Section 36 in Telecommunication (Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff Order, 2017
36. In order to understand the concerns of the broadcasters, it is important to understand the prevailing business model. Broadcasters get revenue from two streams viz advertisements from advertisers and subscription revenue from the subscribers. The advertisement revenue directly depends on the eye balls linked with a given program. Broadcasters during discussions on tariff issue pointed out that they lack control on pricing of channels to customers. They argued that since retail level pricing remains with the distributors of television channels and they offer their channels at wholesale level to distributors of television channels, any reduction in price at wholesale level does not get passed on to subscriber impacting their power to maximize advertisement revenue. They requested the Authority to give them freedom so that broadcasters can maximize the revenue by optimizing their advertisement revenue and subscription revenue. Accordingly, the Authority, in the Tariff Order, has given flexibility to broadcasters to decide retail price directly to the customers/ subscriber in the form of maximum retail price of their channels, which is at present decided by the distributors of television channels. It will provide flexibility to broadcasters to optimise the retail price of their pay channels in such a way that they can maximise their sum of revenue from subscription and advertisements. This will also empower broadcasters to provide good quality channel or reduce the price of the channel if they so desire to enhance its viewership and get better advertisements revenues.
