RS Sharma, Chairman, Telecom Regulatory Authority of India
India is the world’s second-largest TV market after China with nearly 200 million television households and growing consumption on digital platforms. Come January 1, 2019 - a new regulatory framework for the broadcasting sector will come into effect. The framework promises to usher in major changes for the industry, as well as consumers across the country.
BTVI’s Siddharth Zarabi caught up with Telecom Regulatory Authority of India (TRAI) chairman RS Sharma and asked him about the impact of the regime.
Excerpts of the interview.
Siddharth Zarabi: Some sections of the industry are still opposing the new tariff order and have threatened blackouts. What explains this?
RS Sharma: I agree that some of the broadcast players who have lost out their case in the highest court of land – the Supreme Court- are spreading rumours and misinformation. This whole issue of blackout is not correct. What we are ensuring is that when we put in a new framework in place, it should be done in a manner that will not cause any inconvenience to customers. There is a transition plan which will ensure that the customers are given adequate time to exercise their choice about what kind of channels they want to watch. What is most important is that in this framework, the customer is at the centre of the universe. The industry exists for the customers and they have to be given the ultimate choice for what they do or do not want to watch.
One should not thrust channels on them. If they don’t like to watch some channel, they should not have to pay for it. That’s the broad philosophy of the framework. The new tariff order strikes a balance between all stakeholders - local cable operators, the multi-system operators (MSOs), the direct-to-home (DTH) operators and broadcasters. All their concerns and problems, which have been voiced over the years, have been addressed through this new framework. And everybody is on board, except a few stakeholders who are opposed to this tariff order and they probably continue to remain opposed even now, despite losing at the Supreme Court.
Siddharth Zarabi: What is your own assessment about the cost to the consumer? Will rates go up post the implementation of the order?
RS Sharma: Complete misinformation is being spread that consumer prices will increase. Look at it this way- today you are selling me 100 channels and I watch merely five of them. Tomorrow, I will choose only five and only pay for five. Obviously, the price of 100 channels is more than five. So, to say that the price is going to increase is absolutely incorrect.
Secondly, who is saying this? Who benefits when a consumer pays more? The industry will benefit. They should be happy. No consumer group has opposed this issue. Therefore, this is again a self-contradictory situation where those who are going to benefit are essentially the ones complaining that the prices will go up.
Thirdly, if those of who are benefitting complain about the price going up, it is in their hands to bring the price down. They can reduce the rates. These apprehensions have no logic. Our assertion is that prices will go down for those consumers who exercise their choice. If someone wants to subscribe to 1,000 channels that are offered in the country, then the prices will be the same as he would have to pay for everything. But if I am going to choose what I am going to watch, then the prices are going to come down.
Siddharth Zarabi: Is there a negative impact of the order on DTH operators?
RS Sharma: In my view, it has no negative bearing on any stakeholders, except those who are selling their channels and pushing them down the throat of consumers. The framework prescribes a very transparent kind of relationship between these stakeholders whether it is a local cable operator (LCO), or an MSO or DTH operator and broadcasters.
Look at the broadcasters. They now have the freedom to price their product and this price will go down for the consumers. Take for example your channel – BTVI. If you are free-to-air, but the DTH operator or the LCO charges Rs 2 or 5, then that’s not going to happen. A free- to-air channel will flow down the value chain to the customer as a free-to-air channel. And the customers are going to get 100 free to air channels at the basic price of Rs 130. That being the case, I think it does justice to all stakeholders. Of course, some people are dissatisfied because tomorrow those channels will be watched by the customers which they want to subscribe to and not every other channel.
Siddharth Zarabi: What is the future of stand-alone channels going to be in India?
RS Sharma: One of the objectives is that now every channel will be treated in an equal manner. So, if there is a standalone channel which provides wonderful content, obviously people are going to like and subscribe to it. If it is free-to-air, it is further icing on the cake, as people would not have to pay for that channel. So that being the case, we are going to see good content development in this space and I think that is needed in this sector today.
Siddharth Zarabi: What is the impact of the policy change on MSOs? Is there an opportunity for the current local cable operator to become an MSO? Is further consolidation going to happen?
RS Sharma: My assessment is that we have made the entire inter-relationship among all stakeholders transparent. This means that if a broadcaster is offering a channel at price X to distributor A, then it will have to offer the same channel at the same price to all the distributors. So, broadly what is going to happen is that the largeness (of an operation) is not going to kind of become beneficial in a very substantial manner. Of course, there is always an issue where if you are a wholesaler, if you have to sell it to larger people - you could get some discounts. But there is capping on these discounts, with that result, now there is a level playing field. Big or small – no one is going to be discriminated against as was happening in the previous framework.
Siddharth Zarabi: So will this framework increase mergers and usher in some consolidation in the sector?
RS Sharma: On the contrary, as I explained to you, since even the smaller players will be standing on equal footing, I can’t say what is going to happen, I am only saying that tomorrow the smaller players will also have a level playing field vis-a-vis the larger players, because the price of the channel which they are going to get is going to be the same as that for larger players.
Siddharth Zarabi: Will this policy directly or indirectly impact India’s OTT and digital platforms? In the US, Star has stopped offering content on linear distribution and is making it available on Hotstar.
RS Sharma: I cannot really forecast with precision as what is going to happen. One can only make certain guesses. We must understand that it is very difficult to stop the march of technology. If technology enables people, the so-called pull model rather than the push model, then it will happen. It’s not going to stop whether I or you want it. Secondly, I think that one of the concerns we had was there is so much litigation in the sector – 97 per cent of cases at the TDSAT are related to broadcasting. So, it is actually quite worrisome. Why does this happen? It happens because of the inter-relationship among the stakeholders whose interests are not aligned. We think that litigation is impacting the industry very adversely.
If we want the industry to become healthy and provide quality consumer services, then it is necessary to ensure that the inter-relationship is not heavyhanded and is light touch. What this regulation has tried to achieve is that the industry focuses more on content, quality and distribution rather than focusing on litigation and provides better services to the consumers. Otherwise, consumers are going to a platform which will be more convenient. Today, data is being delivered at such cheap rates in the country that it is more likely that people’s viewership behaviour is going to change.
Siddharth Zarabi: Are we headed for a situation where over-the-top (OTT) platforms will gain popularity on the cost factor and take away market share from existing players?
RS Sharma: If this industry, which is actually linear, becomes more robust, provides better quality services, then there will be a lot of advantage in watching television due to the form-factor, timings, family getting together to watch etc. It is not as if the OTT or non-linear viewing has all advantages. That’s not correct. So, if linear provides quality, has less litigation, if the relationships are clear, then I think it will continue to grow. This new regulation will contribute to that stability also.
Siddharth Zarabi: Why is there a price cap of Rs 19 for a pay channel and does the TRAI intend to review this cap anytime in the future?
RS Sharma: You cannot put gold on sale alongside vegetables. Essentially, what we are saying is that broadcasters have the freedom to price their channels the way they want to do. This was a freedom not available in the earlier framework. Suppose your product is very niche – let us say a golf channel - the viewership is low but those who watch it would like to pay money. Therefore, what we have said is do not combine such high-price channel in a bouquet. The Rs 19 fee is a boundary, anything priced beyond that should not be included in the bouquet.
Siddharth Zarabi: Do you expect the must carry clause to get enforced because channel carrying capacity is the sole discretion of a distribution platform?
RS Sharma: Must carry and must provide clauses were in existence earlier too. What we have now said is that you have to declare your capacity and if a platform operator does not have the bandwidth – then we have prescribed a waiting list for the channels that have requested to be carried. As soon as one channel gets closed or removed from the platform, the first in the waiting list comes in. This is a very transparent structure which actually provides no excuses to any other party for carrying or not carrying a channel.
Siddharth Zarabi: Do you see foreign investments coming into this sector?
RS Sharma: I will refrain from making some quantitative assessments, but broadly I will say that if you have a healthy industry, if stakeholders are not fighting with each other, if you have a quality of service, if you have content being delivered through these channels - they will attract investment. I think there will be investments in networks and content. There will be investment all around and the situation will be very, very conducive. That is my hope.
(The interview was conducted live on BTVI at noon on Thursday, 27 Dec. Later in the evening, the TRAI announced that all existing packs/plans/bouquets to subscribers will continue uninterrupted till 31st January 2019. No service provider will disconnect any signal/feed to any MSO/LCO/subscriber till 31st January 2019, on the pretext of implementation of the new regulatory framework.
Inter-service provider commercial settlement to continue as per their inter-service agreements in-force prior to 29th December 2018 till 31st January 2019.)
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