MIB on cross-media restrictions, cable monopoly, and new DTH guidelines

MUMBAI: The ministry of information and broadcasting (MIB) has found the Telecom Regulatory Authority of India’s (TRAI) recommendations on cable monopoly as impractical and has sought the Competition Commission of India’s (CCI) on the same.

In its recommendations on ‘Monopoly/Market dominance in cable TV services’, the TRAI had recommended using Herfindahl– Hirschman Index (HHI) for measuring the level of competition or market concentration in a relevant market.

It had also recommended restricting the building up of market share up to 50%, which corresponds to individual contribution of 2500 to market HHI by any individual/ ‘group’ entity through M&A/ ‘control’ of an entity over many MSOs/ LCOs.

For assessing monopoly/ market dominance of Multi System Operators (MSOs) in the TV channel distribution market, the state was chosen as the relevant market.
Market dominance is to be determined on the basis of market share in terms of the number of active subscribers of MSOs in the relevant market.

In its reply to the Parliamentary Committee on Information Technology, the MIB stated that these recommendations were earlier discussed by Inter-Ministerial Committee (IMC) in its meeting held on 17th and 22nd January 2014 following which the recommendations were accepted.

Following this, the ministry received representation from the industry arguing that HHI Index for measuring market concentration is not the appropriate tool in the media sector.

The ministry further stated that the matter was examined in this ministry and not found feasible as the recommendations appear to be impractical. It also informed that the views of CCI are being sought in the matter.

On the TRAI recommendations related ‘Issues Relating to Media Ownership’ dated 12th August 2014, the ministry said that the recommendations are under consideration of the IMC that has been set up for examining them. Two meetings of the IMC have been held on 23rd February 2018 and 28th March 2018.

The ministry on 16th May 2012 had sought TRAI’s recommendation on the issue of vertical integration in the broadcasting and TV distribution sector and cross-media holdings across the TV, Print & Radio sector.

In its recommendations, the regulator had suggested keeping government out of TV broadcasting sector. It had also sought a ban on private treaties between media companies and business houses.

It had also recommended imposing restrictions on media companies that have a market share of 32% in TV news and print segment. If any company crosses the threshold then it will have to dilute its control in one of the two segments.

The TRAI had even sought ownership restrictions on corporates entering media. It had also batted for a common media regulator for TV and print.

The TRAI’s recommendations on ‘Issues related to New DTH Licenses’ dated 23 July 2014 has seen some forward movement.

A Draft Cabinet Note regarding amendments to the guidelines for providing DTH services in India circulated to Ministries/Departments concerned on 12th March 2018 contained some provisions of cross holdings between broadcasters and Distribution Platform Operators (DPOs).

The comments of all the Ministries / Departments are being examined for a view in the matter, the MIB said in its reply to the committee.

The IMC constituted for the purpose of examining TRAI recommendations on the subject observed that the matter of cross-holding in DTH has to be taken into consideration in
the larger context of other TRAI recommendations on cross-media holdings.

The IMC recommended that the restrictions in the existing DTH guidelines may continue till the matter is holistically resolved.

In its recommendations on ‘Issues related to New DTH License’, the authority had liberalised the cross holding restrictions by allowing broadcasters to own a DPO. However, no broadcaster can own more than one DPO.

However, the authority has also recommended imposing several restrictions on vertically integrated companies to ensure a level playing field. Vertically integrated DPOs cannot exceed 33% market share. The relevant market for DTH is the whole country while in case of cable it is a state.

Further, vertically integrated entities cannot do fixed fee deals. The deals can only be on a cost per subscriber (CPS), which has to be non-discriminatory. However, this clause has become irrelevant in light of the TRAI’s new regulatory framework for the broadcasting sector wherein customers can now directly choose channels and packages based on the MRP and bouquet rates declared by the broadcasters.

On the issue of grant of infrastructure status to the broadcasting industry, the MIB may submit a revised proposal identifying specific items that qualify for inclusion as ‘Infrastructure’ after the demand was turned down by the Institutional Mechanism (IM).

The IT committee had recommended that the MIB must submit the revised proposal expeditiously to the Department of Economic Affairs in the interest of the industry and to make consorted effort for granting infrastructure status to the broadcasting industry.

The meeting of Institutional Mechanism on Harmonized Master List of Infrastructure Sub-sectors was held on 20th February 2017. The agenda of the meeting included ‘Inclusion of Broadcasting Industry in the Master List of Infrastructure Subsectors’.

Following the meeting, the IM had recommended that inclusion of ‘Broadcasting Industry’ in Harmonized Master List of infrastructure sub-sector cannot be considered as presented.

On the issue of 8% adjusted gross revenue (AGR) charged from cable TV companies on their entire business and not just broadband, the ministry stated that it has already taken up this issue and it is under consideration of department of telecom (DoT).

It further stated that Prime Minister Narendra Modi had chaired a meeting on Digital India on 17th May 2018 wherein the issue of broadband through cable network was discussed as one of the agenda. The PM had desired that DoT may take necessary action to provide cable TV services and internet services through one cable.

The ministry also told the committee that the issue of sharing of infrastructure status sharing in the TV broadcasting sector is under its active examination. MIB secretary had chaired a meeting with the representatives of TRAI and Broadcast Engineering Consultants India Limited (BECIL) on 13th February 2018.

The ministry had made reference to TRAI on 29 April 2016 seeking recommendations on sharing of infrastructure by MSOs, LCOs and HITS operators for providing TV Services. TRAI had furnished its recommendations on “Sharing of Infrastructure in Television Broadcasting Distribution Sector” on 29th March 2017.

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