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Government sets the ball rolling on HITS; issues policy guidelines

MUMBAI: The Information and Broadcasting ministry today issued policy guidelines for digital distribution platform Headend in the Sky (HITS) which is expected to speed up the process of digitising India’s sprawling analogue cable TV network.

The guidelines provide for an enabling regulatory environment for HITS operators. The policy guidelines were cleared by the union cabinet on 12 November, 2009.

The guidelines state that HITS services are allowed in both ‘C-Band’ and ‘Ku-Band’. HITS operators can uplink from Indian soil only and will have to install SMS and encryption system.

HITS service providers are not permitted to provide signals directly to the subscribers. However if a HITS operator also owns a MSO/Cable Operator he can provide signals directly through his distribution network.

With a view to attract foreign investment, the government has increased total direct and indirect foreign investment limit in HITS sector to 74 per cent. FDI limit up to 49 per cent will be on automatic route anything beyond that will require prior approval of the Foreign Investment Promotion Board (FIPB).

In order to keep a check on vertical integration and to promote competition, the ministry has imposed a cross-media holding restriction that prevents any broadcasting or DTH company to hold or own more than 20 per cent of the total paid up capital in the company holding the HITS licence.

At the same time, the HITS permission holder cannot hold more than 20 per cent equity in a broadcasting or DTH company. Additionally, any person or company holding more than 20 per cent equity in a broadcasting of DTH company, cannot hold more than 20 per cent equity in a company having HITS permission, and vice versa.

The HITS licensees will also have to make full disclosure of shareholders agreement, loan agreements and other such agreements at the time of application. Any subsequent changes having a bearing on the foregoing agreements will have to be disclosed to I&B ministry within 15 days.

Existing permission holders of HITS will have to comply and migrate to new policy regime within three months failing which their permission shall be cancelled. Essel Group’s MSO WWIL holds the HITS license in the

As per the guidelines, the applicants of HITS license should provide a non-refundable entry fee of Rs 100 million. While, no annual is required to be paid HITS service providers the license holder will have to pay license fee and royalty fee for the spectrum used as prescribed by the Telecom department.

Permission for providing HITS service will be for a period of 10 years from the date of issue of wireless operational license (WOL) by the Wireless Planning and Coordination Wing of Ministry of Communications and IT.

The applicant company will also have to furnish a bank guarantee of Rs 400 million valid for a period of three years within one month of issuance of SACFA clearance.

The HITS licensee has to commence its uplinking/downlinking operations within one year from the date of issuance of clearance from the WPC failing which half of the bank guarantee will be forfeited.

If HITS licensees commence services within two years from the date of clearance from the WPC, the entire bank guarantee will be forfeited and action for revocation of permission will also be considered.

However, if the roll-out obligations are fulfilled within one year from the date of clearance from the WPC, the entire bank guarantee will be refunded and if the roll-out obligations are fulfilled after one year but within two years of the issuance of WPC, half the bank guarantee will be refunded.

The set-top boxes provided by the HITS operator should be interoperatable [Editor1] so that if the consumer decides to switch to any other service provider, they [Editor2] should be able to do so at bare minimum cost.

The content that the HITS operator will provide has to pass through the encryption and digital addressable system located within the earth-station situated on Indian soil.

The HITS service provider will have to provide access to various broadcasting channels on a non-discriminatory basis. The HITS license holder is also not allowed to enter into any exclusive contract for the distribution of various television channels.

The HITS operator should not carry content prohibited by the MIB. The HITS will also have to ensure that the sports channels carried on its network comply with the mandatory sports feed sharing

The HITS licensee further has to ensure that the channels carried through its network follow the Programme Code and the Advertising Code stated under the Cable Television Networks (Regulation) Act, 1995 and the Rules framed thereunder.

The majority Directors, of the company seeking the HITS license, have to be of Indian citizens and all the senior officials, namely the Directors, Managing Director, Chief Executive Officer and the Chief Financial Officer, have to obtain security clearance from the Ministry of Home Affairs.

Any subsequent change in directorship, key executives or FDI will also be required to be notified to the MIB.

Applicants seeking permission for providing HITS services will have to have a company registered in India under the Companies Act, 1956. No restriction has been imposed on number of permissions as long as applicants fulfil all the criterion laid down in the policy guideline.

The ministry feels that HITS services would not only help increase the penetration of cable market further into rural areas where it has been absent because of unviability but will also help in further reduction of prices of STBs and will also lead to further consolidation of the cable market.

HITS would help a subscriber with a wide choice of digital channels, better picture quality and value added services at affordable price. HITS would provide greater channel capacity from the present limited capacity of channels placed in prime/non prime band, it added.