Is it time for TRAI and broadcasters to start a new innings?

Beneath all the beautiful narratives that Kabir Khan’s ‘83’ delivers – of unflinching hope and love for the nation, team spirit and learning from failure – is a sublime story on the power of an effective regulator. The poignant biopic, on a resilient Kapil Dev leading an underdog Indian cricket team to lift the 1983 World Cup by defeating the invincible West Indies team, is a marvellous illustration of leadership with forbearance.

Dev, as a young captain, teaches us that it is possible to govern without micromanagement or excessive authority. For one, he is aware of his strengths but more importantly, of his weaknesses – including his imperfect English. He is mindful of his squad’s cultural differences, varying temperaments and playing styles. He is equally conscious of his own position amongst more experienced players. He fires up his team’s competitive spirit but teaches them to play fair. He takes calculated bets but does not shy away from making difficult decisions to create a level-playing field. In all, Dev knew just how much control to exercise and how much autonomy to grant to thrive not just as a team but also individually. In doing so, Dev built a team that trusted him and flourished under his guidance.

Lessons offered by ‘83’ are particularly relevant to the Rs.68,500-crore broadcasting industry, considering the current relationship between the regulatory authority TRAI and broadcasters. “There seems to be a level of distrust,” says Abhishek Malhotra, Managing Partner, TMT Law Practice. He adds that this trust deficit needs to be bridged.

Where to start from, however, can be daunting when a lot of water has flowed under the bridge.

The unanimous opinion is the TRAI needs to, first and foremost, step back and re-evaluate its role as the custodian of the broadcasting industry. “The TRAI needs to look at this not as a contesting party, but as an independent and objective regulator. It is time the TRAI stops micromanaging the sector in the name of consumer interest,” says Malhotra. “The TRAI’s mandate is to sufficiently balance the interests of all stakeholders, not just those of consumers. And it has to do so by allowing the sector to play to market forces so that competition is sustained, talent is nurtured and creativity prospers alongside necessary checks and balances.”

“Even as an accidental regulator brought in to oversee the broadcasting & cable services sector on a temporary basis, the TRAI began with a heavy hand. Since 2004, the TRAI has prescribed rules to control the very first line of relationship, that is, between the broadcasters and service operators through stringent price caps and structures,” says Paritosh Joshi, Principal, Provocateur Advisory and former CEO, STAR CJ Network India.

A highly-placed legal expert, who did not wish to be named, says, “The reason why the TRAI has been unsuccessful in fixing prices of TV content since 2004 is because it has been treated as a commodity. The price of sugar or cement can be uniform across manufacturers because similar infrastructure is used to manufacture it. TV, however, is not a commodity; it is related to speech and creative expression which cannot be quantified. This one-size-fits-all approach is the biggest bane of the industry.”

Now if the new dispensation at TRAI’s helm wants to begin the process of rebuilding trust with broadcasters, Joshi says, it has to start with the promise dispensed by the TRAI’s first Chairman Pradip Baijal – of a light-touch regulatory approach that allows the hyper-competitive market to self-determine its prices basis demand and supply. Baijal’s far-sighted wisdom also took cognizance of the fact that India is already a highly affordable market, where TV consumers pay a fourth of that in the U.K., USA or Thailand.

That’s why the New Tariff Order (NTO), even with the best of intentions to make TV prices “affordable”, has done a great disservice to all stakeholders, including the one entity the TRAI has been batting for – the end consumer. For a regulation that aimed at giving consumers the choice to watch what it wants and pay only for those, it has done exactly the opposite. With time-pressed TV users unable to make sense of this labyrinth of à la carte channels and packages, cable bills rising 50-70%, and poor service by last-mile operators, TV users are no longer seeing value in pay-TV. This has set in motion significant cord-cutting and rampant migration to OTTs at the top-end and to DD Free Dish at the bottom-end.

The latest round of price hikes by broadcasters, effective December 1, is expected to expedite this trend. In October, leading broadcasters including Star & Disney India, Sony Pictures Networks India, Zee Entertainment and Viacom 18 raised prices of their flagship channels to between Rs 15-30, effectively taking them out of bouquets. Under amendments proposed to the NTO in 2020 – the NTO 2.0 – the TRAI capped channel prices at Rs 12/- if it wants to be part of a bouquet, a price that is “arbitrary” and “unviable” for broadcasters. In the case of bouquets, a maximum discount of 33% of the total sum of prices of à la carte channels in the bouquet, is permitted.

While the NTO 2.0 is being contested by broadcasters in the Supreme Court, what could help resolve the current stalemate is the initiation of a “dialogue of disclosure” on both sides, says Malhotra.

“The TRAI needs a clear roadmap with a definite time horizon. The TRAI could choose to state upfront that it would like to regulate tariffs for, let’s say, the next 5 years. To do this, the broadcasters and the regulator will need to walk halfway through on the NTO 2.0. The TRAI can either make an honest admission that it does not have the wherewithal to undertake research and ask broadcasters to disclose their data on viable price tariffs, or it needs to present its own data and subject it to broadcasters’ scrutiny. This will need to be a two-way process of trust.”

Media and corporate law advocate Ashok Mansukhani concurs on the need for “constructive dialogue” to break the ice over the NTO. “To build trust, The TRAI needs to hold a series of discussions with Broadcasters/MSOs/DTH Operators/Cable Operators and Customer organisations to try and arrive at a compromise solution keeping customer viewpoint paramount in terms of the TRAI Preamble under the TRAI Act 1997.”

Mansukhani also points out that broadcasters need to create a pan-industry body to speak to and interact with the regulator and government in one voice, a viewpoint ratified by several others including Joshi from Provocateur Advisory.

Given that tariff regulation is the biggest bone of contention, Joshi believes it’s time a democratic time-bound exercise on data gathering is undertaken by all stakeholders.

“Instead of open house sessions, the TRAI needs to bring together the finest intellectuals representing various stakeholder groups including IBDF, AIDCF, COFI, NBA and form a Joint Technical Committee (JTC). The JTC needs to engage a quality Research Service Provider (RSP), fund the research and evaluate it. This data should be made public and subject to the most stringent levels of scrutiny under the RTI. This exercise should cost between Rs.15-20 crore,” says Joshi. “An equitable roundtable will ensure nobody’s motivation is suspect and policy decisions are premised on this qualitative data alone and are not stemming from dogma, prejudice or hostility.”

This exercise in data gathering should help the TRAI in reducing barriers for the heavily regulated cable TV sector, giving it much-needed relief to compete freely with OTT and DD FreeDish platforms. As competitive intensity between reigning platforms increases, it will give consumers real choice in terms of content and prices.

“India is at 125 million pay TV users, which has the potential to grow to 175 million users, but the uncertainty over regulation looms large. Convergence is going to happen very fast and connected TVs will soon be a trend. While niche channel content has moved online behind the paywall, in the future, at least 10% of advertisement revenues will come from connected TVs. In a situation like this, cable TV cannot be subjected to rules different from those governing DD Free Dish and OTT. Deregulating cable TV is the way to go,” said Mihir Shah, Vice President, Media Partners Asia.

Shah also points out that media rights of upcoming marquee properties such as the Indian Premier League (IPL), International Cricket Council (ICC), and possibly the Board of Control for Cricket in India (BCCI) – key revenue drivers for the economy – are being closely watched by not just broadcasting companies but also tech giants with deep pockets such as Amazon.

“For broadcasters to be able to bid for sports broadcasting rights, they need a clear vision on revenues from subscriptions and advertisements,” he said.

The legal expert quoted earlier opines that the principle of “access to a signal seeker on a non-discriminatory basis” needs to be applied across the industry to create a level playing field. “TRAI must acknowledge that broadcasters have the right to price and offer their content basis their cost and revenue models. Thereafter, broadcasters must offer their content on a non-discriminatory basis to similarly-placed distribution platforms; the terms must be non-preferential. This will automatically ensure a level-playing field and will encourage competition and investment in the industry.”

While deregulating the sector remains the central theme, a razor-sharp focus on the last mile is equally important to restoring trust between broadcasters and TRAI. “The dismal quality of standards enforced by MSOs and cable operators, underreporting of subscribers and revenues and rampant piracy has greatly harmed the sector. The TRAI needs to overhaul and diligently enforce its mechanism to monitor the last mile,” says Vivan Sharan, Partner, Koan Advisory.

Fortunately, industry watchers say the TRAI’s new chairman PD Vaghela and Secretary Varthakavi Raghunandan are forthcoming in their approach, giving reason to believe the process of rebuilding trust has intent at both ends.

Time now to begin a new innings!