DTH/cable bills may fall up to 14% after Trai's amendments, says Icra

Topics DTH | Cable industry | TRAI

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Trai's amendments to the new regulatory framework for cable and broadcasting services could potentially lower DTH/cable bills by up to 14 per cent from the present levels, rating agency Icra said on Tuesday.

Last week, the broadcast regulator amended the new regulatory framework for cable and broadcasting services under which cable TV users will be able to access more channels at lower subscription price. These changes come into effect from March 1.

The regulator capped at Rs 160 the amount consumers will have to pay monthly for all free to air channels, and reduced the maximum Network Capacity Fee (NCF) to Rs 130 (excluding taxes) for 200 channels.

"These changes in tariff could potentially lower the direct-to-home (DTH)/cable bills of the subscribers by up to 14 per cent from the present levels and encourage subscribers to exercise their right to choose and opt for a-la-carte channels," Icra said in a statement.

It noted that the tariff order of 2017 had aimed at giving the subscribers their right to choose by mandating the broadcasters to declare the nature of channels as free to air (FTA) or pay channel as well as declare a-la-carte pricing of all channels.

"However, contrary to Trai's expectations, given the high channel pricing of popular general entertainment channels (GECs) and sports channels (with 66 of the 330 existing pay channels being priced at ceiling rate of Rs 19 per month), the very purpose of the tariff order was defeated, resulting in up to 23 per cent surge in bills for subscribers (as per Icra's estimates) and continued dominance of bouquets in the subscription patterns," it added.

Sakshi Suneja, Assistant Vice President at Icra, said after the recent changes in tariff, the prices of popular GECs and sports channels are expected to reduce from Rs 19 per month to Rs 12 per month, given the revised ceiling rates for a-la-carte channels, to be included in bouquets.

She added that the amendments also seek to improve the attractiveness of a-la-carte channels by reducing discounts that can be offered on bouquet pricing to 33 per cent (vis-a-vis a-la-carte prices, from the existing average levels of discounts of 40-54 per cent), as well as through introduction of two new conditions.

"Icra does not expect the bouquet prices to increase, though the channel offerings under the bouquet are expected to reduce. While an earlier bouquet price of Rs 349 included 81 pay channels, the same is now expected to fetch only 51 pay channels. However, the same should not adversely impact the subscribers, as their viewing is largely restricted to few popular channels," she said.

Kinjal Shah, Vice President at Icra, said the recent amendments will adversely impact revenues of broadcasters.

Shah explained that the subscription revenues are expected to reduce (as subscription charges for a-la-carte channels will reduce and also due to the expected shift of subscribers from bouquets to a-la-carte selection).

"Furthermore, given the reduction in the number of channels that can be offered in a bouquet (for a given price), bundling of non-popular channels with established ones will reduce, thereby impacting their reach and thus advertisement revenues for the broadcaster. This, however, would eventually lead to increased focus on content quality," Shah added.

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