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Bombay HC Upholds TRAI's NTO 2.0

The broadcasters had prayed for striking down the amended tariff order and regulations since they violate Article 14, Article 19(1)(a) and Article 19(1)(g)

Photo Credit :

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The Bombay High Court today upheld the constitutional validity of a tariff order passed by the Telecom Regulatory Authority of India (TRAI) last year. However, it slashed one condition that read that the price of a single channel cannot be more than one-third of the highest priced channel in that bouquet.

A division bench of Justices Amjad Sayyed and Anuja Prabhudessai passed the judgment on a bunch of petitions filed by several broadcasters, like the Indian Broadcasting Foundation, a representative body of TV broadcasters, the Film and Television Producers Guild of India, Zee Entertainment and Sony Pictures Network India.

Karan Taurani, VP – Research Analyst (Media & Consumer Discretionary), Elara Securities shares, "We maintain our view that subs revenue growth for broadcasters has converged from double-digit towards high single-digit (7-9%) over the last year post-NTO 1.0 as:

1) NTO does not offer any scope for price revision which limits ARPU growth 

2) TV household growth is not more than 3-5% 

3) Adoption of HD has also been slow in metro cities due to shift to digital media. 

The key norms of NTO 2.0 were:

- capping carriage fee snd NCF charges which were negative for distributors 

- discount of ala carte vs bouquet won’t exceed more than 33% for broadcasters

The discounting norm is more of a negative impact for larger broadcasters like Star who give steep discounting on bouquet vs ala carte vs Zee/SUN who are operating at bouquets which is already at discounts of almost 30-40%. The bigger negative impact of NTO 2.0 will be no scope for growth in pricing which will limit ARPU and in turn thr subs revenue growth. We have already factored in subs revenue growth of 7%-9% YoY (12-14% for SUNTV due to TN digitisation) and expect no changes on the above in medium term; however if NTO 2.0 comes in, we could see a negative impact of 5-7% for one year due to the transition and shift towards ala carte (only 7% of customers now use ala carte - which could move up marginally post NTO 2.0)".

He further adds, "Bombay HC has approved the above except for the clause of limitation of 33% discount on bouquet vs ala carte prices.

We believe there is a high likelihood of this being contested in Supreme Court by TRAI as the entire reasoning of getting the NTO 2.0 was to cap discount and move to selective viewing which the NTO 1.0 did not fulfill

The detailed document of the judgment has not come in yet - the above is basis a media report published recently."


Tags assigned to this article:
trai NTO 2.0 Case broadcasters