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Sunday, October 25, 2020

Explained Ideas: What ails with TRAI’s New Tariff Order

Broadcasting sector needs regulation to facilitate orderly growth, not the management of complex relationships among market participants, writes Uday Kumar Varma.

By: Explained Desk | New Delhi | Updated: October 4, 2020 8:06:24 am
New Tariff Order, TRAI New Tariff Order, TV ad revenues, TV channel pricing, Indian ExpressThere are over 900 channels, 1,600 DPOs, four DTH operators, one HITS operator and thousands of last-mile cable operators representing a large, extensive and intricate web. (File Photo)

In January 2020, broadcasters approached the Bombay High Court after the Telecommunications Regulatory Authority of India (TRAI) notified an amended New Regulatory Framework, which includes a New Tariff Order (NTO) for the sector. The broadcasters contended, inter alia, that because of TRAI’s prescriptive channel pricing rules outlined in the NTO, they are unable to earn revenue from consumers and have to rely on advertising revenue, affecting the quality of the content they produce.

In the next few weeks, the Court is expected to deliver a judgment which will hopefully put an end to this issue of channel pricing. However, this case is only one of the many legal webs that tie up India’s broadcasting sector.

“The issue before us is not the efficacy of TRAI or its regulations. It is to understand the expected role of a regulator in a sector as complex and dynamic as broadcasting,” writes Uday Kumar Varma, former Secretary, Ministry of Information and Broadcasting and Ministry of MSME.

The broadcasting sector in India, in terms of its composition and structure, is complex by any definition. The interdependence of its constituents is deep, pervasive and to a large extent, symbiotic. There are four ways to view a programme on TV — Cable, DTH, HITS and IPTV.

There are at least three major actors in the supply chain — content creators, broadcasters and distribution-plat- form owners (DPOs), among them cable operators.

“The interrelationship among the constituents, whether commercial or strategic, is both dynamic and complicated,” he states.

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There are over 900 channels, 1,600 DPOs, four DTH operators, one HITS operator and thousands of last-mile cable operators representing a large, extensive and intricate web.

The legal challenges to this NTO, as well as previous challenges to regulations, demonstrate that if the regulator chooses to “manage” every aspect of the sector then the consequences will be unpredictable and disruptive.

“The latest NTO is well intentioned as it seeks to place an ‘affordable’ tariff regime. However, the practical difficulties in its implementation and a disregard for the crucial interplays within the broadcasting ecosystem nullifies this objective,” argues Varma.

Also read | Explained Ideas: Why the judiciary must intervene in the Hathras case

Regulations and policies are never static and must respond to ever-changing objectives and compulsions.

The question remains why TRAI is not considering approaches apart from issuing tariff orders, such as giving freedom to the industry to price their channels as per market forces.

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