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May 20, 2008 09:33 IST
The Telecom Regulatory Authority of India, which is also the broadcast regulator, may soon ask all pay-channel broadcasters on direct-to-home platforms to reduce prices to half the rates prevalent in areas where conditional access system has not been implemented (about 70 million cable homes).
This will hit the subscription revenue of DTH players like Star TV, Sun Network and ESPN-Star Sports as they will be able to charge much less for selling signals to DTH players. But this will mean 5-8 per cent lower fees for DTH subscribers.
Trai had last month issued an advisory for a cut in the prices of all pay channels on the DTH platform in line with a TDSAT (appellate for broadcasters and telecom operators) order of 2006. The order asks broadcasters to reduce prices of channels on the DTH platform to 50 per cent of what they charge in non-CAS areas.
While broadcasters like Zee TV, Sony TV, Discovery, Sahara and INX Media have abided by the order, others like ESPN-Star Sports, Sun Network and Star TV India have not, sources say. The leading sports broadcaster has a three-channel bouquet (ESPN, Star Sports and Star Cricket) and its per subscriber bouquet rate for cable homes is about Rs 45.
However, instead of charging Rs 22 or less from DTH players, ESPN is charging Rs 50 per subscriber for just two channels, sources say. Leading regional broadcaster Sun Network is also charging more, sources say. Its bouquet rates for cable homes are said to be Rs 114 per subscriber. It is charging Rs 83 per subscriber from DTH operators.
"ESPN has said it will reduce rates in line with the Trai suggestion if new DTH players can ensure that they will rope in at least 2.5 million DTH subscribers within a year of their commercial launch. Otherwise, it wants 40:60 division of the subscription revenue of new DTH service providers, but at prevailing cable rates," said an industry source.
Because of this, Trai is looking at bringing a tariff control order making it mandatory for broadcasters to adhere to the Trai formula. "Trai has powers to issue any directive on tariff or pricing," said an industry source close to the development.
According to Trai's pricing formula, pay channels can charge DTH operators only up to 50 per cent of the per subscriber rates they charge from cable operators in the rest of the country (non-CAS homes). This means that if Star TV's bouquet of 14 channels is priced at Rs 88 in non-CAS areas, it can charge only Rs 44 or less from DTH operators like Tata Sky, Dish TV and new entrants like Big TV, Bharti, Sun Direct and Videocon [Get Quote].
"As DTH is a digital platform, there is 100 per cent collection of fees, while in the cable sector, the under-declaration (cable operators declare lower subscriber numbers) is 25-35 per cent. Therefore, even at lower subscriber base, broadcasters earn more from DTH companies than from cable homes," said an industry source.
"The Trai directive will help bring parity in rates," said a senior executive of Tata Sky, India's second-largest DTH company.
Trai may order lower DTH rates
The Telecom Regulatory Authority of India, which is also the broadcast regulator, may soon ask all pay-channel broadcasters on direct-to-home platforms to reduce prices to half the rates prevalent in areas where conditional access system has not been implemented (about 70 million cable homes).
This will hit the subscription revenue of DTH players like Star TV, Sun Network and ESPN-Star Sports as they will be able to charge much less for selling signals to DTH players. But this will mean 5-8 per cent lower fees for DTH subscribers.
Trai had last month issued an advisory for a cut in the prices of all pay channels on the DTH platform in line with a TDSAT (appellate for broadcasters and telecom operators) order of 2006. The order asks broadcasters to reduce prices of channels on the DTH platform to 50 per cent of what they charge in non-CAS areas.
While broadcasters like Zee TV, Sony TV, Discovery, Sahara and INX Media have abided by the order, others like ESPN-Star Sports, Sun Network and Star TV India have not, sources say. The leading sports broadcaster has a three-channel bouquet (ESPN, Star Sports and Star Cricket) and its per subscriber bouquet rate for cable homes is about Rs 45.
However, instead of charging Rs 22 or less from DTH players, ESPN is charging Rs 50 per subscriber for just two channels, sources say. Leading regional broadcaster Sun Network is also charging more, sources say. Its bouquet rates for cable homes are said to be Rs 114 per subscriber. It is charging Rs 83 per subscriber from DTH operators.
"ESPN has said it will reduce rates in line with the Trai suggestion if new DTH players can ensure that they will rope in at least 2.5 million DTH subscribers within a year of their commercial launch. Otherwise, it wants 40:60 division of the subscription revenue of new DTH service providers, but at prevailing cable rates," said an industry source.
Because of this, Trai is looking at bringing a tariff control order making it mandatory for broadcasters to adhere to the Trai formula. "Trai has powers to issue any directive on tariff or pricing," said an industry source close to the development.
According to Trai's pricing formula, pay channels can charge DTH operators only up to 50 per cent of the per subscriber rates they charge from cable operators in the rest of the country (non-CAS homes). This means that if Star TV's bouquet of 14 channels is priced at Rs 88 in non-CAS areas, it can charge only Rs 44 or less from DTH operators like Tata Sky, Dish TV and new entrants like Big TV, Bharti, Sun Direct and Videocon [Get Quote].
"As DTH is a digital platform, there is 100 per cent collection of fees, while in the cable sector, the under-declaration (cable operators declare lower subscriber numbers) is 25-35 per cent. Therefore, even at lower subscriber base, broadcasters earn more from DTH companies than from cable homes," said an industry source.
"The Trai directive will help bring parity in rates," said a senior executive of Tata Sky, India's second-largest DTH company.
Trai may order lower DTH rates
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..If they can add it then it will be good for us..As ESPN agrees to charge according to the latest TRAI rules.