[60 Days to D-Day] Digitization good for industry: Sahil Gupta, PWC

02 May,2012

The Telecom Regulatory Authority of India (TRAI) issued the Tariff Order and Interconnection Regulations for the Digital Addressable Cable TV Systems on April 30.

 

Aimed at providing the viewers with a better viewing experience and maximum choice, digitization is being seen as the biggest change broadcast and cable industry in the country is set to witness. Television viewers will get to choose a minimum of hundred Free to Air (FTA) channels at a maximum retail price of Rs100, as per new tariff rules for Cable TV announced by TRAI.

 

The order states: “The basic purpose of digitization is to ensure ample choice to the consumer as well as to enable him to budget his subscription according to his paying capacity. Accordingly, the Authority has mandated MSOs to carry a minimum of 500 channels from January 1, 2013. However, keeping in view that the smaller MSOs having less than 25000 subscribers may need some additional time for building the capacity, they have been given time up to April 1, 2013. Besides, to ensure that the consumer is not adversely affected, the Authority has prescribed that every MSO should have a minimum capacity to carry 200 channels from July 1.”

 

In the new guidelines issues, TRAI has also addressed issues pertaining to revenue sharing between MSOs and LCOs, carriage fee paid by broadcasters, channel pricing and so on.

 

Mr Sahil Gupta, Senior Manager, Tax and Regulatory Services, PwCIndia shared his analysis of the recent order with MxMIndia’s Shruti Pushkarna and how he sees digitization as a win-win for all.

 

What is your view on TRAI’s Tariff Order? 

It’s a pro-consumer directive. Consumers can now pay for what they want to see, unlike in today’s time when they purchase a bouquet which has unwanted channels as well. Hence a la carte selection works more cost-efficient for consumers.

 

So do you see digitization as a win-win for all?

Digitization per se is good for the industry – consumers get better quality reception, broadcasters can know their exact consumer base, which will help them realise full value from MSOscable operators (which gets under-reported in current times based on what subscription base the intermediaries disclose to broadcasters). Moreover, it helps in bringing addressability in the system.

 

Do you think the government is serious about the July 1 deadline?

The government is taking a lot of initiatives to push digitization – it has a stakeholders’ meeting every week or two weeks and is helping stakeholders migrate to the new system. They are thus doing their bit for helping meet the deadline of July 1.

 

But on the ground we hear that there is much to be achieved?

The infrastructure is what is taking time. The digital/upgraded set top boxes need to be procured and be ready for installation at the consumer’s end. Some MSOs/cable operators are looking at funding mechanisms for meeting these procurement needs, while others are working towards building a right procurement strategy for the same. All in all, the industry is gearing up for it and all stakeholders doing their bit.

 

Your view on the guidelines for carriage fees in the Order?

Carriage fee is what MSOs charge broadcasters for carrying their channels to viewers. Some element of arbitrariness gets reduced from this Order as it needs to be uniform and non-discriminatory across all broadcasters. The TRAI will step in if it’s unreasonable and this will help.

 

And on pricing of channels?

The limits on pricing mentioned in the order is aimed mainly at ensuring that channels, especially popular ones, are not priced high.

 

There’s also a mention on the revenue sharing between MSOs and cable operators…

There seems to have been certain disputes between MSOs and cable operators in regard to sharing of distribution revenues. Prescribing the revenue sharing formula, in absence of an agreement between them, will help and bring in transparency…

 

 

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