Is forbearance the lifeline that can save India's struggling broadcast industry?

TRAI(Telecom Regulatory Authority of India)’s consultation paper on National Broadcasting Policy-2024 aimed at promoting planned development and growth of the broadcasting sector in the country have a host of issues highlighted. The issues range from making India a content hub to growth of VFX and even promoting gaming. However, the missing piece in this regulatory conundrum is the issue of forbearance and stakeholders are pushing for it.

According to them freedom to set prices to is the only way forward to encourage a level playing field in the dynamic broadcast ecosystem.The call for a lighter regulatory touch in broadcasting isn't just from broadcasters. The DTH players and DPOs are also united on this front.

The current system is riddled with complexities said stakeholders.

“The year 2017-18 marked a turning point for Indian broadcasting with the introduction of the National Tariff Order (NTO). This move aimed to improve service quality and address concerns about rising prices. However, three versions of the NTO later, stakeholders across the board - broadcasters, distributors, and consumers - remain unhappy,” said a stakeholder on conditions of anonymity.

Here’s why- stakeholders are suffocated with regulatory overload.

“The NTO, with its various iterations, has created a complex web of regulations. From bundling options to free-to-air channels, distributors face a constant regulatory headache. This level of micromanagement is arguably unmatched in other sectors, including telecom,” they said.

On top of that there is the DD Free Dish dilemma for broadcasters.

On one hand, they feel the pressure to participate in expensive auctions to be included on the government’s DD Free Dish platform and on the other they bundle the same channels for pay TV.

Consumers on the other hand are left with the choice between paying for better quality on pay TV or enduring a subpar experience with free DD Free Dish.

So who wins?

Stakeholders are on the same page with the answer: no one.

The whole idea of an getting rid of forbearance before NTO was to control channel pricing from the broadcaster’s end.

But do broadcasters really have the liberty to push prices?

“We are in a hyper competitive market, we cannot increase prices as per our whims” explained a broadcaster who did not want to be named.

“The broadcasting business works on a balancing act where the advertising revenue and subscription revenue have a 70:30 ration. But if channel prices skyrocket, we lose subscriber and that leads to drop in TRP and ultimately a drop in ad revenues,” they added.

Broadcasters understand this tightrope walk all too well and that is primarily why they are opposing price fixing by TRAI.

They argue that the market, with its 200+ players, is already fiercely competitive, unlike the telecom sector with a handful of operators.

“TRAI allows forbearance for telecom where there are only a handful operators. So, why the double standard for broadcasters under the same regulatory body,” they questioned.

The All India Digital Cable Federation (AIDCF) also joins the chorus for forbearance.

Manoj Chhangani, secretary general and head public policy at AIDCF, argues that the current regulations create an uneven playing field, particularly for DPOs (Distribution Platform Operators).

According to Chhangani there are two key issues. Fixed Network Capacity Fee (NCF) and Carriage Fee.

“Both NCF and carriage fee capping haven’t been adjusted since 2017, failing to account for inflation or market changes. This rigidity has lead to loss of revenues for DPOs are across board. By advocating for forbearance, AIDCF hopes to achieve a more flexible and market-driven approach to pricing, ensuring a level playing field and preventing revenue losses for DPOs,” he said.

Another broadcast industry veteran Rajiv Khattar had a slightly different take on it. According to him forbearance is good but if they regulatory body feels it would create unregulated price surge they can always introduce ‘controlled forbearance’.

“This will make sure that there is no excessive control but broadcasters can continue to price their channels the way they want to but without hurting the consumers’ pocket,” he said.

On the other hand, while stakeholders in the broadcasting sector are united in their call for 'forbearance' from TRAI, the Ministry of Information & Broadcasting (MIB) takes a different approach. The proposed Broadcast Service Regulation Bill (BSRB) aims to level the playing field by bringing OTT platforms under price regulation.

However, stakeholders are hoping MIB avoids repeating the mistakes they believe TRAI made with TV channel pricing, which many blame for the current decline in the sector. Everyone involved is keen to prevent a similar scenario from playing out in the OTT space.

The big question remains. Can the Indian broadcasting industry find a regulatory sweet spot that fosters healthy competition and benefit stakeholder across board? Be it the viewers, broadcasters or distributors.