Should carriage fees in television be legitimised? This, it seems, is the main irritation that most broadcasters have with a new tariff order from the Telecom Regulatory Authority of India, or Trai. The News Broadcasters Association (NBA) has raised its voice against it, and the Indian Broadcasting Foundation (IBF) too mentions it in an otherwise approving press release.

But, in fact, the legitimising of carriage fees is a masterstroke.

Think about it. Carriage fees are charged because India’s creaking cable system doesn’t have enough bandwidth. Once digitisation – which this tariff order is supposed to enable – is complete, there will be no bandwidth constraints. If there are no bandwidth constraints, why would multi-system operators (MSOs) or distributors charge carriage fees and why would anyone pay them? But till that happens, it is not a bad idea to allow MSOs, who bear the cost of digitisation, to continue charging carriage fees — albeit with caveats. It is a fair cost to pay for getting 100 per cent transparency, no revenue leakages, better pay revenues and more taxes in the future.

Therefore, the ruckus over the new order, which follows a law passed on mandatory digitisation last year, is unnecessary. This is the industry’s third attempt at digitisation in 12 years. If cable doesn’t go digital now, it will get marginalised — since this time it has competition in the form of direct-to-home (DTH). And if six DTH operators control a market that reaches 146 million homes and generates Rs 33,000 crore in revenues, it is not a healthy sign. This market needs competition between digital cable and DTH if consumers are to get a choice of TV distributors and better prices.

That is why it is imperative that the industry should keep aside its natural instinct to squabble about everything and get on with digitisation. The new tariff order simply does what the industry should have done by itself long ago — it forces transparency across the value chain from broadcasters to MSOs and cable operators.

It states, among other things, that cable operators have to sell a basic free-to-air bouquet of 100 channels at Rs 100. MSOs have to show how much carriage fees they are charging. The carriage fee has to be charged in a uniform, non-discriminatory manner and it cannot be raised for two years. And, in case it is “unreasonable”, broadcasters can turn to Trai. Broadcasters have to share revenues with MSOs in a predetermined ratio and MSOs have to share them with cable operators, also in a proportion decided by Trai.

These, among several other recommendations, make any special deals, undeclared cash and arm-twisting almost impossible. “The detailing of the reporting mechanism [in the order] ensures that the slush nature of the business gets addressed,” says Uday Shankar, CEO of Star India. He is also the president of the IBF.

For those who came in late, here’s a quick recap. Haphazard hyper-growth, poor regulation and short-sighted broadcasters have made the world’s second-largest TV market a structural nightmare. Of the Rs 15,000 crore collected on the ground by cable operators, 80 per cent leaks away as undeclared cash. This leaves the broadcasters gasping for pay revenues, especially at a time when advertising is slowing down.

Meanwhile, over the last 10 years, bandwidth constraints have given rise to carriage fees — a charge by MSOs and operators for carrying a channel. It also explains how MSOs have survived with so little cash coming back to them.

The only way out of the mess is digitisation. A digital set-top box increases capacity 10 times. That means instead of 100 channels, a cable operator can now offer 1,000 channels. So, late last year, the government amended the Cable Television Act. It is now mandatory to sell TV signals through an addressable digital set-top box. By June 30 this year all the four metros should be digital, and by December 2014, all of India.

By legitimising carriage fee, yet making it uniform and non-discriminatory, the regulator has in one stroke cut both broadcasters and MSOs down to size. It tells broadcasters that MSOs, who will foot the bill till consumers start paying for their set-top boxes, need financial legroom.

On the other hand, it also caps carriage fees. MSOs cannot charge crazy amounts from new or niche channels. It also states that MSOs cannot insist on getting a popular channel if they don’t have bandwidth. Trai has directed MSOs to build bandwidth for at least 500 channels till April 2013. Once it is there, the need for carriage fees goes away.

What the order does is take away any excuse a stakeholder might have for not digitising. Can we get on with it now?

Source: Business Standard

New Delhi: Telecom Regulatory Authority of India (TRAI) Chairman JS Sarma explains the digitization of cable. He said that carriage fees should be moderate, between 50 paise to Re. 1 per subscriber per year. “Anything beyond that level would be unreasonable,” he said, adding that there can be no placement fee in post digitization world. Here is the full transcript of the interview.

Vikram Chandra: Hello and welcome, we have with us the person who has been the man of the moment of recent days, Mr JS Sarma, head of the Telecom Regulatory Authority of India. So you have been in the news for telecom but I will discuss television with you because you have just come out with the tariff order, the inter connect order which promises to change the entire landscape of television. What is the main thing you have been aiming for with these?

JS Sarma: Vikram, you see we are in the path of digitization which is going to bring several benefits to consumers, most important, and various stakeholders. It will bring transparency in the system, it ultimately improves the quality of the channel itself and then it brings additional revenue to the government, because it brings transparency to the government, so the entire amount that is collected is accounted for. Now it also, incidentally, vastly reduces the dispute in the entire system; otherwise if the system isn’t transparent obviously there is scope for plenty of disputes. It is to this context that we have recommended and the Ministry of I&B has taken up the task of digitization in the entire country in over three years. Now the two important things are tariff and the interconnection, it is this tariff order and the interconnection that we have issued few days back and that is what is currently under discussion.

Vikram Chandra: Okay, the entire process of digitization is still on track. We have been told that it is good for broadcasters, it is good for the industry, it is good for distributors, good for the consumer. Is that process still on track and will that happen on the 1st of July as stated?

JS Sarma: There is no reason to doubt that. Firstly, happily every stake holder is committed to digitization. There is nobody who says I don’t want to do digitization. I think, as I see and the news I get, I don’t see why there should be any delay in the implementation of this programme. I think, and I am quite confident, that by 1st July you will have complete digitization in the four metropolitan cities.

Vikram Chandra: The orders that you have mentioned have by and large been welcomed, including by the broadcasters and by others. But there have been some aspects that have raised a certain amount of consternation. So one of the things that we are here to do is to try and understand what really lies behind the order, particularly I have to say, the issue of carriage fees. From the government in Parliament to what has been stated to all stakeholders, one of the major aims and ambitions of digitization was to change the business model so that carriage fees go down, subscriptions are better reported and a new business model emerges. People are somewhat concerned as to the carriage fees that have been legitimised in this context.

JS Sarma: No I would not use the word legitimise. It’s being regulated. Carriage fee is something that has been going on for some time. Who started it and why he started it is immaterial. The fact is that the carriage fees are actually big now and it is estimated to be in the order of 1600-2000 crores.

Vikram Chandra: If not more…

JS Sarma: Since it is totally underground, no one knows about it. What we have done is brought it on to the surface and regulated it, now it’s a regulated entity. We said that 500 channels must be provided by every MSO, now this is significant. Currently some people have 175, some have 200, some people have 300 and perhaps only 1 or 2 persons have more than 300. This means that even today, though there are about 500 channels, if a broadcaster wants a channel to be carried, there is always a scope for carriage fee. What we mandated is that from 1st January 2013, and for smaller people from 1st April 2013, the number of channels provided must be 500. There are about 800 odd channels in this country, out of them about 600 odd channels are active. Out of these all the English, all the Hindi, plus any one regional language will not exceed 470. That is why we mandated 500. If the number of channels goes up, it becomes 800 active channels, then we could actually increase this number.

Vikram Chandra: 500 is not frozen you are saying, it can move?

JS Sarma: 500 is not frozen. You need to give MSOs some time to obtain those channels. In fact the rule under the Act also says that the number of channels ‘as prescribed from time to time’.

Vikram Chandra: You said Sir that it’s being regulated. What I think is causing the greatest amount of concern is that you, in a sense, brought it above ground perhaps, but you have said that it is entirely the discretion of the MSO to decide what the quantum of the carriage fee is going to be, and if you consider it unreasonable, you will step in. Now that automatically calls for a lot of concern for broadcasters, because you don’t know what level you might consider something to be reasonable or unreasonable…

JS Sarma: It is true that we have not specifically quantified any amount, because at this particular stage we felt that it is better to let the MSOs and the broadcasters settle it among themselves and let this market settle. You must understand that MSOs also can’t run riot because there is always the threat of DTH. So the cable industry is competing with the DTH industry. Secondly we recognize that the carriage element is basically for the network transportation cost. We have figures with us, it is not that we don’t have figures. We know that the per channel per subscriber cost is not very high. So any MSO who actually wants to charge more, first of all he has to publish it, we have stated that he should publish his charge. He should apply across all the channels, not any particular genre, but across all the channels in a uniform, transparent and non discriminatory basis. Thirdly he can’t change it for two years. And then most importantly, he should report the matter to us and we reserve the right to intervene, in the event we feel it is unreasonable.

Vikram Chandra: I understand you did not want to state a figure in the order itself, but you are right that there is a certain figure which is the actual cost for carrying a channel, and it is not a very high figure. So I guess the big debate becomes what level of carriage is considered unreasonable? That’s the basis on which one makes a plan. You have to understand that many broadcasters are not in a very good financial position either. What are the levels of carriage that you would consider unreasonable?

JS Sarma: At this stage it is very difficult to put it down, but typically, generally anything above 50 paise, per channel per subscriber per month per year.

Vikram Chandra: Per month or per year?

JS Sarma: Sorry per year, you’re right, per year, would be actually be something that needs to be noticed. And anything above a Rupee would then definitely need attention. In other words we would actually watch, is it going beyond a particular range, I think.

Vikram Chandra: If I can just make sure that I am not misunderstanding the range that you have indicated, you are saying that anything above 50 paise per subscriber a year is something that you would notice, and above 1 Rupee, per subscriber a year, would be a level of carriage fee that you think would perhaps be unreasonable?

JS Sarma: No, I think you asked me to put a figure.

Vikram Chandra: Trying to get a benchmark…

JS Sarma: No I think since you asked me to put a figure, I just want to mention that it is currently not in the regulation, but obviously we don’t want astronomical figures. As is said, this is meant for the carriage of the channel. It is not any other money, because we are saying no to placement fees, because there is no need for placement fees in this particular scheme of things.

Vikram Chandra: Is that also clear cut? Because I know you have defined placement fees, but you haven’t said that there has to be EPG by listing, you haven’t said specifically that there shouldn’t be a placement fee. So are you saying that that there will be no placement fee?

JS Sarma: That’s right. You see unlike in the case of analog where you can place the channel at a particular place, the quality differs from channel to channel and brand to brand. Now here, that particular problem is not there, since everything is of uniform quality. So the question of placement, what is placement? It is the advantage that you get. You need to place it in the concerned genre. Now whether this one genre is before the other genre, this is immaterial. So in other words, while each of the MSOs can design their own EPGs, but the channel should be in the particular genre.

Vikram Chandra: And no placement fees will be charged. Is this something that you can make explicit?

JS Sarma: We are saying no to placement fees. Again we don’t want another problem to come up. Getting back to carriage fees, we are not indicating any figure at this stage; this is what we have in mind.

Vikram Chandra: When you are saying that what you have in mind, something like 50 paise per subscriber for a year.

JS Sarma: Yes 50 paise to 1 Rupee.

Vikram Chandra: Which is the benchmark that the MSO should keep in mind?

JS Sarma: We don’t want to get into a very rigid figure at this stage. We will watch. We will see how it is going. In the event if we feel anybody is unreasonable, we will definitely intervene.

Vikram Chandra: I think one of the things, just to look at the way that would work; a channel trying to reach at the 1 Rupee level or a channel to reach 90 million subscribers, pays around 9 crores sort of a thing. So I guess for MSOs also, they would be able to reach a larger number of channels.

JS Sarma: That’s right.

Vikram Chandra: Because earlier they could only charge carriage fees from 50 and now they might be charging for 300 or 400 channels.

JS Sarma: It depends on how one wants to pay. You see we have said that there will be no carriage fee in respect of a channel that the MSO himself seeks. So it is only in respect of the channels that ask to be carried, that the carriage fees can be charged. So these are the kind of things that are there. So I don’t know whether it would be 100 or 200 or 300 etc. You can say that in about a 500 channels capacity, a fair number would be seeking that ‘must carry provision’, which is available only when it reaches 500, because then, incidentally, the much provided clause kicks in alongside. Both right and duty go together.

Vikram Chandra: So your position would be, if I understand it correctly, in this entire issue of carriage fees, is at those sort of levels, at 50 paisa per subscriber a year. If that is to work for both broadcasters and MSOs, then everyone should be happy. If the rates are moderate then both sides should agree.

JS Sarma: If an MSO has 1 lakh subscribers, let’s say in smaller areas, then to that extent that amount that is available is substantial. In any case it is not as if part of the carriage cost, that is the transportation cost, is also not being taken from the subscribers. The reason why I have said a range is, it is very difficult to get into one range in this large country. So you have to see how it is. First of all I am quite confident that the industry with digitization will be a much more organised industry than what it has been so far. I am also sure that the relationships are much more streamlined and therefore I guess, as somebody was telling me this morning, they expect the carriage fee itself come down to one fifth, or so, by 20 percent in about 2 or 3 years. I don’t know whether that will take place or not, but let us watch. The whole idea is that the digitization process should actually tend to professionalise the entire industry. It includes the broadcasting industry as much as the carriage industry.

Vikram Chandra: Of course one of the reasons that you have stated as to why this should be done, is for the cost of digitization from the point of view of the MSOs. Broadcasters are upset about that. They are saying why should they pay the cost for somebody else’s business, especially when they get the benefit of broadband and things like that.

JS Sarma: Then the MSO would say why would I invest? After all I am the person who is investing and they must pay me some amount of money to carry. I think both sides are reasonable cases.

Vikram Chandra: But at some time do you see there being a sunset, once the investments have been made, it’s a better robust economic system?

JS Sarma: I think so. Though this is purely in the realm of the future, but I think in the course of the not too distant a future I admit that MSOs also are able to develop a lot more things. For instance, in the telecommunication itself, we have decided that there will be unified licences. In the state level we are also suggesting that for TRAI there will also be a district level licence. Whatever happens, but in the state level surely and hopefully at the district level too, there would be a telecommunication licence which means a lot more things will be possible. I have been repeatedly saying that cable, as in other countries, should become the deliverer of plenty of services and broadband is a major major thing, it is not channels alone, In fact channels will be one of the services that the MSO will be delivering, in my opinion, in the future. It would be delivering in telecom, delivering broadband, in fact it would be delivering access to educational services, access to health services etc. So with all this I think the relationship between the broadcaster and the MSO will be far more smooth than what it is now.

Vikram Chandra: Thank you so much for joining us.

Source: NDTV.com

NEW DELHI: Multi-system operators taking up digitisation with addressability will be permitted 74 per cent foreign direct investment as part of a move to bring about uniformity in FDI in broadcasting, Parliament was informed today.

Even as the views of different Ministries are awaited on the proposal to increase FDI in the media, Minister of State for Information and Broadcasting C M Jatua said his Ministry had worked out with the Telecom Regulatory Authority of India certain terms and conditions to take care of security related concerns.

The Department of Industrial Policy and Promotion cleared the proposal for uniform Foreign Direct Investment in broadcast carriage services providers, including cable TV and direct-to-home (DTH) around October last year.

The DIPP, which functions under the Industry Ministry, then circulated a draft cabinet note which also includes raising overseas investments limits according to suggestions given by Trai.

The note has been sent to different ministries, including Home Affairs, Information and Broadcasting, Law, Finance, and Department of Telecommunications. The note will have to be approved by these Ministries before it can be sent to the cabinet.

It is learnt that services sector received FDI worth $2.88 billion between April and August 2011.

The draft note wants the FDI limits in the broadcast carriage services providers such as cable TV, DTH, Headend-In-The-Sky (HITS), IPTV, mobile TV and teleport services to be made uniform at 74 per cent. The proposal includes 49 per cent FDI for local cable operators and 26 per cent for news and current affairs channels.

Under the proposal, there is also provision for putting 49 per cent FDI (out of the proposed 74 per cent) on automatic route. But there is no automatic route for content services like uplinking, downlinking and FM radio, Jatua said.

At present, FM radio and uplinking of news TV channels are allowed 26 per cent; cable TV, DTH and teleports are permitted 49 per cent; while it is 74 per cent in case of HITS. Uplinking of non-news and downlinking are both allowed 100 per cent FDI. For private FM radio, the FDI limit was raised from 20 per cent to 26 per cent last year.

In June 2010, Trai had made suggestions to raise FDI for broadcast carriage services like DTH to 74 per cent.

The move is expected to help the media which has been clamouring for more foreign investment, and for several foreign investors including expatriate Indians.

Source: Indiantelevision.com

New Delhi: Not satisfied with the ‘must carry’ diktat and regulation of carriage fee outlined in the latest regulations by the broadcast regulator, both multi-service operators (MSOs) and news broadcasters may soon take legal recourse. MSOs and broadcasters are studying the order before approaching the courts, sources said.

On Monday night, the Telecom Regulatory Authority of India (Trai) issued the tariff order and regulations for digital addressable system (DAS) roll out mandating every MSO to upgrade its delivery platform so as to carry 500 channels in DAS areas, starting with the four metros. DAS entails mandatory use of a digitally addressable set-top-box for accessing TV channels and encryption of all television signals in DAS notified areas.

“The tariff order applies equally to DTH service providers and MSOs. No such ‘must carry’ mandate is imposed on DTH operators. The Trai orders directly attacks every MSOs right to do business. This should be challenged in court,” said a top executive in MSO Alliance, the apex body of leading MSOs.

News Broadcasters Association, the apex body of leading news channels too as expressed its displeasure accusing the sector regulator of legalising the menace of carriage fees when DAS in itself is supposed to eliminate it.

Both Trai and the ministry of information and broadcasting have supported the move. Trai chairman J S Sarma ruled out any roll back of the DAS order. Sarma told a news channel that Trai does not issue regulations and tariff order to roll back or re-look at them the next day. On its part, Uday Kumar Varma, Secretary, I&B ministry told FE that the DAS order was balanced and pro-consumer.

But MSOs are not satisfied. “It costs a lot to upgrade the network and digital head-ends in order to make them ready for carrying 500 channels. While there may be a demand for these many channels in metros and bigger towns, no such demand is there in smaller towns. This directly impacts the fundamental right of doing business,” said the head of regulatory and legal affairs in a leading MSO brand requesting anonymity as the matter was still be discussed internally.

Even the markets welcomed the Trai order as the stocks of MSOs like DEN, Hathway and WWIL went up by 2.12%, 19.23%, and 4.73% respectively. However, the stocks of some broadcasters took a beating. News broadcasters like NDTV -0.84%, Zee News (-2.31%), and TV Today (unchanged), while general entertainment channels like Zee Entertainment closed in the red while Sun TV saw 5% gain.

Source: The Financial Express

If the onset of digitisation is sure to wage a war between the DTH players and local digital operators, the new tariff order from TRAI is sure to add the requisite fuel to this much talked-about battle.

According to TRAI’s latest amendment, all channels including pay and free-to air will be offered on a-la-carte basis to subscribers. Not to forget, there will be a Basic Service Tier (BST) that will consist of a minimum of 100 free-to air (FTA) channels. Of the 100, 18 channels will belong to the public broadcaster DD along with Lok Sabha TV, while the remaining will belong to other popular genres such as current affairs, infotainment, sports, kids, music, lifestyle, movies and general entertainment in Hindi, English and regional language of the concerned region.

The order also suggests that while the multi-system operator (MSO) has to offer the Basic Service Tier, it is not mandatory for the subscriber to subscribe to the BST but instead can form his own package of a maximum of 100 FTA channels. And whatever the case be, the MSO cannot charge the subscriber more than Rs 100 per month.

Evidently, experts state that while the move will bring in more power into the common man’s lap and profits into the MSO’s and LCO’s account, the bigger DTH players will have to revive their payment system or else, may have to shut shop eventually.

Pawan Jailkhani, executive vice-president, revenue, 9X Media Group, says, “The new tariff order will consolidate and regulate the pricing by the DTH and digital operators to a large level.”

He explains that in the case of digital platforms, the cost of transmission doesn’t increase with the number of channels. “However, since an analog operator cannot carry more than 50-60 channels on a single bandwidth, the cost generally increases with the number of channels,” he notes.

According to K Jayaraman, CEO, Hathway Cable Network, while the move will spur the process of digitisation in India, the DTH players will either have to shift their complete focus to the upper class or will have to bring down their prices to half of existing rates.

Consider this: Currently, any given cable operator charges an estimated Rs 150-200 for a pack of 70-100 channels across India. Not to forget, to build an initial customer base, the cable operators in smaller towns and cities also start their business with a free offering for two months or a nominal cost of Rs 50-60 for the same pack of 70-100.

Now, compare this to DTH and (approximately) the same number of channels is offered at almost double the rate. For instance: the package charges on Tata Sky and Dish TV start at Rs 180 per month, wherein an approximate 100 channels across various genres are offered. For Airtel and Reliance, the 100-channel package offer starts at around Rs 160.

S N Sharma, CEO, Den Networks, says, “While with the move, it’s the subscribers that will benefit the most, there will be a tough fight to maintain a tight grip on them. Also, I feel that the local operators and MSOs will have an upper hand on the customer choices.”

For the record, the new tariff order has prescribed a 55:45 (MSO:LCO) revenue share ratio in case of BST and FTA channels and of 65:35 (MSO:LCO) revenue ratio in case of the pay channels or a bouquet of pay channels.

Jailkhani notes that the new tariff system will be profitable for the independent channels as well, which are not a part of any network. Content will rule the subscriber selection and not the bouquets since all channels will be available on a-la-carte basis without much difference in pricing. Citing an example, he says, “For example, when we talk about a channel like Tashan, it is not a part of any major package. So, if I buy a package for say Rs 200 and subscribe for Tashan individually, it costs me an extra Rs 10 a month. This, in turn, enables the DTH provider to pocket somewhere around one crore from a single such channel in a year.”

Another media expert, on condition of anonymity, states that the single a-la-carte paid channel sold by a DTH player earns it about Rs 1-1.5 crore, for which it doesn’t pay any subscription money to the broadcaster. With this new regulation, the extra income of the DTH players will be minimised and they may have to shut shop in future.

Source: afaqs!

As the deadline for the digitisation of the cable-TV sector nears, CNBC-TV18 spoke to representatives of all the three parties concerned- multi-system operators (MSOs), broadcasters and the DTH community.

Ashok Mansukhani, president, MSO Alliance, calls the TRAI order “completely baseless and unfair”. He explains that MSOs will have to spend heavily on encryption and increasing capacity.

“Unlike overseas, boadcasters don’t share ad revenues with MSOs. Providing 500 channels is a tough call for small and independent operators,” he retorted.

Presenting the broacasters’ views, KVL Narayana Rao, director, Indian Broadcasting Federation (IBF), says that the carriage fee will severely burden news broadcasters.

“Broadcasters will no be unable to set aside funds for business development and content generation.” Rao adds that the broadcasters were assured that the carriage fee would be removed and says that the association has appealed to TRAI and the government to reconsider the order.

Amidst both parties venting ire on the TRAI order, DTH representative RC Venkateish, CEO, Dish TV maintained a positive note. He said that TRAI had struck a balanced note and was extremely fair. “I don’t see any reason for why all this hullabaloo is being made.”

Below is the edited transcript of the discussion. Also watch the accompanying videos.

Q: What is your view on concerns by News Broadcaster’s Associations about TRAI order?

Venkateish: TRAI has struck a very fine balance with its regulations and the recommendations. It clearly says that where a platform or a multi-system operator approaches a channel for its content, then there is no question of carriage. On the other hand, when the channel approaches the platform to be carried then the concept of carriage applies. It is extremely fair and I don’t see any reason for why this entire hullabaloo is being made.

Q: As far as, viability of this sector is concerned, NBA says that this recommendation unfairly penalises the broadcast industry and threatens its survival, is that a justified statement?

Manuskhani: Completely baseless and unjustified. Today, most of the distributing cable and companies who have digitalization have about 200 channel capacity. We have voluntarily agreed to start with 200 and we will have to go up to 500 by January.

The total number of channels actually telecast in India is under that.
Therefore, if every channel is available in a 500-channel capacity by January, the question that arises is that, we have had to spend huge sums of money to encrypt channels, create 500 channel capacities, provide two million boxes, 24 hour call centers, billing etc and then work with broadcasters to create a viable subscription model.

In the present scenario, it means that free to air networks which otherwise ride on advertisement platforms don’t really share their advertisement revenue with MSO’s or with DTH companies like it’s done aboard in the form of local ads and so on or local inserts.

On the other hand, TRAI want a ban on carriage fees when there is actually a very fair carriage regulation that has already been brought into place.

Q: What are the immediate negatives if at all that you have seen in the TRAI orders?

Manuskhani: The deadline of 500 channels is okay for National Multi-System Operators like the ones that belong to MSO alliance. 500 channels is a tough call even by next April for smaller operators or independent cable operators in different parts of the country.

It is possible to have 500-channel viewership in national or bigger cities, but difficult is small towns. This should have been left to market forces.

Q: This very comment about market forces and how we should perhaps not end up over regulating this entire sector. Do you share any concerns with what the TRAI has ordered and do you think there is scope for it being relooked at a later stage once this current regime is put in practice?

Venkateish: The TRAI has done a commendable job of balancing the interest of all the stakeholders. Market forces works in an efficient market environment and environment in media industry is not necessarily efficient because content providers and distribution platforms who have some sort of monopoly over their things.

In such a scenario, there are always possibilities of market failure because if two broadcasters have an exclusive content and the distribution provider has a exclusive distribution then the potential for adversity and conflict always exists. Therefore, the regulator has to play a very important role in maintaining and ensuring that there is no market failure.

The regulator has always in this particular regulation tried to step a fine line and opened up the competition at the retail end where there is genuine competition.

We have seen that in DTH. All six DTH providers are competing against each at the consumer end and therefore the consumer’s end is protected, but at the input end where there are monopolies and possibility of market failures the regulator has stepped in to regulate.

Q: The distributors say that TRAI recommendations are good and the practice of carriage fees is essential. The NBA on its part is distressed by the move, why is that?

Rao: We welcome digitization and it is something that we have been asking for several years. The government and TRAI have done the right thing by coming out with digitisation rollout plan and the relevant orders that will allow it to take place.

However, we are distressed that the problem of carriage fee continues. Carriage has burdened broadcasters, in particular news broadcasters very severely over the last few years. It constitutes a third of our total cost. We are unable to keep aside revenues for development of our channels, business and generation of good quality content. We were assured that carriage would be removed. So, to that extent we are very distressed.

Q: Do you intend to take this order head on or challenge the order?

Rao: I don’t think we need to go to a court at this moment and I hope that will not arise. We have appealed; we have urged the government and TRAI to relook at the order, issue more clarifications, what exactly they have in mind when they say a carriage fee would need to be paid before we can react.

At this moment it is very open ended. It just says it will continue, while they say that it is because investments have to be made into digitisation and therefore carriage must continue. The fact is, its very open ended and without any kind of a time limit. It’s difficult for us to understand what exactly they mean and what they have in mind. At this moment it appears that the problem and the burden continues and that is very worrying.

Source: Moneycontrol.com

The Telecom Regulatory Authority of India or TRAI has revamped the entire regulatory structure of the broadcasting, cable TV and DTH industry in India, dealing with issues such as carriage fee, channel prices and channel availability.

Once digitized, all channels (pay and free-to air) have to be offered on a-la-carte, or individual, basis to subscribers, TRAI said.

There will be a Basic Service Tier (BST) consisting of a minimum of 100 free-to air (FTA) channels for Rs 100.

It is up to the consumer to pick and choose which 100 free channels he wants to watch for Rs 100 per month. In other words, he can make his own ‘basic package.’

He can also ask the cable operator to provide a pre-designed ‘basic tier’ with 5 channels of each genre — news and current affairs, infotainment, sports, kids, music, lifestyle, movies and general entertainment in Hindi, English and regional language of the concerned region.

However, if he or she wants pay channels, the minimum is Rs 150, TRAI added.

“In case subscriber chooses Pay channel(s) with or without FTA channel(s) the MSO can fix a minimum monthly subscription not exceeding Rs. 150/-. If the total value of the channels/ bouquets opted by the subscriber exceeds Rs. 150/- then actual subscription charges have to be paid,” TRAI said.

For consumers, the new regulations mean that soon, their cable networks will support a minimum of 500 channels — and they will more or less be able to pay only for the channels they watch.

In its new regulations, coming two months before the first phase of cable digitization kicks in in the cities, TRAI mandated a minimum capacity of 500 channels in the new system.

Currently, most cable networks have about 300 channels. Digitization is expected to increase their capacity to about 1000-1500.

There is more good news in the new regulations for the broadcasters (channel owners) than for owners of cable TV and DTH networks.

Primarily, the TRAI has ‘legalized’ carriage fee — a hitherto secretive practice in which cable and DTH operators used to take money from channel owners to carry particular channels, or to place a channel near another etc.. However, carriage fee can only be demanded from a channel owner if he is trying to ‘push’ his channel onto a cable network, not otherwise.

While many channel owners have been urging the regulator to simply ban carriage fee — which they consider a bribe — cable and DTH operators have pointed out that carrying a channel involves expenses, some of which has to borne by the channel owner.

Carriage fee was also the only way in which new channels could ensure their presence on large networks, which otherwise saw no reason to carry unknown channels without a customer base.

As a result, carriage fee comprises as much as 70% of the running expenses of certain channels.

To ensure that carriage fee does not stifle growth among channels, TRAI has removed the element of secrecy and discretion from the payment.

From now on, all channels will have to pay the same amount as carriage fee, and the amount shall be declared in a publicly available document. Each cable and DTH operator is free to decide its carriage fee, but must apply it to all the channels uniformly.

The other big change is designed to prevent the frequent fights between channel owners and cable networks. Channel owners have been told to supply channels to all operators who wish to transmit it.

Conversely, all cable operators much provide space for all the channels from all companies — unless they can prove that less than 5% of their subscribers are subscribing to the channel.

The excerpts of the TRAI new regulations are as follows:

CARRIAGE FEE:

Every multi system operator shall publish in its Reference Interconnect Offer the carriage fee for carrying a channel of a broadcaster for which no request has been made bythe multi system operator.

Provided that the carriage fee shall be uniform for all the broadcasters and the same shall not be revised upwards for a minimum period of two years from the date of publication in the Reference Interconnect Offer.

A multi system operator, who seeks signals of a particular TV channel from a broadcaster, shall not demand carriage fee for carrying that channel on its distribution platform.

CHANNEL CAPACITY:

A multi system(cable) operator operating in the Municipal boundary of Greater Mumbai, National Capital Territory of Delhi, Kolkata Metropolitan area and Chennai Metropolitan area shall have a capacity to carry a minimum of two hundred channels as on the 30th June, 2012 and such capacity shall be enhanced to a minimum of 500 channels by 1st January, 2013:

Provided further that all multi system operators operating in the area referred to in the first proviso and having subscriber base of less than twenty five thousand shall have the capacity to carry a minimum of 500 channels by the 1st April, 2013.

BROADCASTERS MUST PROVIDE CHANNELS WITHOUT CONDITIONS:

No broadcaster of TV channels shall engage in any practice or activity or enter into any understanding or arrangement, including exclusive contract with any multi system operator for distribution of its channel which may prevent any other multi system operator from obtaining such TV channels for distribution.

Every broadcaster shall provide signals of its TV channels on non-discriminatory basis to every multi system operator having the prescribed channel capacity making request for the same within sixty days from the date of receipt of the request.

If a broadcaster before providing signals to a multi system operator insist for placement of its channel in a particular slot as a pre-condition for providing signals, such precondition shall amount to imposition of unreasonable terms.

NETWORKS MUST CARRY CHANNELS WITHOUT CONDITIONS:

No multi system operator shall enter into any understanding or arrangement with any broadcaster that may prevent any other broadcaster from obtaining access to the cable network of such multi system operator.

Every multi system operator shall, within sixty days of receipt of request from the broadcaster or its authorised agent or intermediary, provide on non-discriminatory basis, access to its network or convey the reasons for rejection of request if the access is denied to such broadcaster.

It shall not be mandatory for a multi system operator to carry the channel of a broadcaster if the channel is not in regional language of the region in which the multi system operator is operating or in Hindi or in English language OR if the broadcaster is not willing to pay the uniform carriage fee published by the multi system operator in its Reference Interconnect Offer.

It shall not be mandatory for the multi system operator to carry a channel for a period of next one year from the date of discontinuation of the channel, if the subscription for that particular channel, in the last preceding six months is less than or equal to five per cent of the subscriber base of that multi system operator taken as an average of subscriber base of the preceding six months.

Source: RTN Asia

MUMBAI: India has 44.21 million private DTH subscribers as of 31 December 2011, the Telecom Regulatory Authority of India said in its quarterly report.

The total number of registered subscribers is from the six private direct-to-home operators – Dish TV, Tata Sky, Airtel Digital TV, Videocon D2H, Reliance Digital TV and Sun Direct.

Digital cable TV, however, is growing slowly in the Cas (conditional access system) notified areas.

Cable TV operators have marginally increased the seeding of set-top boxes (STBs) in the Cas areas of Delhi, Mumbai, Kolkata and Chennai during this period.

According to Trai, the total number of STBs installed increased to 853,737 in the quarter ended December 2011, as compared to 819,960 STBs in the previous quarter.

Trai has also released the data on the number of TV channels in India till 31 December 2011. There are a total of 825 private satellite TV channels permitted by the Information and Broadcasting Ministry, out of which 163 channels are pay, as per the sector watchdog’s report based on the data received from 25 broadcasters and distributors across the country.

The maximum number of channels being carried by any of the reported multi-system operator (MSO) in digital mode is 277. In analogue form, however, the maximum number of channels being carried by any of the reported MSOs is 100 channels.

Trai also said that the number of private FM radio stations in operation remained at 245 till the end of Dec 2011.

Source: Indiantelevision.com

NEW DELHI: Broadcast tribunal TDSAT has directed ESPN to enter into a new a commercial agreement with Dish TV based on RIO that specifies terms for DTH operators to get signals from broadcasters.

“The petition of Dish TV is allowed. The parties are directed to enter into an agreement with effect from September 1, 2011 which would be governed by the modified RIO,” said a TDSAT bench headed by its Chairman Justice S B Sinha.

In 2009, Dish TV and ESPN had entered into an agreement for three channels ESPN, Star Sports and Star Cricket but not based on RIO.

Two year later in 2011, Reference for Interconnect Offer (RIO), as per norms laid down by regulator TRAI, fixed the channel tariff for DTH and other addressable media at 35 per cent of what local cable operators charged. The pricing was revised upwards by the Supreme Court at 42 per cent.

Dish TV wanted its agreement with ESPN renewed based on RIO, which was contested by ESPN at TDSAT.

The new agreement between them would be effective from September 1, 2011, Telecom Disputes Settlement and Appellate Tribunal (TDSAT) said.

Reacting to the judgement R C Venkateish, CEO, Dish TV said, “This judgment of the TDSAT is a landmark judgement for the DTH industry clearly establishing the right of a DTH operator to move from a fixed fee arrangement to a RIO based agreement.

“The said judgment will bring order in the industry and will also enable the DTH operator to continue providing channels to subscribers on affordable and competitive rate.”

When contacted, an ESPN spokesperson said: “No comments.” The tribunal also allowed Dish TV to recover the excess payment of around Rs 25 crore made to ESPN for the period starting September 1, 2011, Dish TV said.

The tribunal also dismissed a similar petition filed by ESPN on the same issue and asked it to pay Rs 50,000 to Dish TV as cost for litigation.

Meanwhile, rejecting ESPN’s petition, the tribunal said “We have no doubt in our mind that the said petition is wholly misconceived”.

Dish TV and ESPN Software, a holding company of ESPN for distributing and marketing its channels, both had filed cross petitions against each other in this issue.

Source: The Economic Times

NEW DELHI: Participants at a one-day meet to discuss the march towards digitisation agreed that there would be no difficulty in meeting the deadlines if the government and the Telecom Regulatory Authority of India (Trai) complete their tasks in time.

However, some of the members speaking in different sessions of the Casbaa meet ‘Beyond digital’ did not rule out the possibility of digitisation getting entangled in litigation if adequate steps were not taken till May, since the deadline is 30 June for the first phase covering the four metros.

Some of the other speakers were also anguished that the budget had not brought any cheer either in terms of customs duty holiday on digital set top boxes (STBs) or incentives for indigenous production of the STBs.

Multi-system Operators Alliance president Ashok Mansukhani said the government appeared to have done nothing after the notification. The rules of business were still not clear. For example, it was not known whether MSOs who had the CAS (conditional access system) licences would have to get fresh licences Would cable operators get licenses directly or would the business be transacted as of now through the MSOs, and what exactly will the role of the government be.

He wondered why Trai had issued a second consultation paper when it had as many as 100 responses including 80 from cable operators. He said cable networking had still not been recognised as an industry, and had not been given any tax concessions. While the MSOs had the funding, a level playing field was still missing.

He said though 30 June at present appeared to be a mirage, the industry was prepared to abide if the government got its act together.

Indian Broadcasting Foundation VP and Times Television Network MD & CEO Sunil Lulla said most broadcasters were in the red, and so the pricing has to change. And if digitisation is to help the consumer, then he should be ready to pay more.

He said attempts were on to create TV spots to create awareness about digitisation, but the government must also come forward.

Cable Operators Federation of India (COFI) president Roop Sharma said cable operators had been fighting for digitisation even before the MSOs or broadcasters had done so, but nothing was done to help the last mile cable operator or create awareness among the people. “When I am not even sure I will get content after 30 June or not, why should I spend so much money on infrastructure?” she asked.

The cable operator has to even recover entertainment tax to pass it on to the MSO, she said. She denied charges that the cable TV industry was not organised.

She wanted definite action from the government to get inter-connect regulations, tariff, and STBs.

News Broadcasters Association president K V L Narayan Rao said the race for TRPs will continue until subscription rates improve, but Trai had failed to take a decision in this regard. At the same time, he said good content must also come. He wanted greater unity on the part of the stakeholders in approaching the government.

IPTV India Forum’s Anil Prakash said IPTV had failed so far because of lack of right of way provisions and initiative of the last mile operator. He wanted the government to pitch in to reach out to the consumer.

DTH Association of India General Secretary Rajiv Khattar stressed the need for implementation. He said tax incentives were needed if the deadline had to be met.

Tata Sky MD and CEO Harit Nagpal said the government had nothing to lose, as it would get taxes; broadcasters stand to earn; and even the MSOs will break even. But it was the DTH which would be hit the hardest. At present, around 30.3 per cent was going in taxes, and DTH had not been included in the Negative List despite a ruling of the Delhi High Court that watching a programme on DTH was like entering a multiplex.

Dish TV CEO R C Venkateish said DTH was still a capital intensive industry struggling to survive, and the ARPUs were low because of under-declaration by the cable operators. Digitisation will help stop that.

Videocon d2H CEO Anil Khera said there was need for a level playing field at a time when over 30 per cent went into taxes. He said the government’s deadline appeared unrealistic but was confident that it could be met. The success of the first phase will set the tone for the other phases, he said.

Indusind Media & Communications Ltd. MD Ravi Mansukhani welcomed the plans for a unified licensing for broadcasting and telecom. He suggested the creation of a fund to help smaller MSOs or cable operators. Though he had at first felt that it would be better to split digitisation into first pay channels and then free to air channels, he felt it was better to go directly into the new technology.

Star Network Vice President (Regulation) Pulak Bagchi and Cisco India’s Sanjay Rohatgi were confident the deadline would be met. Bachi said this was because of the Indian appetite for change, dynamism and productivity of the people.

Hathaway Cable & Datacom MD & CEO K Jayraman said things will work if Trai gets its work done. He said 10 million STBs were needed for the first phase, and 20 million for the second phase. He felt that there was time for the industry to fight for fiscal incentives.

Source: Indiantelevision.com