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How TRAI’s content aggregators’ regulation can shift the balance of power
MUMBAI: The Telecom Regulatory Authority of India (TRAI) has narrowed the role of the content aggregators through its new regulation, prompting multi-system operators (MSOs) and direct-to-home (DTH) service providers to instinctively feel that they can no longer be ‘bullied’ by the muscle power of Media Pro, MSM Discovery or IndiaCast UTV.
Under the new regulation, content aggregators are barred from forming bouquets which have channels from more than one broadcaster. While curbing the powers of the content aggregators, the sector regulator has allowed them to function as ‘agents’ of broadcasters. The aggregators can continue to sell bouquets of more than one broadcaster, but they will be able to bundle channels from only one broadcaster (or its group companies).
Such a rule by itself reduces the existing market power content aggregators had over the MSOs and the DTH operators. Taken to an extreme conclusion, this could see the dismantling of joint venture television distribution companies. This is unless, of course, broadcasters decide to distribute channels in separate bouquets through the existing entities.
Big broadcasters, however, would have less impact. They have a wide spread of channels and would continue to command negotiating power. But the smaller broadcasters, especially news channels that were riding on the back of bigger bouquets, would feel the tremor.
Salient features of the regulation
Among the key amendments carried out by TRAI, the broadcasters and not content aggregators will have to publish the Reference Interconnect Offers (RIOs) and enter into interconnection agreements with distribution platforms.
However, in case a broadcaster is using the services of an agent, such authorised agent can only act in the name of and on behalf of the broadcaster.
While the content aggregators can act as agents of multiple broadcasters and negotiate deals on their behalf, they cannot bundle channels of multiple broadcasters. However, broadcaster companies belonging to the same group can bundle their channels.
In case an agent acts as an authorised agent of multiple broadcasters, the individual broadcasters will be required to ensure that such an agent does not bundle its channels or bouquets with that of other broadcasters.
Despite vehement opposition from the broadcasters, the TRAI has, thus, brought the content aggregators under the existing regulatory framework by amending the Tariff Order and Interconnect Regulation for digital addressable system (DAS).
The authority stated that the present amendment prescribes responsibilities for the broadcasters in order to ensure that their authorised distribution agencies (aggregators) do not indulge in certain activities beyond the scope of the business of their principals (broadcasters).
The authority also pointed out that the amendments were necessitated as the aggregators were going beyond their scope of business by combining the offerings of different broadcasters and directly entering into agreements with distribution platforms.
TRAI’s amended regulation, however, is silent as to who will collect money from the distribution platforms. According to a media lawyer, the broadcasters can authorise the aggregators to collect as the same is permissible under law.
Content aggregators get six months to rework existing deals
TRAI has given broadcasters six months for reworking their existing deals with content distribution platforms. Renegotiation of contracts at new bouquet rates could lead to friction and switch-offs.
As per TRAI, broadcasters will need to amend their RIOs, enter into new interconnection agreements and file the amended RIOs and the interconnection agreements with TRAI within six months.
As on date, there are around 239 pay channels offered by 55 pay broadcasters. These channels are distributed by 30 broadcasters/aggregators/agents of broadcasters.
The three content aggregators—MediaPro, IndiaCast UTV and MSM Discovery—distribute 140 pay channels, which is almost 58.9 per cent of the total pay TV channels in the country.
The three aggregators by virtue of their large market share compelled the distribution platforms to even carry unwanted channels that have very less stand-alone market value. The platforms, on the other hand, pushed these channels to the consumers to recover costs.
In the process, the public, in general, ended up paying for ‘unwanted’ channels and this, in effect, restricted consumer choice, TRAI said.
Since the aggregators distribute a large number of popular channels of different broadcasters, they are in a position to coerce the platforms into selling the channels at terms favourable to them, TRAI added.
On the issue of jurisdiction, TRAI said it has the powers to frame ‘ex ante’ rules/regulations to ensure that the objectives of the TRAI Act are met. Thus, it is well within the jurisdiction of TRAI to issue regulations and amendments thereto on the subject matter.
The authority also shrugged aside suggestions that the amendments violated Article 19(1)(g) of the Constitution and contended that it is in conformity with various provisions of existing interconnection regulations.
Content distribution platforms feel market anomalies will get corrected
The distribution platforms are relieved that the authority has finally bit the bullet and brought aggregators under the regulatory framework.
Dish TV CEO RC Venkateish said, “It will correct a lot of anomalies in the distribution chain. You have to look at the intention with which the regulator has come out with the regulation. I don’t think the regulator will let anyone bypass this. The industry balance of negotiating power equation will change and it will be more of a level playing field. The extortionists will start behaving.”
Hathway Cable & Datacom MD and CEO Jagdish Kumar felt that the regulation would introduce a level playing field in the market.
“TRAI has taken a reasonably rational decision. We have been coerced into carrying weaker channels, despite our unwillingness. Now that the authority has made the necessary amendments, the extortion by aggregators will stop,” said Kumar.
Both Kumar and Venkateish think that six months is more than enough to rework existing deals.
DEN Networks COO MG Azhar said that the amendments were reflective of the change in the distribution scenario. “The industry is moving from a B2B to a B2C model. So TRAI’s move is more in safeguarding the interest of the consumers. The broadcasters will now have to spend money to promote their channels to the consumers, unlike earlier when they were part of some or the other bouquet,” expounded Azhar.