When TRAI’s new tariff order came into effect in early 2019, both the regulator and the consumers expected monthly cable and DTH bills to go down due to increased choice and competition. But what happened was quite the opposite.
Whether it was cable and DTH players or channel broadcasters, everyone priced their offerings at the maximum level permitted under the new rules: Rs 153 per month for cable/DTH service. Ther pay channels have also charged extra prices even after offering their bouquets. The end result was that the new tariff order ended up increasing monthly bills for consumers, instead of lowering it.
However, this also had an unintended outcome: It also led to complete pricing uniformity in the cable/DTH market. Players like Dish TV and Sun Direct, which used to attract customers by offering more value for money, suddenly found themselves charging the same price as Tata Sky and Airtel Digital. Similarly, cable operators, who too used to cater to the low- and middle-income market, ended up charging the same monthly fees as Tata Sky.
These pocket-friendly players soon realized that consumers will shift to platforms like Tata Sky and Airtel Digital if there no longer was any pricing difference between their services and those of these premium players. In other words, it could end in disaster for these low-cost players.
For the consumer, the reasoning was simple: Why should he go for a low-cost player when a premium player like Tata Sky offers a substantially higher number of channels? For example, Tata Sky currently has around 592 channels on its platform, including 90 HD channels. In comparison, Sun Direct has only 457 channels, including 73 HD channels. D2h, on its part, is carrying only 529 channels, including 71 HD channels. Cable operators, particularly outside the metros, usually carry only around 300-400 SD channels and around 60 HD channels.
However, cable operators are typically better placed than pan-India operators like Sun Direct and D2h as they tweak the selection of channels they carry to the local market. A cable operator in Assam, for example, does not have to carry 39 Malayalam channels like Tata Sky does. But when it comes to a pan-India platform like Sun Direct, it was more difficult to ignore the fact that Tata Sky and Airtel Digital offered a greater selection of channels, and consumers started preferring these platforms.
PRICE CUTS
Surprisingly, it was the cable operators who made the first move to address the price problem. For example, six months after the new tariffs were introduced, Tamil Nadu-based Arasu Cable slashed its network charges to just around Rs 41 per month, compared to the Rs 153 charged by most platforms at the time. This was because their consumers were simply unwilling to increase their monthly pay-out from Rs 150 before TRAI NTO to Rs 250 after the rules came into effect.
On the other hand, DTH players like Sun Direct continued to officially charge Rs 153 as the network fee, but started offering some network fee discounts on selected packages. Nevertheless, the minimum charge for cable or DTH continued to be Rs 150 per month.
Now, with the COVID-19 pandemic forcing consumers to look for the cheapest option, even Sun Direct has now been forced to officially announce an across-the-board reduction in its network fees by Rs 94.40. In other words, it will now charge only Rs 59 per month as the minimum that you have to pay to access the Sun Direct platform, and this will give you access to all 148 non-pay channels on the platform.
CHEAPEST ON OFFER
The new plan makes Sun Direct the cheapest cable or DTH pack on offer anywhere in India by far. On almost every other platform, the minimum you have to pay to watch even a single channel is Rs 150. The offer may attract price-sensitive customers in the South Indian and Bengali markets, the focus areas for Sun Direct.
Sun Direct’s Rs 59 pack has 25 Tamil channels, 21 Malayalam channels & 14 Telugu channels. Sun cuts NCF by 62% from Rs 153 to Rs 59 per month . Makes it the cheapest pay DTH or cable service in India Could pressurize other DTH players to follow suit
However, it is not just the low-end that will benefit from the price cut. The reduction in network charge will also benefit people who watch more channels, including pay channels. In other words, even if you watch HD English movies and so on, you still will be charged only Rs 59 as the network charge, even though you will have to pay the pay channel charges extra.
For example, a consumer who activates the Tamil Basic bouquet of Sun TV, which consists of seven channels such as Sun TV, KTV and Sun Music, will have to pay Rs 59 + Rs 47.2, or Rs 106.2, per month. On other DTH platforms like Tata Sky or Dish TV, he would have to shell out Rs 200.60 per month.
The move is likely to pressurize other DTH players, particularly D2h, as it competes directly with Sun Direct in South Indian markets. It will also have an impact on Airtel Digital, which also has a sizeable share of the South Indian market.
IMPACT ON CABLE OPERATORS
As for cable operators, the exact impact of this move remains to be seen. This is because, on the one hand, most cable TV players already charge very low network charges — in the range of Rs 50-100. However, they also charge a minimum of Rs 150 per month in return for including many of the local pay channels in their basic offering. In other words, for Rs 150 per month, local cable operators bundle pay channels worth Rs 50-90. This means that if you are to subscribe to a cable service, you have to pay at least Rs 150 per month, and there is no way to cut the bill even lower.
Now, Sun Direct’s new pack offers a way to do that. The pack could attract extremely value-conscious customers who are willing to watch only free-to-air channels. If a large number of such users start shifting to Sun Direct, cable operators will face a difficult choice as they cannot afford to give a single connection at Rs 59 per month because of maintenance charges.
Unlike a DTH service, cable operators incur extra monthly expenses for each new customer, and must also share some of their subscriber revenue with their feed provider or MSO — even if the subscriber is only watching free channels. This means that if the monthly charge is reduced to Rs 59 (Rs 50 plus tax), it would leave a cable operator only with around Rs 30-40 for himself. At present, cable operators get a minimum of Rs 60 per customer, and in most cases, at least Rs 100 per customer.
