TRAI versus Indian broadcasting

The Telecom Regulatory Authority of India or TRAI has managed to do the impossible. It has united Indian broadcasters. The head of every major broadcast firm in the country — NP Singh (Sony), Punit Goenka (Zee), Uday Shankar (Disney-Star), Aroon Purie (TV Today) among others — were on one podium in Mumbai last week. All of them compete bitterly for a share in India’s Rs 74,000 crore TV market. They have never spoken up for each other. But at a press conference called by the Indian Broadcasting Foundation or IBF they spoke in one voice. This is very unusual, but these are unusual times. 

On January 1 this year, TRAI made changes to a tariff order it had implemented just 11 months ago in February 2019. On Friday last week (January 10) the IBF called its press conference. On Monday this week (January 13) the TRAI called a press conference to state its point of view. On Tuesday the IBF and its member broadcasters filed a writ petition in the Bombay High Court against the amendments. 

 
The battle of wills between the world’s second largest TV market and its regulator continues. And it will till either the TV industry goes into decline or TRAI realises that in a highly competitive market broadcasters have every right to price their channels the way they want to. And that the prices of entertainment, sports, films or music cannot be set like that for voice or data or food grains. That bundling actually benefits consumers. That changing rules too frequently creates a negative spiral which affects all things an ideal regulator should facilitate — growth, jobs, taxes and consumer choice. 

The battle could end if broadcasters and distributors learn to explain their point of view in a unified voice. After 28 years of private television, the average cable TV prices in India are among the lowest in the world and have remained way below inflation rates. Yet there is no single graph or chart from this huge industry that illustrates that — either to consumers or to regulators. 

And the battle will definitely end when TRAI learns to do simple impact analysis. Analysing the effects and costs of regulating or not regulating requires phenomenal rigour but it would save the industry and consumers so much pain. That is what communications regulators like Ofcom of the UK do routinely. 

If TRAI had done an impact analysis to start with it would not be making so many basic changes to an order issued less than a year back.   

The tariff order first floated in 2016, came up with caps on channel prices, dos and don’ts on bundling and all sorts of rules. After much litigation it was implemented in February 2019. It helped increase transparency but also resulted in a rise in prices, complaints of complicated packages resulting in a shift from cable to DTH or from TV to online. In August 2019 the TRAI came up with a consultation paper that read like a rant against bundling. Then came this order. 

If it is implemented there will be further rise in prices, more confusion on channels and packaging and even more money spent on communicating the changes. It will also mean the death of lifestyle, English several sports and niche channels. That means job and tax losses. Much of this is happening in a year when the economic slowdown has pushed ad growth from double to single digits. 

Take prices, a point TRAI keeps harping on. They rose with the last order because it introduced, rightly, a network capacity fee of Rs 130 per home per month (excluding taxes) for a basic tier of 100 free-to-air channels. In the new order this has been pushed to a maximum of Rs 160 for 200 channels along with the new bundling curbs; it is inevitable that prices per home will go up. 

This is where TRAI’s beef with bundling makes no sense. Globally bundling is a done thing in most industries — airlines, hotels, media, consumer products and most importantly in telecom which TRAI regulates. In hotels, buffets are cheaper and offer more variety than an a la carte meal. A niche channel like Zee Café would be more expensive if it wasn’t a part of a bundle that has the more popular Zee TV. 

TRAI has at its disposal a huge amount of research resources, a lot of data and access to stakeholders. As a regulator it could connect with fellow regulators across the world to understand how an impact analysis could be done. That would save the industry, consumers and TRAI itself the trauma caused by its frequent flip-flops. 



Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel