Broadcasters want tighter audit norms for DPOs to ensure transparency

MUMBAI: The broadcasters have called upon the Telecom Regulatory Authority of India (TRAI) to tighten the audit norms for the distribution platform operators (DPOs) to bring transparency.

In their response to the consultation paper ‘Empanelment of Auditors for Digital Addressable Systems’, the broadcasters have contended that the under-declaration of subscribers by the DPOs is the biggest area of concern for them. Therefore, the need of the hour is to have a transparent audit process.

Broadcaster Star India has submitted that by assigning the right to cause the audit to the DPOs, who are also going to pay for the same, there is a potential to impair the objectivity of the audit exercise. It also stated that the interest of the broadcasters will get hampered if the audit is inaccurate.

It also highlighted that there is a strong case of audit getting manipulated since the DPOs will pay for the audit. It also noted that if the frequency of the audit is limited to once a year, the time chosen by the auditee may be the leanest time of the year.

It also pointed out that there have been instances, wherein audits caused by broadcaster have identified that DPOs have not disclosed CAS systems, territory transgression cases, and unauthorised, unencrypted & channel disguised transmission in order to hide actual subscriber bases.

Star further stated that the broadcaster has its own market information which is shared with the auditor for testing; with the auditor appointed by DPO, unless the same information is provided by the DPO to the auditor may not have the ability to or have the incentive to do which may cause the issues to remain unidentified or ignored.

The auditors being engaged by the DPOs may not have the incentive to deep dive causing the discrepancies to remain undisclosed, it added.

IndiaCast Media Distribution submitted that the present consultation paper raises serious issues with respect to the implementation of Clauses 10 and 15 of Interconnection Regulation.

It also noted that the existing regulations do not sufficiently cover the concerns of the broadcasters.

The broadcaster, it contended, can only request for an audit to be conducted by the empanelled auditor’s only if there is a change in such configuration of the addressable system.

The company is in favour of conducting a periodic audit of all the DPOs to check regulatory compliances and subscription-related compliance in line with audits conducted in the telecom sector as the provision of only one audit during the calendar year further opens the loop for the DPO to manipulate the data.

It also said that there should not be any restrictions on the audit conducted by broadcasters except in the case of disputes when BECIL or the empanelled auditor should conduct the audit.

Pointing out the loopholes in the Interconnection Regulations, 2017, Sony Pictures Networks India pointed out that there are many national MSOs, who share their CAS & SMS servers with their JV partners. These JV partners deal directly with the broadcasters for commercials.

In such cases, it becomes difficult to access data from the systems as the principal (National MSO, who owns the servers) refuses to part with data pertaining to its JV partners. Since CAS doesn’t differentiate area wise or JV wise divisions, it becomes impossible to verify the accuracy of the data under audit purview.

“The essence of an audit is to obtain the complete data from both the systems viz. SMS and CAS. So, it is extremely critical to ensure that if a distributor is sharing its CAS and SMS with any third party (individual entity / JV, who deals directly with broadcasters), it should be directed to share the data with auditors irrespective of the distributor’s arrangement with its JV partners,” the broadcaster submitted.

The broadcasters are not in favour of having a separate set of auditors for technical and subscription audit.

The Indian Broadcasting Foundation (IBF) has noted that the model/make of the conditional access system (CAS) and the subscriber management system (SMS) installed by the distributor should form the basis of division of list empanelment of auditors.

Before a broadcaster decides on an auditor, it should be able to check whether such auditor has evaluated CAS and SMS of makes that have been deployed by the relevant DPO or not, it added.

It further stated that the panel of auditors need not be common across all models /makes of CAS and SMS installed by the DPO. Auditors should have the expertise and experience of conducting audit indifferent of any make/model of CAS / SMS etc.

Empanelment of different auditor based on the model and make of CAS & SMS installed by DPOs would require a fresh empanelment process every time a new model /make of CAS and SMS vendor enters the market which is not feasible, the IBF said.

The IBF also said that the initial the length of empanelment may be kept for few years so that this process can be reviewed and list of the auditors may be updated. Accordingly, the period of empanelment may range from 1 year to 3 years. This period may be enhanced to 5 years later. There should be a strict vigilance initiated by the TRAI to curb any illegal practices.