Government of India has “requested” cable and DTH operators to not disconnect those subscribers who do not recharge or pay their monthly bill during the COVID-19 lock-down.
The request has been made based on two justifications: First, doing so will help keep the people indoors, and second, it will help counter fake news that spreads through social media.
The direction is, however, not mandatory or binding, and it remains to be seen how many DTH providers pay heed to the suggestion.
“It will be appreciated by all concerned stakeholders that at this critical juncture, this steady flow of information and keeping the public engaged inside their homes with programmes on news, authentic information and entertainment is of paramount importance,” Neerja Sekhar, joint secretary for broadcasting said in her letter today.
“Therefore, all the stakeholders (Broadcasters, DTH Providers, MSOs, LCOs) are advised to continue to provide uninterrupted services to their respective subscribers and cooperate with other players within the distribution chain in the interest of the viewers and larger public safety in these difficult times.
“All steps may, therefore, be taken to ensure that the people continue to uninterruptedly view the available channels,” it said.
While the ministry has addressed all stakeholders — including channel owners/broadcasters — in its letter, it has not made it clear whether cable and DTH operators can avoid depositing pay channel charges to broadcasters for this period.
Normally, cable and DTH operators have to deposit a fixed amount of money — known as pay channel charges — for each subscriber who is subscribed to their channels. The cable/DTH operator collects this money from the end-consumer along with their monthly charges.
If consumers do not recharge or pay their monthly bill during the lockdown, this money too will not reach the cable/DTH operator. Thus, they may end up having to pay this from their own pockets.
Moreover, the request from the ministry is likely to be easier for cable operators to implement, compared to DTH operators.
This is because DTH operators have an automated mechanism to deactivate or shut off any boxes for which monthly subscription has not been paid.
If this is to be avoided, they have only two options. First, they can stop all deactivations of consumers across India temporarily, hoping that pay channels will not demand content charges defaulting subscribers.
Alternatively, they can move all customers who are in default on to a package that comprises on free or FTA channels only. These are channels for which the DTH operator has to pay no content charges to the channel operator/broadcaster.
Given that the ministry has not explicitly mentioned about the pay channel related liabilities of the DTH operator, the second option may be what most DTH operators are likely to prefer. It is, however, likely that channel operators may contact DTH operators and assure them that they will not demand pay channel charges for subscribers in default. This will be beneficial for the channel operator too, as it will avoid the subscribers from being switched to an FTA pack.
On the other hand, cable operators are better placed to implement the request from the government as it is quite common for subscribers to not pay for a month or two. Many cable subscribers often tell the cable operator to collect the money ‘next time’ when faced with financial issues.
Similarly, most cable operators are currently not going around to collect monthly subscription charges, and will collect the dues for March and April in early May.
MORAL HAZARD
The directive from the ministry, however, raises the question of moral hazard: If no one will be disconnected during the lock-down period, why will anyone recharge their connection?
This may result in even paying customers opting not to recharge to take advantage of the ‘new scheme’, and could cause massive losses to cable and DTH operators.