Cable operators and the DTH, direct-to-home operators are set to embark on a major tariff war due to TRAI (Telecom Regulatory Authority of India) hinting at a reduction in the current tariff formula for broadcasters on DTH, which will result in cutting down the DTH bills by half.
Last week there were discussions held between the DTH companies, broadcasters, Cable companies and Trai to discuss the new pricing formula. A directive from Supreme Court has caused Trai to be involved in the pricing revisions as a result of a legal battle between the DTH firms, broadcasters and the cable companies. The new revised tariffs have to be presented at the Supreme Court by Trai before 30th of June, 2010. To chalk out the revised pricing, sources have confirmed that Trai is set to meet again.
Experts have stated that this new pricing will result in cost effective content on the DTH platforms in comparison to the cable operators which will result is a price war between the two competitors. According to the current pricing formula fixed by Trai, what the DTH operators would have to pay to the broadcasters is at the rate of 50 per cent of the tariff fixed for cable homes. However with the new pricing this was set to change and the rate would be fixed at 30 per cent of cable tariffs by Trai.
Hence instead of the current 50 pr cent, the six major DTH operators in India will now have to shell out just 30 per cent of the able tariffs for non CAS homes to the broadcasters. Putting it simply, if the consumer today pays Rs 50 for a cable channel to his cable operator, he will have to pay just Rs 25 to the DTH service provider which is half of Rs 50 as per the current DTH tariffs. However with the new tariff plan the consumer will have to pay just Rs 15 on the DTH platform for the same channel, which is 30 per cent of Rs 50.
This will enable a faster and quicker roll out of the DTH platforms as the monthly bills of close to 25 million DTH homes would reduce by at least half of what it is today. Major DTH players in India like Tata Sky, Reliance Big TV, and Airtel Digital TV are in favor of this reduced tariff. This reduction is the charges will spur a price war between the cable operators and the DTH provides according to the experts.
With an estimated 90 millions subscriber base who generate close to Rs19,000 crore as annual revenues, just Rs 3,500 crore is what reaches the broadcasters due to under –declarations in the Indian Cable market. However when compared to the 25 million plus DTH market which is pegged at over Rs 5,000 crore, 100 percent of the revenue reaches the broadcasters. A leading cable operator from East Delhi has commented “Be it 20 per cent or 30 per cent of cable tariff for DTH platforms, we would demand the same for the cable sector; else consumers will shift to DTH”.
This price reduction is not backed by all the DTH players. One of the senior executives in a leading DTH company has stated “Reducing DTH tariffs will mean loss of revenues due to declining average revenue per user. Trai should look at de-linking DTH content pricing from cable tariffs”. Certain niche broadcasts and sports channels have also pitched for removing the tariff barriers.
No related posts.
Related posts brought to you by Yet Another Related Posts Plugin.
