X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Media: Demystifying the ‘non-CAS’ order… - Views on News from Equitymaster
StockSelect
  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Media: Demystifying the ‘non-CAS’ order…
Oct 5, 2007

The media regulator TRAI (Telecom Regulatory Authority of India) has passed a new tariff order for capping the cable TV rates in non-CAS areas. The non CAS areas constitute the entire country except select zones in the metros of Delhi, Mumbai and Kolkata and all of Chennai. The tariff order
The tariff cap has been fixed as per status of the city, which depends on its population and income level. All cities have been categorised into A-1, A, B-1, B-2 and ‘others’ depending on these two parameters. The tariffs, which will come into effect from December 1, 2007, range from a minimum of Rs 77 (irrespective of the city) for only free-to-air channels (FTA) to a maximum of Rs 260 per month in A-1 and A-class cities, where the subscriber will get a minimum of 30 FTA and over 45 pay channels. There are a total 13 cities in ‘A1’ and ‘A’ class, and 62 cities in ‘B1’ and ‘B2’class.

Tariff slabs for the different classes of cities:
No. of channels ‘A-1’ & ‘A’
class cities
‘B-1’ & ‘B-2’
class cities
Others
Only free to air channels (min.30 FTA channels) Rs. 77 Rs. 77 Rs. 77
Minimum 30 FTA channels plus upto 20 pay channels Rs. 160 Rs. 140 Rs. 130
Minimum 30 FTA channels plus more than 20 and upto 30 pay channels Rs. 200 Rs. 170 Rs. 160
Minimum 30 FTA channels plus more than 30 and upto 45 pay channels Rs. 235 Rs 200 Rs.185
Minimum 30 FTA channels plus more than 45 pay channels Rs. 260 Rs. 220 Rs. 200
Source: TRAI website

Tariff in non-CAS areas cheaper
As per TRAI’s order for CAS areas, the local cable operator is offering minimum of 30 Free to Air (FTA) channels at Rs 77 per month. Besides, there is a ceiling on the maximum retail price of any pay channel, whether new or existing, of Rs 5 per channel per subscriber per month (excluding taxes). However the cable tariff in non CAS areas is cheaper than in the CAS areas. For instance; if a subscriber in a non CAS area living in ‘A1’ class city opts for 28 FTA channels he pays Rs 200. However a subscriber opting for the same number of channels in a CAS area has to pay Rs 217. This difference would be greater if one compared the cable tariffs of CAS area and cable tariff of ‘others’ class city in non – CAS area.

What’s in store for…

  • Broadcasters: The cable tariff cap imposed by TRAI may not bode well for the broadcasters, particularly the niche channels such as TV 18, and sports channels such as Star Sports, ESPN. We believe that viewers interested in financial news would be willing to pay much more than Rs 5 per month for CNBC TV 18 as their monthly expenditure on financial newspapers may be greater than Rs 50. The niche channels rely more on subscription revenues for their survival as they get less advertisement revenues. If CAS is not rolled out as per schedule or the cap on the subscription price of a pay channel is not lifted soon then the plans of some broadcasters of launching niche channels may get adversely affected. There would also be a dent in the subscription revenues of the general entertainment channels making them more susceptible to any slow down in economic growth as they would be relying more on advertisement revenues.

  • Content providers: The broadcasters subscription revenues would reduce limiting their ability to spend on content. Some niche channels may defer their entry plans reducing the demand for content. Thus this order does not bode well for the content providers such as Balaji Telefilms and Creative Eye.

  • MSOs: The Multi System Operators (MSOs) offer analog and digital cable services in association with local cable operators. While the cap would, on one hand, impact the revenues of the MSOs, on the other hand, they would also have to pay less to the broadcasters. Lower tariffs would help in increasing the penetration of cable television especially in smaller towns.

  • DTH operators: MSO’s would offer cable services at lower rates putting pressure on the DTH operators to do the same. DTH operators customer acquisition costs are already very high and it is a capital intensive business having a long gestation period. If the tariff order is not revised upwards in the near future then it would have a negative impact on the subscriber additions and the ARPU of the DTH operators.

  • Viewers: The viewer’s monthly expenditure on cable would reduce. However, in non-CAS areas they have limited power to choose the channels they wish to view. Further, TRAI has also directed the broadcasters to provide all their channels on a la carte basis and declare the la carte rates to the MSOs) /cable operators. Bouquets of channels can also be offered. But to prevent perverse pricing of bouquets and to make the a-la-carte choice effective, it has been provided that the bouquet rates and a la carte rates of channels forming part of a bouquet should satisfy the following conditions; (1) Sum of a la carte rates (rate of a single channel) not to exceed 1.5 times the bouquet rate. (2) A la carte rate of each channel cannot be more than three times the average rate of the pay channel in the bouquet.

The above measure would enable the MSO / cable operators to choose channels in tune with the liking of their subscribers in the localities being served them, and consequently to reduce the burden of cable charges on the subscribers on account of unwanted channels.

Thus the TRAI order is not envisaged to be very favourable to the broadcasters, content providers and DTH operators. Viewers, however, would be the beneficiaries from this order as their cable expenses would reduce and they would have better power to choose the channels they wish to view.

To Read the Full Story, Subscribe or Sign In


Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE TECK


Feb 23, 2018 (Close)

S&P BSE TECK 5-YR ANALYSIS

COMPARE COMPANY

MARKET STATS