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Broadcasters, MSOs miss MIB deadline to sign interconnect agreements for Phase III

MUMBAI: There seems to be no urgency among the broadcasters and the multi-system operators (MSOs) to get moving on implementation of digital addressable system (DAS) in Phase III towns. The deadline to sign interconnect agreements, set by the Ministry of Information & Broadcasting (MIB), has been given a miss for the second time.

The Telecom Regulatory Authority of India (TRAI) is closely monitoring the situation but has not taken a call on what the next course of action would be, a source said.

Earlier, the MIB had asked the MSOs and broadcasters to sign interconnect agreements by 21 June, or the TRAI would intervene. On 27 May, at the eighth DAS Task Force meeting, the MIB officials had made it clear that they were upset about the slow progress in the signing of interconnect agreements.

TRAI had met MSOs and broadcasters separately in early June to get an update on the signing of interconnect agreements. MSOs and broadcasters had assured the broadcast sector regulator that at least 25 per cent agreements would be signed by the end of June.

“We haven’t moved on interconnect agreements. There are several issues left to be sorted out,” said a senior executive from a broadcasting company.

Analogue cable is scheduled to end in the Phase III towns by 31 December 2015. Phase III of DAS covers 38.79 million television households across 630 districts and 7,709 urban areas spanning 29 states and five Union Territories.

A key area of friction is the commercial terms on which channels will be offered for Phase III. MSOs want the content to be provided by the broadcasters at a lower cost than what they are paying for in Phases I and II of DAS cities. They argue that consumers pay lower monthly cable TV bills and, hence, broadcasters should charge less for their content.

”The pricing of the channels in Phase III areas must be commensurate with the ARPU the MSOs are getting from this market. There can’t be a situation where we make all the investments and start bleeding immediately. Broadcasters have to temper their ambitions a bit and give us time for at least two years to realise the subscription revenue potential in these markets,” Hathway Cable & Datacom MD & CEO Jagdish Kumar said.

Broadcasters, on the other hand, do not want to do softer deals. They also want to reduce their carriage payouts. “Phases III and IV account for just 25 per cent of the carriage market. We want carriage to fall sharply in the first two phases of DAS. How can we allow carriage to grow in Phases III and IV? MSOs should realise that DTH is paying higher for the same content,” said a senior executive from a distribution company.

So where are the interconnect agreements stuck?

Broadcasters have provided the format on their websites for MSOs to seek signals, following which many MSOs have sent requests.

In the application for requesting signals in DAS Phase III areas, the MSOs are required to provide basic information like name, address, service tax registration number and entertainment tax, besides the channels they want to subscribe.

They are also required to furnish specific information about Phase III areas like proposed areas of operations, date of analogue switch-off, number of set-top boxes (STBs) seeded along with the seeding plan.

Broadcasters also sought information about pending civil/criminal/police cases relating to infringement of copyright, cheating, or under Negotiable Instruments Act.

“MSOs have provided the details. We have sent everything but the broadcasters have not come back with their commercial proposal. We are waiting for their offer,” said Kumar.

A senior official from a distribution company said the MSOs have not provided enough information for us to conclude on the commercial terms and this has led to delay in the signing of agreements.

“We are not getting enough details from the MSOs such as how many set-top boxes they want to seed, etc. They are sending lengthy lists of which markets they want to enter,” the official said on condition of anonymity.

The official expects things to start moving from next month. “It will take a month for things to get into momentum. Discussions are on but things are yet to fructify,” he added.

The first deadline set by TRAI for signing of interconnect agreements was 30 April. The sector regulator had asked MSOs to approach the broadcasters within 15 days with their business plan. Broadcasters were to respond to the MSOs within 15 days.

Also read:

Sign interconnect agreement by 21 June or TRAI will intervene, MIB tells stakeholders