The Telecom Regulatory Authority of India's proposal on television tariffs is well intentioned but marked with uncertainties and risks, according to Edelweiss Securities Ltd.
TRAI has proposed a monthly rental of Rs 130 per set top box for 100 standard definition channels, in its draft tariff order on Wednesday.
Edelweiss said the implementation of this order will take time as many stake holders may seek legal recourse against certain provisions in the draft. They expect the biggest hurdle in the implementation to come from local cable operators.
In the draft order, TRAI says TV channel distributors can form bouquets only from a la carte channels of broadcasters. However, the retail price of such a bouquet of pay channels will not be less than 85 percent of the sum of maximum retail price of these channels forming the bouquet.
Consumers may still end up choosing a package due to lack of awareness about a-la-carte channels, according to Edelweiss.
Consumers may still prefer to choose packages due to low awareness and ease/inertia. Distributors will have to come up with a standard package for consumers, which will provide all popular channels.Edelweiss Research Report
Carriage Fee Clarity
The report further states that TRAI's order lacks clarity over carriage fees and placement revenues. It also highlights the issues that may arise via LCOs as well as multi-system operators.
There is no clarity on carriage fee and placement revenue. However, we expect distributors to charge carriage revenue to broadcasters for carrying free-to-air channels in the basic pack. There is no discussion on sharing between MSOs and LCOs. In case of MSOs, unless prepaid billing starts, we do not expect fair share of revenue for the MSOs from the LCOs.Edelweiss Research Report
Long-Term Positive?
Despite the flaws, Edelweiss expects a jump in monetization from premium channels and a rise in revenue from Phase III and Phase IV markets.
However, the lowest package price of a DTH service, which is currently at Rs 99, may go up to Rs 130, according to the report.
Also Read: How Much Should Consumers Pay For 100 Television Channels? TRAI's Asking
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