
it is either more complicated for subscribers to renew a cable
or a DTH connection, more expensive, or both.

Trai’s broadcast revolution will not be televised

 Cable or DTH operators—the pipe between broadcasters and
viewers—feel they have lost bargaining power with the
broadcasters, as the latter sets the price of channels under
Trai’s regulation. Payouts by DTH operators to broadcasters
have increased by around 40%, according to sources.

Smaller channels and broadcasters, which don’t have the

leverage of their larger broadcast counterparts, are also
reeling under the new system. With big broadcasters
perversely incentivising channel packs, smaller players are left
in the lurch. Lower traction will lead to lower ad rates.

The writing on the wall is clear: “All small channels will shut
down. The small operators will die,” said one executive with a
DTH provider. “This regulation will create monopolies. You
are making sure that only people with deep pockets will
survive,” the executive added.

Trai isn’t blind to this new reality. In a consultation paper

released in mid-August, it acknowledged that the situation
hasn’t panned out as it hoped. But even as Trai ponders the
chaos it has unleashed, new heavyweights are emerging—OTT
players.

With the cost of internet data plummeting, video streaming

services such as Netflix, Amazon Prime, and Hotstar have seen
a marked uptick in popularity. The subscriber base of the 16
top OTTs increased 2.5X—from 63 million to 164 million—
between August 2016 and August 2017.

“Amid this changing landscape, Trai is over-regulating the

sector, strangulating the traditional players,” says the DTH
executive quoted earlier. And while the reign of the old guard
seems shakier than ever, the gatekeepers of India’s data
revolution—Mukesh Ambani-owned telco Reliance Jio and its
arch-rival Bharti Airtel—seem primed to rule the space.
Positioned as an OTT player, Jio is also shielded from Trai’s
regulations.

A skewed broadcast system

 For years, five broadcasting companies—Star India, Zee
Entertainment Corp, Viacom18, Sun Network and Sony
Entertainment—have dominated India’s broadcast and cable
business. Accounting for the bulk of the sector’s $9 billion-plus
revenues in 2017, they virtually control the sector. Indeed,

Trai’s broadcast revolution will not be televised

 their heft, both in terms of finances and content, means they
wield considerable influence on distributors as well. Here’s
how they functioned:

Broadcasters charged distributors (DTH or cable operators)

for transmitting their channels to subscribers. The larger the
platform, the better the rate a distributor can negotiate with
the broadcaster. Smaller platforms, therefore, are forced to
shell out far more.

With such an unequal power equation, broadcasters have

wielded their might with little pushback. Consider this, each
of the big broadcasters runs over 40-50 channels. Of these,
only 5-6 channels really drive viewership. In an ideal world,
distributors would baulk at the majority of a broadcaster’s
offerings. Except, this is an all or nothing deal, so distributors
carry, and therefore, pay for the broadcaster’s entire portfolio
of channels.

Unsurprisingly, the end subscriber is offered variety she

doesn’t need, with the distributor passing its costs on as well. 

Broadcasters are the only real winners in this system, with all
their channels earning revenue, rather than just the popular
ones. In addition, by filling the limited network capacity of
distributors with their own channels, they also stifle the ability
of smaller broadcasters to find a platform.

“Broadcasters would arm-twist the DPOs (distribution

platform operators), and negotiate a deal favourable to
themselves. The DPO will incur a loss,” a Trai official said.   

This is what led to Trai’s intervention. The regulator wanted

to bring transparency in the business dealings between
broadcasters and the operators, thus bringing down the final
pricing offered by the operator to subscribers. At the time of
publishing this story, Trai has not responded to questions sent
by The Ken.

The best-laid plans…

The undoing of Trai’s intervention, however, came shortly
after. Broadcasters and operators took the regulator to the
Madras High Court, where the discount capping of channel
packs was struck down. The resultant tariff regime came into
effect from February 2019.
Trai’s broadcast revolution will not be televised
 Broadcasters and operators used this opportunity to create
several channel bundles—all deeply discounted, to take away
from the lure of subscribing a la carte. One operator made
4,000 packs, though the number of channels is approximately
900, said the Trai official quoted earlier. Trai’s consultation
paper from August states that this was done to confuse
viewers.

The Trai official quoted earlier says that both viewers’ bills as
well as the revenue of broadcasters’ has since shot up.

On the other side of the equation, distributors have got the

short end of the stick. Earlier, say sources in the industry, big
distributors with large subscriber bases could negotiate
mutually beneficial terms with broadcasters. Under the new
tariff order, however, broadcasters themselves declare the
price of the channels, virtually eliminating any scope for
negotiation. According to a DTH company executive, the
payouts from the DTH company to broadcasters increased
from 50% to 70%.

While small channels will face an uphill battle to compete

with the more attractive, cheaply-priced packs of large
broadcasters, it is the free-to-air players who are suffering the
most. These channels, have seen their costs shoot up due to
carriage rates—what free-to-air players pay distributors in

Trai’s broadcast revolution will notorder

be televised
to be broadcast—being formalised. Carriage fees were
 earlier levied at the distributor’s discretion, allowing room for
negotiation. This fee is now chargeable at the rate of Rs 0.2
for each subscriber covered by the distributor.

“Look at a platform such as DishTV, which has 30 million

subscribers. A channel will have to pay Rs 0.2 multiplied by
30 million, which is economically not viable for a smaller
channel. In the next six months, 150 channels will shut down.
They cant afford to pay that much,” says the DTH executive
quoted earlier.

But even as the wolf is at the door of the old guard, a digital
revolution is sweeping the space.

The new paradigm

At present, internet-based video streaming services are
unregulated. Over the last few years, all major broadcasters
have set up internet arms to keep up with evolving consumer
behaviour. They are also transmitting content through their
respective apps. DTH operators, too, are forming symbiotic
partnerships, and have launched hybrid set-top boxes which
provide both the traditional linear transmission of channels
along with the ability to browse OTT content. It’s a fight to
retain consumers, says another executive working with a large
group having stakes in broadcast, DTH and cable services.

The winner in the space will ultimately be whoever offers a

wide range of content and services at the most competitive
price. The two most obvious candidates on this front are
India’s largest telco, Mukesh Ambani-owned Reliance Jio and
its rival, Bharti Airtel.  

Both the telecom service providers have a history of

experimenting with internet television or IP TV. While
traditional television broadcasting happens over a linear, one-
way network, internet television uses a two-way transmission
network, allowing for access to both live content as well as a
library of past content. In the traditional sense, internet TV
doesn’t include browsing. While both players have dabbled
with it in the past, only Airtel managed to get an IP TV play
off the ground, before shuttering it some seven years later
after deciding that scalability was an issue due to the need for
optical fibre transmission. 

Trai’s broadcast revolution will not be televised

 With the commercial rollout of Jio Fiber, Jio’s fibre-to-home
service offering high-speed internet, Jio is now in pole
position to become a leader in the sector. “With plans above
Rs 1,200, the Jio Fiber set-top box will come bundled with
subscriptions of OTT applications,” said a senior company
official. The box will also have a port for cable television. “As
of now, the plan is to provide live television through its OTT
application, JioTV. It is like any other OTT platform,” the
official said. 

Positioning itself as an OTT, Jio will remain out of the

purview of Trai regulations. “For mobile screens, Jio manages
the best deal from broadcasters due to the large subscriber
base—which means Jio pays less than what is paid by a DTH
operator and much less than by a cable operator,” said the
DTH executive quoted earlier. On mobile, JioTV claims to
offer over 600 channels, including over 100 HD channels. The
Jio official didn’t respond to the queries pertaining to
negotiation with broadcasters for the television screen.

Like other DTH players, Airtel, too, has launched hybrid set-
top boxes which offer Airtel Xtreme—enabling both linear
DTH and OTT services. “If a consumer is seeking convenience,
she will go to one operator which can deliver data, content,
fixed-line and mobile phones. In the process, I don’t have to
deal with multiple people for paying multiple bills,” said Sunil
Taldar, CEO of Airtel Digital TV.

Airtel has started testing quad-play—mobile, broadband,

fixed-line and content—in certain places and the response has
been phenomenal, Taldar added, though he didn’t share any
numbers. Whether a consumer selects one operator over
another depends on which one is offering a comprehensive
suite of services, he said. At the end of the day, no one can
quite offer this as well as the two telcos can. Was this shift
inevitable? Probably. But Trai’s regulations irreversibly set this
powershift in motion. 

Share this article, even

with non-subscribers
The next 5 people who sign up with your exclusive link can read
this premium article without encountering a paywall.
https://the-ken.com/shared-story/?sharecode=NDkwMDU4LTkyNDUt COPY
Trai’s broadcast revolution will not be televised
 Gift credits available : 5

Airtel Amazon Prime Bharti Airtel Den DishTV Disney

Hathway Datacom Hotstar Internet Jio JioPhone JioTV Netflix
Reliance Industries Sony SonyLIV Star India Sun NXT Tata Sky
Telecom TRAI Viacom18

AUTHOR
PRATAP VIKRAM SINGH
Pratap is based out of Delhi and covers policy and myriad
intersections with the other sectors, most notably technology. He
has worked with Governance Now for seven years, reporting on
technology, telecom policy, and the social sector.
VIEW FULL PROFILE
AUTHOR
PRANAV BALAKRISHNAN
Pranav writes about the business of moving people and things
around, i.e, mobility and e-commerce. Over the past two years, he
has written about Ola, Tesla, Flipkart, Amazon, and the increasing
role played by Reliance Industries in the Indian technology story.
Pranav joined The Ken from Asian College of Journalism, Chennai,
specialising in business journalism.
VIEW FULL PROFILE

Popular Stories

Vi’s last stand Reliance Jio’s K- IDFC First’s retail How foreign hackers India’s
09 AUG, 21 10 SEP, 21 29 SEP, 21 28 JUL, 21 04 AUG, 2

shaped conundrum lending road to weaponised India’s —the

redemption cybersecurity shield talent
PRATAP VIKRAM SINGH ROHIN DHARMAKUMAR KAUSHAL SHROFF PRATAP VIKRAM SINGH SUMANTH

MORE POPULAR STORIES

Comment
NO COMMENTS YET
Trai’s broadcast revolution will not be televised
 COMMENTS ARE CLOSED

SUBSCRIPTIONS COMPANY CONTACT US EDITORIAL JOIN THE

Individual Plans About Us Write for us Narratives CONVERSATION
Corporate Plans Team Queries All Stories @NatesanSiv Been glued to
The Ken for a while now. Gives
Campus Plans Careers FOLLOW US Free Stories you all you need to know in a
non traditional language both
Gift a Subscription Culture Saved Stories concise and to the point. Well
Community Newsletters done @TheKenWeb
Blog @asperised Anyone interested
in knowing the impact of
COVID-19 in India should
definitely subscribe to the
BFO newsletter by
@TheKenWeb It's free and it's
amazing.

Kenrise Media Private Limited, No.677, 1st Floor, Suite #643, 13th Cross, HSR Layout, Sector 1, Bangalore - 560102

2021 THE KEN TERMS & CONDITIONS PRIVACY BUILT AT THE KEN

Trai’s broadcast revolution will not be televised