2020 – A year of turbulence for the cable industry

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The year 2020has shown many turbulences to the cable television industry. The NTO 2.0 brought in by TRAI has resulted in the reduction of income to the LCOs on one hand and Corona has thrown the LCOs into many problems. The relaxations offered to DTH have kept them in an advantageous position and the cable industry is indirectly hit by the decision. Corporate MSOs like Reliance Jio has started resorting to unethical practices to grab the customers and to bring LCOs into their fold. Apart from all these, TRAI has decided to regulate the local channels of MSOs and LCOs and resulting in loss of revenue to MSOs and LCOs.
The year 2020 has harmed the cable TV industry in many ways. Exactly on January 1, the start of the New Year, TRAI announced a new tariff order NTO 2.0. The decision was taken to increase the number of free channels from 100 to 200, giving a minimum amount of Rs 139 under the network capacity fee. At the same time, it has stipulated that 26 DD channels should be given in addition to these. This has resulted in the loss of additional revenue coming through additional channels. At the same time, if there is a second connection in a house, it is stipulated that only 40% of the network capacity fee is charged for that connection. It has also caused a loss of income. Usually, the second connection is opted for by the rich, and as such the cable operator is forced to lose income at the cost of benefitting the rich. Another important point is that broadcasters are not asked to subsidize the content for the second TV. This is sheer discrimination against the LCOs. As such the NTO 2.0 is considered as a gift to LCOs on the new year day of 2020.
The corona crisis has brought more problems to the sector. The cable crew worked hard to ensure that people could stay home and watch TV without stopping for a single moment. The crew has put their efforts wholeheartedly without caring for their health. On the other hand, there were also fierce protests from the audience. Broadcasters were unable to produce new programs, and as such the repetition of old programs disappointed the audience and they expressed their displeasure with the cable operators. Cable staff had to go door-to-door as subscriptions were not fully digitized. Despite the old broadcasts, the desire to charge broadcasters in full has again become a headache for operators. The LCOs were forced to face all sorts of problems during the corona crisis.
The corporate MSOs have started playing all gimmicks to attract LCOs and subscribers. They have announced many packages to lure them, keeping the long term effects in hiding. Their sole aim has been to eliminate the independent MSOs and to bring all the LCOs under their fold. HITS operator NXT digital is no exception, It has even encouraged non-industry people to destabilize the LCOs who have been in the industry for more than two and a half decades. The LCOs had to come together to fight against such elements and this was a warning to all corporate MSOs who were trying to expand their tentacles strongly in the cable industry. Andhra Pradesh State Fiber Gird Limited, a government organization has become an MSO but has created an uncertain atmosphere leading to confusion among the LCOs. There are doubts about the continuity of its cable tv services. The Govt. has also agreed to the recommendations of TRAI and revised the guidelines of the DTH industry. By bringing down the license fee from 10% of annual revenue to 8% of adjusted Gross revenue, the DTH sector is going to be benefited immensely. This is sure to increase the profitability of DTH operators, which in turn will be spent to attract customers with lucrative packages. As such the LCOs may forego their subscribers to DTH operators shortly.
The Telecom Regulatory Authority of India (TRAI) has issued a Consultation Paper at the fag end of the year, aiming at controlling the Platform Services of MSOs and Local Cable Operators. While the LCOs are already with postal registrations, TRAI thinks that they should be cleared by the Ministry of Home Affairs on the lines of the satellite channels. It is interesting to note that the corporate MSOs too agreed to these recommendations and as such the LCOs are likely to be required to get registered once again. TRAI has been advocating that the local channels of the LCOs are required to come to the digital headend at MSOs place before being encrypted and distributed by the LCO in his area of operations. This is going to be a major issue since this involves huge costs on one hand and the number of channels to be distributed by the MSOs will be hit. The MSO will not have such a capability to retransmit all his LCOs’ channels. The LCOs are running many channels with at least 80% of pirated content and TRAI seems to be trying to control piracy by limiting the number of channels of LCOs. However, the regulation, if accepted by the Ministry of Information and Broadcasting, is likely to adversely impact the income source of the LCOs in a big way.
The whole year 2020 has created many hurdles to the growth of the cable television industry. While the government regulation is against the cable industry, on one hand, the corporate MSOs have left no stone unturned to bring the LCOs under their fold. However, this is not new to the cable industry which has withered many such odds. It owes to stand strong and face every challenge in 2021 and gearing up itself accordingly!

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