TRAI’s new regulation mandates broadcasters to disclose marketing, placement deals
MUMBAI: The Telecom Regulatory Authority of India (TRAI) has notified the Telecommunication (Broadcasting and Cable) Services Register of Interconnection Agreements and all such other matters Regulations, 2019.
The new regulation mandates that the broadcasters must report details of interconnection agreements with distribution platform operators (DPOs) including commercial details to the authority. This includes the details of all other individual agreements which include marketing, placement, agreements on advertisement slots, and extended credit facility.
The regulator has further stated that the marketing fee details and for that matter, any kind of fee for a channel, between broadcaster and distributor shall be reported to the authority.
“Thus, any incentive (monetary or otherwise) for marketing or support or visibility or placement signed between Broadcaster and distributor of television channels shall be reported to the Authority by the broadcaster,” TRAI said in its explanatory memorandum.
Unlike carriage fee, the TRAI has followed a principle of light-touch regulatory regime, whereby no ceiling or formula has been prescribed on placement fee, marketing fee or any other nomenclature of mutual agreement among service providers.
As regards the placement agreement, the authority noted that as per the extant regulatory framework, the broadcaster may offer discount within the prescribed limit or pay the mutually agreed fee, after signing the interconnection agreement, to a distributor for placing the channel at the desired position in the EPG.
In addition to reporting their RIO, the broadcasters will be reporting the details of the information of the individual agreements signed with the distributor of television channels, as per RIO. Further, the broadcasters will also be reporting the details of all other individual agreements signed with the distributor of television channels.
Any deviation in RIO based agreements also needs to be reported under Regulation 3(3) of this Regulation. The TRAI has incorporated necessary provisions in the regulations.
Initially, the distributors having average active subscriber base below one lakh have been exempted from the obligation of reporting details of interconnection agreements to promote ease of business and reducing the regulatory burden on such MSOs with limited resources. The new regulation envisages online filing in electronic mode.
The distributor having average active subscriber base below the reporting threshold have been exempted from the obligation of reporting details of interconnection agreements.
However, all the DPOs shall report their carriage RIO to the authority. The average active subscriber base for the month of March will be calculated as prescribed in Interconnection Regulations, 2017. For a distributor having multiple head-ends, the calculation shall include the subscribers of all the distribution networks including those of all the head-ends operated by him.
TRAI noted that there are few MSO’s who are operating different companies as Joint Ventures (JVs). In case any MSO or any of its JV partner becomes eligible to report for the register ofinterconnection i.e. becomes ‘reporting distributor’ then all its joint venture partners/ associate companies working as distributors must submit the interconnection agreements.
Further, these regulations provide that if any distributor once crosses the reporting threshold then it will attain the status of “reporting distributor”. Afterward, if the subscriber base of any reporting distributor, falls below the threshold in any of the subsequent years, it shall furnish a certificate duly signed by the compliance officer to the Authority that its subscriber base is below the threshold for that year.
The authority is in the process of developing an online portal for submission of reporting under this Regulation. The Authority stated that it may mandate MSOs with an average active subscriber base of less than one lakh to also report the details of their Interconnection agreements in the future. The reporting threshold of one lakh subscribers will be reviewed by the Authority from time to time.
The authority has specified that the new regulations will come in force in 120 days, except as regards submission of information related to the Compliance officer. The intervening period will enablethe service provider to prepare for easy compliance.
The authority stated that the primary objective of the register of Interconnect regulations is to formulate the contours of a reporting system for the service providers so that they can report details of interconnection agreements including commercial details to the authority. It would enable the authority to maintain a register of interconnect as per provisions of TRAI Act.
Presently the Register of Interconnect Agreement (Broadcasting and Cable Services) Regulation, 2004 is in force.
The draft Telecommunication (Broadcasting and Cable) Services Register of Interconnection Agreements Regulations, 2019 was issued by TRAI on 22nd April 2019. Subsequently, an Open House Discussion (OHD)was also held on 10th June 2019 in Delhi.
Based on the comments received and analysis of the developments in the market pursuant to the implementation of the new regulatory framework these regulations have been prepared.
The broadcaster or reporting distributor shall report to the Authority about the details of all their interconnection agreements within thirty days from the date of signing of such agreements or modifications or amendments or addenda, as the case may be.
The authority is of view that in order to avoid duplication of reporting, once a particular agreement is reported with TRAI then the same should not be reported again until any change/ modification is made in such agreement.
Such change or amendment should also be reported within 30 days from date of signing of such amendment or modification. A new broadcaster also shall report the information relating to interconnection agreements within thirty days from the date of signing of such agreements or modifications or amendments or addenda, as the case may be.
The reporting distributor of television channels will have to verify the information filed by the broadcaster in respect of all individual agreements signed amongst them, within fifteen days from the date of filing by the Broadcaster. Similarly, the concerned broadcaster will have to verify the information filed by the reporting distributor in respect of all individual agreements signed amongst them, within fifteen days from the date of filing by the reporting distributor.
The authority will endeavour to generate system enabled email to the concerned compliance officer to prompt such verification.
In case a broadcaster/reporting distributor fails to file the information in respect of any agreement then the concerned reporting distributor /broadcaster shall inform and report to the Authority, the information relating to all the interconnection agreements within forty five days from the date of signing of such agreements or modifications or amendments or addenda, as the case may be.
The authority is of the view that the details of information required to be reported by the broadcaster/distributor of individual agreements signed with distributor/Broadcaster, as per reference interconnect offer are non-confidential in nature as the reference interconnect offer published by the broadcaster/distributor is available in public domain. Thus all the interconnection agreements signed as per RIO are non-confidential in nature.
The authority has accepted the suggestion of stakeholders that the distributors should not be mandated to file the copies of agreements signed with LCOs. Distributor-LCO agreements are standardised as the regulations prescribe for the signing of such agreements on MIA/SIA.
However, the MSOs are required to report the details of all individual agreements signed with LCOs such as names and addresses of contracting parties, date of signing of the agreement, validity period of the agreement, and area covered by the agreement; the indication, in respect of each of the individual agreements, as to whether the agreement has been signed on the basis of Standard Interconnection Agreement or Model Interconnection Agreement, settlement of service charges (in case of Model Interconnection Agreement) details of revenue share (discounts if any) agreed, if any, and any other details which may be specified by the Authority, through direction, from time to time;
The TRAI will also impose a financial disincentive on broadcasters and DPOs who fail to disclose the relevant information mandated by the regulation. In case of delay beyond thirty days, the financial disincentive will increase and will be @Rs. 2000/- per additional day beyond the first thirty days.
The authority has prescribed a maximum limit of Rs Two Lakhs only. The maximum limit is applicable for each requisite submission and each of the due date as prescribed in the regulations. To re-iterate, the financial disincentive will be calculated distinctly for mandatory filing with respect to each RIO/agreement or other matters as applicable.
In case both the broadcaster and a reporting distributor of television channel fail to report any agreement then in addition to the financial disincentive on both such broadcaster and a reporting distributor, the authority may take suitable action against such erring service providers as per the provisions of TRAI Act.