TRAI mulls doing away with 5% subscription threshold for regional channels on DTH

MUMBAI: Alarmed by the complaints of arm-twisting of regional channels by the distribution platform operators (DPOs), Telecom Regulatory Authority of India (TRAI) is mulling to do away with the threshold of 5% subscription for regional channels for direct to home (DTH) platforms.

The authority has also consulted all stakeholders whether placement fee/marketing fee agreements should be regulated in view of the complaints about the misuse of the forbearance granted by the TRAI on these kinds of deals. In the new regime, only the carriage fee has been regulated.

In its consultation paper ‘Issues related to Interconnection Regulation 2017’, the TRAI has stated that it has received representations from quite a few regional broadcasters wherein they have highlighted their concerns regarding the declaration of the target market by DPOs.

The existing regulations provide freedom to the DPOs to declare their target market for the purpose of ascertaining the carriage fee.

The DTH operators have defined entire India as their target market whereas most of the multi system operators (MSOs) have declared multiple states/ large states as their target market.

Since DTH operators have declared entire India as their target market, the regional channels end up paying high carriage fee since their target market is restricted to a particular and they are not able to reach the 5% subscription threshold of the target market.

Under the present interconnection regulation, DPOs have the option to decline to carry a channel having a subscriber base less than 5% of the target market.

DTH operators argue that they cannot declare state-wise or city-wise target areas as their signal footprint is across the country.

Notwithstanding the argument of the DTH operators, the TRAI noted that it will be unfair for all those regional broadcasters to pay carriage fee factoring in the active subscriber base of PAN India of the DPO.

“The subscription of Regional channels on a national basis continues to be lower than the minimum threshold of 5% despite a very high subscription in their respective regional market. This makes them prone to undue arm twisting by the distributors. To address this issue, one may opine that the threshold of 5% may be done away with especially for DTH platform as their target market is Pan India, however in case of MSOs this condition may remain,” TRAI said in the consultation paper.

The regulator further stated that one option could be that carriage fee may be linked to the cost of carrying a channel. In this option, the cost of carrying a channel may be worked out and the amount of carriage fee that a broadcaster may be required to pay the distributor may be capped at that level. In this case, the issue for consideration would be to determine the cost of carrying a channel.

The DPOs have argued that even if a broadcaster is mandated to pay a carriage fee of twenty paisa per subscriber per state irrespective of the total active subscriber base, the DPO will still not be able to recover his/her costs.

The TRAI noted that DPOs in India have a channel carrying capacity ranging from 250 to 600 channels and there are presently a total of 902 private satellite channels available in the country. Certainly, a DTH operator cannot carry all the channels due to the limitation of transponders.

Regulating marketing/placement/promotion agreement

The placement agreement, marketing agreements or any other technical or commercial arrangements between broadcasters and distributors (apart from RIO based agreements) are in forbearance.

But now, the TRAI has received quite a few complaints have been received from various broadcasters whereby it is being alleged that some DPOs are resorting to pushing for marketing/placement/promotion agreement, by exploiting the available forbearance.

The TRAI said it has received representations from quite-a-few broadcasters stating that the DPOs are arm-twisting them to sign marketing/ promotion fee deals, in the garb of putting their channels in a specific package.

While the framework does not specifically restrict the marketing/ promotion deals, creating packages and forcing broadcasters to sign for such packages is de-hors the new regulatory framework, the TRAI noted.

Many broadcasters have complained that some DPOs are denying them subscription agreement and are imposing supplementary terms for signing placement/ promotion agreement as a precondition for the signing of the subscription agreement.

Many FTA broadcasters have also informed TRAI that DPOs are forcing them to sign marketing/ promotion/ placement fee agreements otherwise they would not include them in the BST.

Many small regional broadcasters have also submitted that certain DPOs are threatening discontinuance of their channels from the platform if they do not sign placement/ market promotion deals.

Written comments on the consultation paper are invited from the stakeholders by 23rd October 2019. Counter comments, if any, may be submitted by 6th November 2019.

Summary of Issues for Consultation

Issues related to Target Market

1. Do you think that the flexibility of defining the target market is being misused by the distribution platform operators for determining carriage fee? Provide requisite details and facts supported by documents/ data. If yes, please provide your comments on possible solution to address this issue?

2. Should there be a cap on the amount of carriage fee that a broadcaster may be required to pay to a DPO? If yes, what should be the amount of this cap and the basis of arriving at the same?

3. How should cost of carrying a channel may be determined both for DTH platform and MSO platform? Please provide detailed justification and facts supported by documents/data.

4. Do you think that the right granted to the DPO to decline to carry a channel having a subscriber base less than 5% in the immediately preceding six months is likely to be misused? If yes, what can be done to prevent such misuse?

Issues related to Placement and other agreements between broadcasters and Distributors

5. Should there be a well-defined framework for Interconnection Agreements for placement? Should placement fee be regulated? If yes, what should be the parameters for regulating such fee? Support your answer with industry data/reasons.

6. Do you think that the forbearance provided to the service providers for agreements related to placement, marketing or any other agreement is favoring DPOs? Does such forbearance allow the service providers to distort the level playing field? Please provide facts and supporting data/documents for your answer(s).

7. Do you think that the Authority should intervene and regulate the interconnection agreements such as placement, marketing or other agreement in any name? Support your answer with justification?

8. How can possibility of misuse of flexibility presently given to DPOs to enter into agreements such as marketing, placement or in any other name be curbed? Give your suggestions with justification.

9. Any other issue related to this consultation paper? Give your suggestion with justification.

You may be interested