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Empowering consumers of TV services
Financial Express, February 05, 2019

In the year 2004, when broadcasting and cable services (B&CS) were predominantly analogue and largely unregulated, these came under the ambit of the Telecom Regulatory Authority of India (TRAI). Over these years, TRAI has played an important role in shaping the regulatory and policy framework governing the B&CS sector by making timely interventions through regulations, tariff orders and directions to service providers, and recommendations to the government.

The B&CS sector consists of multiple stakeholders in the value chain. While broadcasters manage TV channels, distributors such as DTH (direct-to-home) and cable operators deliver these channels to consumers. All these service providers earn their revenue from advertising and/or subscription fees. While the subscription fee is paid by subscribers of TV services directly, the advertisement fee is also indirectly linked to the viewing of TV channels by subscribers. Accordingly, subscribers are a very important stakeholder in the value chain.

Another stakeholder, the government, earns revenue in the form of taxes levied on these services. TRAI, as sectoral regulator, in order to promote and ensure orderly growth of the sector, protects the interests of consumers as well as of service providers including broadcasters, distributors and local cable operators.

Prior to digitisation of broadcasting and cable services, the analogue era had inherent deficiencies such as lack of choice to consumers in selection of channels and payment thereof, poor quality of viewing, non-transparent and discriminatory business transactions, and frequent disputes amongst service providers in the value chain, resulting in interruption of TV channels to consumers and thereby affecting the orderly growth of the sector and even loss of revenue to the government.

Subscribers had to pay for all the channels pushed by operators, irrespective of the fact whether or not those were preferred by subscribers. Due to technological limitations, it was practically impossible to know the exact number of subscribers of TV channels. Further, the piracy of signals of TV channels was also much easier. Accordingly, to overcome such limitations, many service providers nominated their field agents in various geographical areas across the country to assess the number of subscribers, discover the piracy of signals of TV channels, and collect the due subscription fee. Gradually, these agents were authorised by service providers for signing of interconnection agreements also. Based on the market potential assessment, most of the interconnection agreements amongst service providers were signed in the nature of fixed fee or minimum guarantee fee. In this market, in the absence of securing interconnection at competitive rates, no service provider can survive. Accordingly, though these agents were not recognised under the law, over a period of time, they started indirectly regulating the entry and exit of any particular service provider in the market.

To overcome many such deficiencies, on the recommendations of TRAI, the central government promoted digitisation and addressability of distribution networks. Simultaneously, in order to promote and ensure orderly growth of the sector, TRAI amended the regulatory framework applicable to broadcasting and cable services from time to time.

After the digitisation of distribution networks, while improved quality of viewing benefited consumers, the revenue realisation from subscription fee got streamlined for service providers. However, even after digitisation, continuation of the analogue era practices in the form of non-transparent and discriminatory fixed fee or minimum guarantee fee agreements restricted the choice to consumers and also hindered the orderly growth of the sector. Various kinds of mutually-agreed agreements, some voluntary and some under duress, between broadcasters and distributors, not only took away consumers’ right of choice, but also foreclosed the entry of new service providers in the sector. In spite of overcoming technological challenges, non-transparent business practices and, in turn, the role of agents—while signing interconnection agreements—continued. The new regulatory framework addresses all these limitations, and thereby brings transparency, non-discrimination and objectivity in the signing of interconnection agreements. Technology and the subscription data would make the role of field agents redundant and benefits of technology would start reaching the consumers. Now the market forces, and not the agents, would decide prices of services as well as the revenue share arrangements amongst service providers. The new regulatory framework, inter alia, ensures:

* Informed decision-making by subscribers as the maximum retail price (MRP) of each pay TV channel will be displayed on the TV itself;

*Effective choice to consumers for the selection of channels and paying only for those channels;

*Free competition in the market and facilitate entry of new broadcasters and distributors in the market;

*That fixed/minimum guarantee fee interconnection agreements are not signed between service providers;

*Free competition that would improve the quality of TV channels and facilitate discovery of true price of pay TV channels;

*Regulated and transparent agreements between broadcasters and distributors that would reduce disputes and ensure orderly growth of the sector;

*Prescriptive clauses that restricted the choice to consumers in the agreements are barred;

* Realisation of revenue on the basis of subscription reports;

*Transparency and non-discrimination in the sector that would ensure accrual of due revenue to each stakeholder in the value chain, including the government;

*Local cable operators who face consumers would be able to meet their consumers’ demands, deliver quality service to them, and secure their share of revenue.

During the last few weeks, some social media campaigns have been launched by unknown entities, having vested interests, to propagate fear-mongering and instigate small service providers against the notified regulatory framework. These are based on incomplete or twisted facts. It appears that such misleading campaigns are spearheaded by such agents whose roles would become redundant. In reality, free competition in the market and consumers’ choosing channels of their choice would automatically discover the true value of pay channels. Further, competition in the market place would incentivise service providers to improve their quality of service and channels. In view of the authority, this framework would protect the interests of consumers as well as of service providers, and ensure orderly growth of the sector.

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