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.
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.