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Yes, but a small step for DTH industry
The direct-to-home (DTH) television segment added 10 million customers last year, as many as it did in its first five years, expanding its reach to 24 million homes, of the total 130 million television homes today. Rural areas account for a growing share of DTH customers. Although TRAI has recognised DTH's role in increasing digitalisation with addressability, its recent Telecom (Broadcasting and Cable) Services tariff order is a small step in the right direction.

The DTH business remains unviable in the absence of a level playing field vis-a-vis analogue cable service due to the content cost and the high incidence of taxes. TRAI has acknowledged that the wholesale tariff for a DTH operator is 2.47 times that of the non-CAS cable tariff, arising out of rampant under-declaration and non-transparency.

As a result of this non-transparency by the cable segment for years, it seems the broadcasters have adjusted their wholesale tariff to accommodate this high incidence of under-declaration. Hence, it has now become an issue of what gets corrected first: the tariff construct or the extent of declaration. Today, wholesale tariffs from broadcasters for all channels comes to nearly Rs 1,400, while the consumer is unwilling to pay more than Rs 150-250.

Obviously, the model is highly unviable for the incumbent cable segment that continues to under-declare its subscriber base to correct the fundamental anomaly in the business model. This needs correction. However, as the tariff for DTH is linked to the cable segment, DTH service providers suffer due to under-declaration and are seeking a regulatory guideline to correct the anomaly.

The new norm on tariff for addressable platforms at 35% of nonaddressable platform still does not cover for complete under-declaration by cable service providers and, therefore, does not provide a level playing field to the new emerging platform. The DTH pie today is less than 20% of the total cable and satellite households in the country, but contributes over 50% of broadcasters' subscription revenues. Thus, the promising, technologically-advanced DTH segment is subsidising the incumbent analogue industry.

Source: The Economic Times

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