In March, TRAI came up with a consultation paper that would initiate discussion with DTH and IPTV operators on issues related to the sectors. We had picked out points that were unique and could possibly bring about unprecedented changes in the industry on MediaNama. The paper has now received comments from various stakeholders and we have here their opinions and arguments.
On Clean Feeds & TV Without Ads
Smart Digivision said that in case of offering ad-free television, more flexibility should be allowed to operators and that a commercial arrangement with the broadcaster could be arrived at to share the ad revenues. Bharti Airtel and Reliance Big TV has welcomed the clear feed initiative and has said that it should be considered for the Indian market. Zee Turner has firmly opposed clean feed, stating that “there is absolutely no necessity for providing a clean feed to the DTH operator”.
Read this interesting patent filed by Alcatel Lucent in India, of advertising on IPTV.
VAS As Channels
Reliance Big TV has said VAS cannot be construed as broadcast TV channels as the broadcasters have a different business case and VAS are merely an additional incentive to enhance customer satisfaction. It has asked the government to specifically indicate the provision of such services under DTH license. It believes that seeking prior permission from the competent authority before introduction of such services will unnecessarily delay the process.
DTH operators are incurring substantial cost in providing Value added services for which they arent able to charge consumers due to what Dish terms as “unhealthy” competition from the cable sector.
Smart Digivision said add-on value added services that offer customers a means of fully exploiting the addressable and interactive feature of DTH/ IPTV platform cannot be termed as channels and that an automatic permission be granted for new services which could be revoked if it becomes necessary in the subscribers’ interest or in general public interest or upon other considerations such as security of state, public order, etc.
Bharti Airtel seems to want VAS to build up in DTH as it did in telecom, noting in its reply that cellular operators provide numerous value added services like SMS, MMS, Voice Mail, GPRS, etc, apart from basic voice call services. It has asked if cable operators offering movie on demand, video on demand should also be included.
Sun Direct has noted that most MSO/cable operators offer similar VAS to their customers and if such as legislation is imposed on DTH players, it must also be made for cable operators. It has countered stating that VAS do not fall within the limits of broadcasting channel and so cannot be termed as traditional TV and that permission should not be made necessary for launch of such services as they are in public interest.
Treating VAS as akin to other channels is like comparing apples with oranges, Turner International, the producer of has said. It has said that such non-linear or “on demand” services have more limited availability and are designed to address niche interests and extending regulations to them would reduce the incentive of program providers and channel suppliers to offer these to customers.
Zee Turner has agreed with TRAI, saying by virtue of the licensing stipulation, a DTH operator cannot be a broadcaster. It has said that content exclusivity can be brought in by treating Movie-On-demand, Video-on-demand, pay-per-view as separate channels on DTH. It has added that other value added services such as Active Stories, Games are data services and so need not be under the purview of the regulation.
Industry Refuses To Allow Consumers To Pick & Choose Channels
TRAI had raised the question if DTH operators should make available pay channels on a la carte basis to the subscribers as the cable operators are required to do in CAS areas. Dish has said that if TRAI meant they have to offer all the pay channels on a la carte mode, it would be a technical nightmare for the company. It has explained that transponder bandwidth is not as easily scalable as cables and also that by offering individual channels, consumers will suffer technical delays and increase in prices.
Dish TV has said that it would cause “confusion” if such a choice was made available to the users. We accept that such an option may be technically unfeasible for the operator, but it is grossly condescending of Dish TV to talk of confusion. The operator should be more pro-choice.
Sun Direct has said that making channels available in a la carte basis is valid only in a monopoly situation such as in the cable industry.
On offering all pay channels on a la carte, Reliance Big TV has informed that system limitations will not allow such a possibility. There is a constraint on the number of offers that can be accommodated on the subscriber’s smart card and the a-la-carte count of channels is far higher than the constraint and will be not be a viable option.
Turner International also agrees, expressing concern that consumer choice would be reduced by such a requirement because it discourages investment in new or niche channels. “If broadcasters can’t secure wide distribution (and hence, exposure) through a bouquet arrangement, they will be less likely to take the commercial risk involved in launching such channels,” its comment read.
Only Zee Turner has welcomed the initiative, saying it would be in the interest of the consumers and the consumers would be required to pay only for the opted channels. It would also put pressure on the DTH Platform owners to carry quality content.
Radio on DTH
Sun Direct has approved of including radio via DTH and has asked that before licenses and regulations be amended, a discussion with Radio Providers needs to happen to understand their point of view.
Radio Mid-Day West, which operates RADIO ONE FM 94.3, a private FM channel in 7 cities has asked TRAI to consider different approaches to audio radio and video-audio receivers such as Worldspace which are connected to TVs. In case of audio receivers, DTH operators must conform to regional boundaries and not, say, offer a Mumbai specific channel to their customers elsewhere. It also noted that DTH must be a medium to provide the radio station on an as-is basis and not modify or insert any content to avoid copyright issues.
Worldspace Inc has said that the satellite radio policy under formulation already provides a detailed registration process for radio channels to be distributed via satellite onto DTH, IPTV, Internet and cellular networks.
Reliance Big TV has said that though radio applications are not very popular due to their inherent limitation of being fixed to the DTH appliance unlike radio, their addition to the DTH offering to consumers must be enabled.
Zee Turner opines however that DTH platform owners should not be permitted to carry radio channels as radio licensee could bypass revenue sharing criteria. It would also result in infringement of territorial limits allowed under the existing Radio License.
Bharti Airtel has noted that most of the DTH operators including Government’s owned DTH service is providing radio channels on its platform and since IPTV and DTH were able to provide radio as VAS to consumers, it should not be restricted.
Smart Digivision has asked that regulatory provisions (to prevent conflict of business interests conditions with existing radio system operators, uplink/downlink guidelines etc ) that are applicable to radio channels should be applicable to operators offering radio channels. It also said that a “must provide provision” for non-discriminatory offering of radio channels should be extended as done for TV Channels.
Basic Service Package
Dish TV has suggested that once a subscriber buys the necessary equipment – dish antenna, set top box, etc, a bouquet of 30 free to air channels could be made available in encrypted mode at Rs. 95 excluding entertainment and service taxes. Sun has said that there is a major constraint on transponder capacity; it isnt agreeable to offering FTA channels.
Zee Turner has urged TRAI to undertake the cost benefit analysis. It says this wouldlead to the expansion of the subscriber base of the DTH platform and would result in reduction operating costs.
Further Reduction Of Content Tariffs Demanded
Tariff regulation at the wholesale level – between the broadcasters and the DTH operators – has already happened with Tata Sky’s petition which brought about the rule that DTH operators had to pay only 50% of what CAS and cable operators were paying to broadcasters for content. So while CAS operators have to pay Rs 5 to broadcasters per channel, DTH companies pay Rs 2.5. Despite this, most of the DTH operators are demanding a further reduction pointing out that i) CAS and cable operators do not have the transparency that DTH has and hence are under-reporting their customer base and ii) they do not have to pay exorbitant licence fees that DTH providers do.
Reliance Big TV has opined that growth of DTH services in the country remains slow and the operators are incurring huge losses. It maintains that operation of DTH service is unviable and a loss making business and that high cost of capital and appreciation of US dollar have further increased the problems of this sector. It and other DTH operators have said further reduction of these tariffs would help reduce their costs and expenses due to taxes and levies.
An aside: Dish TV has pointed out that Tata Sky, while receiving the benefit from the court to pay only 50% of the tariffs to broadcasters, had not been obliged to pass this benefit down to consumers. We ask – have any of them done the same? Zee Turner has also noted that a certain DTH operator earns a margin of approximately 181% for ETC Punjabi and Zee Punjabi and has asked that DTH operators may be permitted to charge not more than 100% of what they paid for channels.
Dish TV has said that though Indian ARPU is much lower than international markets, approximately 30% of the ARPU goes for taxes and levies, so there is a need for an input tariff regulation for DTH at wholesale level to balance out content costs, taxes and levies. Dish suggested the new tariffs could be reduced to 30% of the non-CAS rates while Bharti Airtel (Digital TV) recommended it not be more than 25% of the non-CAS cable tariffs. Reliance has said that tariff for DTH services should not be more than 20% of the non-CAS cable tariffs.
Zee Turner has warned that an attempt to introduce any other basis/methodology/mechanism to fix tariff would not only upset the already established norms of 50% of non-CAS rates but would also result in lot of disputes and litigations in the sector.
Don’t Fix Retail Prices: In the case of CAS consumers, viewers pay a fixed retail price per channel and a fixed rent for the set top box.
Dish TV vehemently denied the need for imposing fixed retail prices for subscribers, arguing that consumers were compelled to buy STBs if they lived in CAS areas but buying DTH STBs was a choice that the consumer had. If retail price was fixed, it says, it would take away flexibility from the DTH operators and would not be in the interest of consumers. Dish suggested that retail prices should be left to the market forces and the competitive regime will ensure that the consumers will continue to get DTH services at a low rate. It said that DTH operators are currently offering pack of around 100 channels at a rate cheaper than the cable and that they were already giving a huge subsidy to the subscribers on customer premise equipments (or set top boxes).
Reliance was opposed to retail tariff regulation claiming costs of offering DTH service were too high to take such a risk. It said that the subscriber could choose to churn out at any point of time leaving the DTH operator saddled with huge losses on account of non-recovered STBs & recovery and refurbishment costs etc. for the recovered STBs. On fixing of STB rentals, Reliance Big has said that there isnt a need and that in the future, when more types of STBs are offered such as recorder STB and High Definition STB, multiple rental amounts would confuse the customer.
Sun Direct and Smart Digivision felt that a retail ceiling should not be prescribed for DTH and IPTV. Sun believes that fixing retail prices is unnecessary as “there is transparency in service when compared to cable services and consumer has the choice to shift from one operator to another.” Sun, which offers set top boxes for free, said that the tariff for renting and box serving must be a percentage of cost of box and that standardising it was not required.
Zee Turner has expressed that there is reasonable apprehension that DTH Platform owners may form a cartel to fix a higher tariff at consumer level if this is not done and so suggests a cap on the price to be charged by a DTH operator for channel(s) at retail level in terms of percentage of the wholesale price at which the content has been procured.
Only Bharti Airtel has said that retail tariff regulation, as implemented for the telecom sector, could be replicated by DTH operators successfully.
Advertising by DTH Operators
Smart Digivision said that the advertisement code should be uniformly applied for all networks spanning both near VOD (such as Movie on Demand, which is not the same as VOD as it didnt allow pause and rewind) and true VOD services. It added that self-regulation of programming, which applied to broadcasters, should stand for operators too to ensure that VAS be prevented from assuming the role of a traditional TV channel.
Sun Direct has said that responsibility for ads on VOD must be taken by the DTH operator.
Bharti believes advertising by DTH operators can co-exist with ads by broadcasters.