New framework may actually decrease TV bills, says RS Sharma

The regime, which came into effect on February 1, 2019, will benefit popular channels and hasten the adoption of over-the-top platforms and will be a mixed bag for viewers and distributors.

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Telecom regulator, TRAI Chairman RS Sharma said the new framework may actually decrease TV bills and rejected the claims made by a report says which TV watching bills will go up.

New framework may actually decrease TV bills, says RS Sharma

 

He said that the report was prepared on an "inadequate understanding" of the TV distribution market and it was incorrect.

He said that the report was prepared on an "inadequate understanding" of the TV distribution market and it was incorrect.

The statement comes after Crisil report which says the network capacity fee (NCF) and channel prices announced by broadcasters and distributors as per the TRAI new guidelines could increase the monthly bill of most subscribers of television channels.

Crisil said TRAI's new regulatory framework for broadcasting and cable services industry is intended to usher in transparency and uniformity and will afford far greater freedom of choice to viewers.

More than 90 percent of TV viewers flip 50 or fewer channels, and the new rules will let them subscribe to what they want and not be saddled with channels they are not interested in, the report added.

The regime, which came into effect on February 1, 2019, will benefit popular channels and hasten the adoption of over-the-top platforms and will be a mixed bag for viewers and distributors.

Sachin Gupta, Senior Director, Ratings, said that "Our analysis of the impact of the regulations indicates a varied impact on monthly TV bills. Based on current pricing, the monthly TV bill can go up by 25 percent from Rs 230-240 to Rs 300 per month for viewers who opt for the top 10 channels, but will come down for those who opt up to top 5 channels."

The new regime could drive consolidation in the broadcasting industry because content will clearly be the king and key differentiator. Subscription revenues of broadcasters would rise 40 percent to Rs 94 per subscriber per month compared with Rs 60-70 now. With viewers likely to opt for popular channels, large broadcasters will have greater pricing power. Conversely, broadcasters with less-popular channels will find it tough to piggyback on packages, and the least popular ones will hardly have a business case and could go off the air.

 

For distributors (DTH and cable operators), the new regulations are a mixed bag. While content cost will become a pass-through, protecting them from fluctuations, they may lose out on the benefits of value-added services such as bundling content across broadcasters, customization, and placement revenue.

Currently, most distributors are charging NCF at the cap rate of Rs 130 per month. Similarly, broadcasters have priced subscription for the most popular pay channels at the cap rate of Rs 19 per month.

But these are early days and the situation may evolve with prices charged by broadcasters and distributors declining depending on market forces, viewership, and competitive intensity.

Nitesh Jain, Director, Ratings, said "In all this, OTT platforms could emerge as the big beneficiary because many viewers could shift because of rising subscription bills. And low data tariffs also encourages viewership on OTT platforms."

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