NTO 1.0 has seen a reduction in earnings of Local Cable Operators (LCO). But the worst is yet to come as there is the plan for NTO 2.0.
After the NTO 2.0 is implemented, the monthly subscription fee of the DTH connection is expected to rise from ₹345 to ₹410. That would severely affect those living in tier 2 and 3 cities as the pandemic effect on their economy is not over yet.
This will lead to cable disconnections and an increased opting for free-to-air channels and OTT platforms. The prices could increase by 20%, and it will not be advantageous for broadcasters or operators.
As per the latest reports of TRAI, there are up to 1745 multiple system operators (MSO) registered with MIB, including two regional ones. Furthermore, 12 MSOs and one headend-in-the-sky (HITS) have over one million subscribers.
In India, there are 68.89 million subscribers to the DTH services, which also includes DD Free Dish subscribers. But in June 2021, there were 69.86 million active subscribers.
The difference between the two NTOs is that the channels priced at ₹12 or more are not bundled and cannot be included in a bouquet.
In NTO 1.0, there is a provision for a commission of 20% along with a 15% incentive, but according to the new NTO, they will get only a 20% commission.
All Local Operators Association, Delhi wrote a letter to the Ministry of Information and Broadcasting, stating the issues with NTO 2.0.
In it, the association stated that there should not be a 15% cap on bouquet discounts and a-la-carte prices are unrealistically high.
This will force the consumers to opt for inflated broadcaster bouquets. LSOs are dependent on MSO contractors and beyond that, the difficulty lies in collecting more money from customers who are reeling under the economic pressure of the pandemic.
This will force them to switch alternatives such as digital media and OTT. The matter is in Supreme Court and will be heard in March.
Another problem with this is that it reduces the earnings of local cable operators. The network capacity fee is split between MSO and LCO on a 55:45 ratio, with 55% for LCO.
But after the new plan is implemented, the fee structure will be split between 80:20, with MSO taking 80%. For the past two years, there has been a big reduction in earnings for LCOs.
For example, if they earned ₹100 per month, it dropped to ₹70 after NTO 1.0 and will drop to ₹40 after NTO 2.0.
Because of the rate hike, 30% of the households already disconnected cable connection and a further rise will make matters worse. It will land many LCOs jobless. Reports say that the delay in implementing NTO 2.0 will impact domestic subscription revenues.
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