Have broadcasters & TRAI finally made peace over NTO 2.0?

Pay TV broadcasters have shared an uneasy relationship with the Telecom Regulatory Authority of India (TRAI) ever since the latter became the regulator for the broadcasting sector. It got trickier after TRAI amended the New Tariff Order (NTO) by placing additional restrictions on bouquet formation. The amended NTO or NTO 2.0, as it is popularly known, was notified on 1st January 2020.

Cut to February 2022, the Indian Broadcasting and Digital Foundation's (IBDF) decision to withdraw its appeal against NTO 2.0 signals a thaw in the relationship between broadcasters and the sector regulator. The development also signifies that the broadcasters have placed their trust in TRAI to take care of their concerns about NTO 2.0.

IBDF had moved an application on 14th February before the Supreme Court, seeking permission to withdraw the pending legal challenge to the regulatory framework for the broadcasting sector, including the contentious NTO 2.0 regime. The Supreme Court has allowed the withdrawal of the pending challenge while keeping it open for the broadcasters to mount a legal challenge at a future date should their concerns remain unaddressed. IBDF's application has been supported by major broadcasters who had separately challenged NTO 2.0.

According to industry experts, the broadcasters and TRAI have been holding backroom parleys to hammer out a solution as the implementation of NTO 2.0 in its current form would have hurt all the players in the ecosystem. The consumers would have been the worst hit in NTO 2.0 due to the likely inflation in monthly TV subscription bills caused by the removal of popular entertainment and sports channels from the broadcaster bouquets.

The back-to-back extension of deadlines was being seen by many in the industry as an attempt by TRAI to buy more time for fixing the concerns against NTO 2.0. The decision by broadcasters like Star India, Zee, Sony, Viacom18 and Sun TV Network to offer driver entertainment and sports only on à la carte basis had put paid to TRAI's plans of bringing down prices. NTO had led to an increase in prices of pay TV services due to the addition of Network Capacity Fee (NCF). Subsequently, TRAI amended NTO to address "aberrations" in the new framework.

Now with IBDF withdrawing its petition, the stage is set for TRAI to come out with a consultation paper on the tariff order and the interconnection regulation.

Industry sources say the consultation paper is TRAI's attempt to placate the broadcasters who have seen a stagnation in subscription revenue growth due to a freeze in pricing. "The withdrawal of appeal shows that IBDF and TRAI have reached some kind of understanding. TRAI will most likely try to care for their concerns around the reduction in price cap. The reinstatement of the earlier MRP cap of Rs 19 looks like a high possibility. The consultation paper is just a procedure to achieve that," an industry source said on the condition of anonymity.

However, a TRAI official refuted this claim contending that the regulator will arrive at a decision only after seeking the views of all the stakeholders. He also said that TRAI will do what was best for the broadcasting sector as a whole. "TRAI's stand has remained consistent that as a regulator we stand for orderly growth of the sector while protecting the interest of the consumers as well as service providers. TRAI has consistently maintained that, if the situation so demands, it is open to review the regulations or tariff," the official said.

While noting that TRAI would soon take a call on the consultation paper, the official said the regulator's official position remains that NTO 2.0 will be implemented. "As things stand today, we are implementing NTO 2.0. Consumers will get new packages with effect from 1st June. We pushed the deadline to June due to the increase in Covid-19 cases. The authority will take a call on issuing a consultation paper if considered expedient. Preparation of a consultation paper requires appropriate research and takes time."

As per TRAI's implementation plan, broadcasters have time till 28th February to amend their RIOs. TRAI has also formed a committee with representation from broadcasters and DPOs, to look into the implementation of NTO 2.0. "We have been holding meetings with different associations and also consumer groups to understand and address the issues for implementing NTO 2.0," the official said.

A veteran executive with a leading broadcasting company said the broadcasters have exhibited trust in TRAI by withdrawing the petitions. "IBDF has reposed its faith in TRAI by withdrawing the petition as TRAI is expected to issue a consultation paper. This shows that broadcasters have more confidence in the present TRAI dispensation than the previous one. TRAI needs to carry out an impact analysis of NTO before deciding on amending the regulations. TRAI should do what is best for the broadcasting sector rather than trying to please everyone in the ecosystem," he stated.

TRAI had earlier asked the stakeholders to send a list of issues that concerns them with respect to NTO 2.0 implementation. The distribution platform operators (DPOs) have requested the TRAI to remove bottlenecks around NTO 2.0 in two phases. In the first phase, NTO 2.0 can be implemented with slight modifications while in the second phase a detailed consultation process must be undertaken to take care of all the key issues concerning the DPOs.