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TRAI wants to bring VAS and local cable channels under regulatory framework

MUMBAI: The Telecom Regulatory Authority of India (TRAI) has released a consultation paper that seeks to bring local cable channels and value-added services (VAS) offered by direct-to-home (DTH) operators under the regulatory ambit.

One of the restrictions that could be introduced is the exclusion of local cable news channels from the programmes permitted on platform services (PS).This need arises because the foreign direct investment (FDI) limit in cable TV distribution is 74 per cent while the foreign holding cap in news and current affairs category is 26 per cent.

The broadcast sector regulator also feels that there should be a cap on the number of PS channels offered by a distribution platform operator (DPO).

In the consultation paper titled ‘Regulatory Framework for Platform Services’, the TRAI has described these services by distribution platforms as PS. The reference in this regard was made by former secretary of the Ministry of Information and Broadcasting (MIB) Uday Kumar Varma.

The key issues discussed in the consultation paper are the definition of PS, types of programmes that can be carried on PS channels, eligibility criteria for registration of PS, security clearance of PS channels, registration of PS channels, penal provisions for non-adherence to terms and conditions of registration, and other obligations to be imposed.

The consultation paper also deliberates on what amendments and additional terms and conditions are required in the existing registration/guidelines/permission/licence agreements with regard to the DPO for regulating the PS channels.

The authority has asked stakeholders, in case guidelines/rules for PS are laid down, how much time the existing DPOs should be given to comply with the prescribed rules.

In its explanatory memorandum, the regulator explained that the DPOs operate certain kind of programming services which are not obtained from broadcasters and are specific to their platforms.

Such platform-specific services include movies and music-related programmes, local community-based programmes, local news and current affairs, interactive games, shopping channels, and education channels.

Presently, PS channels being offered by DPOs are not regulated under any specific guidelines of the MIB, TRAI said. DPOs operate them as per their own understanding of the terms and conditions of their respective registrations/licences/agreements.

Some programmes transmitted by DPOs through these PS channels are similar to the programmes transmitted by regular TV channels, the authority noted.

Definition of Platform Services

The authority has recommended one possible definition of ‘PS’: “Platform services (PS) are programmes transmitted by distribution platform operators (DPOs) exclusively to their own subscribers and does not include Doordarshan channels and TV channels permitted under downlinking guidelines.”

Programmes permitted on PS channels

To ensure that PS channels remain distinct from the registered TV channels permitted under uplinking/ downlinking guidelines and do not trespass the domain of broadcasters either overtly or covertly, the authority is of the view that certain provisions should be there regarding the composition of PS channels. Further, the MIB and TRAI shall review the composition of PS channels from time to time.

The authority also stated that since the VAS and cable channels offered by DPOs provide locally relevant information akin to radio, the guidelines that govern FM radio networks can be adopted for the PS channels as well.

FM radio networks are allowed to provide information pertaining to sporting events excluding live coverage, information pertaining to traffic and weather, information pertaining to and coverage of cultural events, festivals, availability of employment opportunities, and public announcements pertaining to civic amenities like electricity, water supply, natural calamities and health alerts.

Eligibility criteria for registration as PS

Since content is transmitted through PS channels, the authority believes that the main responsibility of ensuring compliance with stipulated terms and conditions would rest with the DPOs. It thus becomes essential that the entity offering the PS channels is legally responsible and registered under an appropriate regulatory framework.

One way to ensure uniformity in the legal status of all the DPOs is that the DPO offering PS must be a company registered in India under the Companies Act. Almost all categories of DPOs, other than MSOs, are already required to be registered as company under the Companies Act. Even MSOs registered with the MIB are generally registered companies.

The authority also noted that the process of incorporation as a company has been simplified in India with the Companies Act defining even a one-person company as ‘a company which has only one person as a member’. This, the authority stated, will allow even small MSOs who are already registered with the MIB to register as a company under Companies Act, 2013 without having to fulfil onerous requirements.

FDI limit for PS channels

The authority also pointed out that foreign companies can bypass the 26 per cent FDI cap in news and current affairs category by simply investing in MSOs who operate local news channels. This is more so because the FDI limit in cable TV distribution is 74 per cent with 49 per cent under automatic route.

However, in case the ‘news and current affairs’ category is excluded from the programmes permitted on PS, there may not be a need for putting further restrictions on foreign investment in DPOs for offering the PS, the authority noted.

Net worth of DPO

The authority is mulling whether minimum net worth condition is required for offering PS especially when these channels are being operated by the existing registered/permitted DPOs.

As per the downlinking guidelines, the applicant company should have a minimum net worth of Rs 5 crore (Rs 50 million) for downlinking of first (non-news or news and current affairs) television channel and Rs 2.5 crore (Rs 25 million) for downlinking of each additional television channel. The requirement of net worth is generally to ensure that only serious players enter the sector.

Security clearance of PS channels

For uniformity in addressing security requirements, it may be considered necessary that PS channels be subjected to the same security clearances as are required for private satellite TV channels.

At present, the PS channels of the DPOs do not require security clearance, whereas for the TV channels being broadcast by authorised private broadcasters, security clearance is a must. Without the security clearance, these TV channels cannot be registered with the MIB.

Registration of PS channels

One of the options, according to TRAI, could be that all PS channels to be offered by DPOs should also be registered with the MIB which presently grants the registration/permission to DPOs for operating the TV channel distribution network.

Since DPOs are spread across India, it is desirable that a time-bound centralised online system for registration is introduced by the MIB. This could be in line with the e-governance policy of the government, the authority stated.

It also recommended that at the time of registration of a PS channel, the DPO should declare the type of programmes to be transmitted through such PS channel. These programmes should be in conformity with the programmes permitted over PS channels. Any change in the programme type should be informed to the MIB 30 days prior to such a change.

Period of registration

As per downlinking guidelines, the initial permission for downlinking of channels is granted for a period of 10 years and a renewal of permission may be considered for a period of 10 years at a time subject to certain conditions.

On similar lines, for PS as well, the validity for initial registration can also be 10 years. Renewal of permission could be considered for a period of 10 years, subject to compliance with conditions as may be prescribed, the authority said.

Geographical area of operation of PS channels

Since DPOs will be operating as per the provisions stipulated in their respective licence/registration/permission and will offer PS only to their own subscribers, there could be a view that restrictions on the geographical coverage for PS channels is not required, the authority recommended.

Permission/annual Fee

Since PS channels will be restricted to subscribers of the concerned DPO only, they do not attract the provisions related to ‘must carry’ and ‘must provide’ which are applicable to registered channels permitted under downlinking guidelines.

Therefore, one may argue that the fee charged in the instant case for PS channels may not be the same as or may be lower than that for registered channels permitted under the downlinking guidelines, the authority stated.

Cap on total number of PS channels operated by DPO

The authority feels that there is a need to limit the number of PS channels offered by a DPO. This limit may be specified as a percentage of total number of channels offered by that DPO or a fixed number (say 10 channels) or a combination of above, i.e. a percentage of total number of channels offered or a fixed number (say 10 channels), whichever is lower.

Other obligations of DPO

Other obligations that may be imposed on the DPOs include non-transferability of registration for PS without prior approval of the MIB, prohibition from interconnecting with other distribution networks for re-transmission of PS, i.e. cannot share or allow the re-transmission of the PS channel to another DPO, compliance with the Programme & Advertisement Code and TRAI’s regulations pertaining to quality of service (QoS) and complaint redressal.