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Media: Demystifying the 'DTH' order... - Views on News from Equitymaster
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  • Sep 6, 2007

    Media: Demystifying the 'DTH' order...

    In the previous article we had explained the TRAI guidelines for the rollout of CAS services and their impact on the various stakeholders. In this article we will explain the TRAI guidelines for the rollout of DTH services and its impact on the DTH operators, broadcasters and the viewers.

    Telecom Regulatory Authority of India (TRAI), the regulator for the media sector has issued a set of regulations pertaining to DTH broadcasting services. At present DTH services are offered by DD Direct, Dish TV, Tata Sky. Reliance ADAG and Bharti group will also be launching DTH services in the near future. The new regulation aims to resolve the ongoing tussle between the broadcaster and DTH operator where the latter had been protesting against taking less popular, even flop channels along with the hit ones in a bouquet. The interconnection disputes between the DTH operators and broadcasters have delayed the rolling out of the DTH service.

    What's in it for...
    Broadcasters: As per the new regulation, all broadcasters will compulsorily offer all their channels on an individual basis to DTH operators. Additionally, the broadcasters may also offer bouquets, but they will not compel any DTH operator to include the entire bouquet in any package being offered by them to the viewers. TRAI has refused to specify the tariff cap for pay channels. At the same time, however, it has introduced a series of checks to ensure that the broadcasters do not overcharge for individual channels and also for bouquets.

    The pricing power of the broadcasters will thus be curtailed limiting their ability to spend on content. This could intensify the struggle for survival of less performing channels, or the new channels that have been piggy-riding the popular channels in the bouquet offered by the broadcaster. Besides, the increased penetration of DTH services augurs well for the growth of popular niche channels such as TV18 as an individual channel can be offered at a higher price in the case of DTH than in the case of CAS. The broadcasters have also been asked to publish within 90 days Reference Interconnect Offer (RIO) for the DTH operators, containing technical and commercial terms for interconnection. The RIO will be made available on the broadcaster's website and to the DTH operators. The RIO will clearly indicate the rates for the channels and bouquets, details of discounts and payment terms. This will lead to more transparency in the sector.

    DTH operators: In order to make the service appealing enough for a cable home to switch to DTH, the operators have to carry all the popular content. However, if they passed on the entire bouquet costs, the service would become expensive compared to cable. Further, with the new regulation in place, DTH operators can carry only the popular channels and refuse to carry the unpopular channels that are a part of the bouquet. Thus the DTH players will be able to offer DTH services at lower rates helping them to compete effectively with the MSO's such as WWIL and the local cable operators who offer CAS services. This will help in increasing the penetration of the DTH services. It will aid the spread of satellite television to parts not serviced by the cable industry for reasons of viability.

    The rollout of DTH services was being delayed due to the frequent disputes on pricing between the DTH operators and the broadcasters. However, now if a DTH operator makes a request to a broadcaster to enter into an interconnection agreement based on the published RIO, then the broadcaster will be obliged to do so within 45 days of the request. This will enable the DTH operators to rollout their services faster. Also, TRAI's decision to put an end to bundling of television channels by broadcasters will make the service truly addressable.

    Customers: DTH, in line with CAS will enable the customers to choose and pay for what they want and accordingly manage their monthly costs. Alternatively, for the same allocation the viewer can get a menu of channels of his choice, including many niche channels in the wings that are waiting for working addressability. TRAI's directive will enable DTH operators to offer more meaningful competition to cable resulting in more choice for television viewers.

    The new guidelines will offer more choice to the viewers and help in making DTH services more affordable. DTH operators will be able to compete effectively with the MSO's, which will lead to an increase in the penetration of satellite television even in remote areas, which are not addressed by cable television due to unviability of laying a cable network. Popular niche channels will gain financially, while channels that are currently piggy backing on popular channels will find it difficult to sustain their operations. These guidelines will thus help in the orderly growth of the television broadcasting and distribution industry.



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