There are sufficient indications that the New Tariff Order ( NTO 2.0) issued by the Telecom Regulatory Authority of India ( TRAI) may be delayed. Since the issue is already in courts and some judgements have been reserved, experts feel that it is sub-judice on the part of TRAI which suddenly asked the broadcasters to announce their channel prices before 10th August, 2020. On the other hand, TRAI has not given a schedule for implementation since it involves signing of the agreements between Broadcaster and DPO as well as MSO and the LCO. The whole exercise needs at least 3 months and as such this may not be implemented before Dasara-Diwali season.
TRAI’s tariff order of 2017, and the amended version unveiled in January this year, are arguably the most controversial pieces of legislation in the media and entertainment industry in more than a decade. The tariff order of 2017 was meant to put a stop to the practice of ‘bundling’: The practice of tying up TV channels in the form of packages and forcing consumers and cable/DTH operators to carry/buy all or most of a broadcaster’s channels.
At the time TRAI came out with the order, it was largely the channel broadcasters who determined which channels would be delivered to millions of cable and satellite TV living rooms across India. Since cable and DTH operators could only get viable access to channels in the form of packs or bundles, they were forced to carry dozens of channels from each broadcaster on their network.
Even though channels were also technically offered one-by-one, their individual prices were so high that it would make zero economic sense to access them individually. Because of this, bigger broadcasters — each of whom had 35-70 channels — were able to corner most of the capacity on cable and DTH networks, making it difficult for smaller players and newcomers to reach consumers. Many small broadcasters found it difficult to survive due to the tough competition for slots on networks.
TRAI wanted to dismantle this practice as it resulted in a lack of effective choice at the consumer end and also prevented innovation in the market by increasing barriers of entry for newcomers.
However, the tariff order was taken to court in 2017 itself by various parties, including Star India, Airtel Digital and Tata Sky, which caused a delay of more than 1.5 years in its implementation. It was finally implemented in early 2019, but without its key safeguards against bundling. The rules, as implemented in 2019, effectively prevented the bundling of channels by cable and DTH operators, but was toothless in preventing bundling by channel owners.
In the end, instead of improving the situation, it led to an increase in end-user prices. Due to the ensuing backlash from consumers and cable and DTH operators, TRAI was forced to bring back some of the anti-bundling safeguards envisaged in the 2017 rules and publish an amended set of rules on January 1 this year.
However, this too was taken to court by the channel broadcasters, who requested the court to provide them interim relief in the form of a stay on the operation of the revised tariff order. The broadcasters were unable to get a stay. But, to everyone’s relief, Bombay High Court finished the hearing in a matter of days, and reserved the order in early March. This prompted TRAI to voluntarily abstain from pushing ahead with the implementation of NTO 2.0 before the court came out with its order.
However, with the court failing to come out with an order even after five months, TRAI earlier last week directed broadcasters to implement the provisions of NTO 2.0 by August 10. If implemented, broadcasters are likely to be forced to bring down the prices of their popular channels by at least 30%
Consumers and cable/DTH operators, for their part, seem to be largely sympathetic to the regulator as they believe that the unbundling of channels would allow them to carry or consume only those channels that they want, while rejecting the others. Broadcasters, however, believe that such a turn of events would result in a sudden loss of viewership for many of their less-popular channels, which could affect their profitability and even their financial stability.
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