The Hindu Business Line : CAS crunch

What is good for consumers is not often perceived as good for service providers. Some television pay channels want to contest in court the Telecom Regulatory Authority of India order that says they cannot charge their subscribers more than Rs 5 each. This disagreement may delay further the implementation of the Conditional Access System in Delhi, Mumbai and Kolkata that promises to grant viewers the freedom to pay for only the channels they want to watch, rather than for the entire spectrum of channels, whether good, bad or simply not watchable. What TRAI has mandated is a great deal for viewers.

When CAS was introduced in Chennai three years ago, it gifted viewers the freedom to sift the pay channels from the free. That turned out to be particularly valuable: Less than ten per cent of households opted to buy into a pay channel. The others satisfied themselves with the free-to-air channels and considerably reduced their monthly cable subscriptions. Of course, some of them might have wished to have a peek at a few of the pay channels, especially the ones showing cricket, but deft pricing and bundling of channels by the broadcasters made a la carte pickings expensive. The latest TRAI order plugs that loophole; every channel must be available a la carte at no more than Rs 5. Consumer choice has been guaranteed at a low, low price.

Yet, broadcasters have a point when they cry hoarse about the uniform price ceiling, even if one does not buy their argument that there is no need for TRAI to meddle with the pricing. Costs and quality of production do vary from channel to channel, and substantially too, and therefore lumping them all into the Rs 5 box may do injustice to the channels that are expensive to produce, such as those that pay enormous sums to gain rights to broadcast cricket. But broadcasters would do well to accept TRAI's strategic thinking: Unless CAS is perceived by the majority of viewers to be cost-effective, few would opt for it and then the entire System would come crashing down. Only such a low price per channel would persuade a large population of viewers switch to the digital box.

In that sense TRAI has done a good turn to the pay channels by making them look affordable and acceptable to most viewers. With such pricing they stand a good chance of retaining a large proportion of their current audience, on whose strength they sustain large advertising revenues. They must realise that high list prices can turn viewers off as they did in Chennai. Losing viewership in one city was something many channels have taken in their stride, but they cannot afford to lose it in all the four metros. It is a crunch time for many a channel. Do they continue to remain pay, take a chance with the newly-empowered audience and put their advertising revenue stream at risk or quietly turn free-to-air, become freely available and trust their advertisers instead?