Thursday, 12 December 2013

Ad Cap Arguments or Delay Tactics

Last month TDSAT heard the arguments on all ad-cap related petitions by the broadcasters and News Broadcasters Association (NBA) against the Telecom Regulatory Authority of India (TRAI). Several arguments went back and forth between all the parties and, finally, it came to an end on 30 November.
Most of the petitions have questioned the authority of TRAI to issue such a regulation. Some broadcasters do not even think ad-cap is an issue of Quality of Service Regulations. They have emphasized this issue as a part of content regulation which is not under the purview of TRAI. If one hears all these arguments, it becomes very clear that aim of all these petitioners is only to delay the implementation of the regulation. Already broadcasters have violated the law for so many years and they want government to allow them to do it indefinitely till they start making enough profits fr0m digitization.  

It is also very strange that TDSAT has not seen the hidden agenda of these news broadcasters and thrown out the petitions before even admitting knowing fully well that they question the implementation of law already passed by the Parliament. 
It is also strange that the petitioners have begged the Tribunal to permit them to display these annoying ads even if millions of subscribers are being harassed with distracting ads just because they fear that without this they will not make enough money to sustain their business. If this was so, why did they not question the law when it was passed by the Parliament? 
I remember when LCOs had petitioned TDSAT against revenue share regulations of TRAI in 2012 the same TDSAT had dismissed their petition asking them to first let them get implemented. In LCOs case subscriber interest was not being sidelined. There also it was the question of their survival and fundamental right to earn their livelihood.
The way digitization is being implemented, there does not seem to be an end to the process as haphazard regulations are ensuring the situation to remain uncertain forever. This further strengthens my belief that DAS is being implemented only to help some broadcasters to make more money and create large monopolies in the media in India.
The music channels’ counsel Ramji Srinivasan argued that TRAI cannot use both section 36 and section 11 of the TRAI Act for the regulation and now do a flip and call it a direction. If TRAI did want to frame the regulation, it should have done so under section 36 and not used multiple sections fr0m multiple acts.
However the music channels’ counsel said that they do have a license fr0m the TRAI but if the regulator wants to use it then it needs to to apply Section 7 (11) of the Cable TV Networks Act strictly without additions or subtractions. 
He also presented data showing the effect the ad cap will have on their revenues. He said that channels in this genre will need to resort to a 30 per cent hike in ad rates if the cap does come into effect. Earlier, NBA counsel had also argued presenting data supporting the fact that channels' ad rates would need nearly 50 to 100 per cent increases, if losses due to lower air time are to be covered.
Srinivasan said that amicus curiae Aman Ahluwalia had said that news channels will be severely affected by ad cap since their viewership is low; similarly the music channels are also in danger since they are also niche with a limited viewership. And hence the ad regulation should not be applied to anyone at all. The question is can TDSAT decide on the selective applicability of a law on stakeholders? 
In a rejoinder filed by the News Broadcasters Association (NBA), the counsel pointed out that the TRAI had not informed the TDSAT that ads are of three types- commercial, social and programme promos. Not every ad is a paid ad and DAVP ad rates are also low. And the number of minutes of advertising does not take into consideration any of these facts; and hence is not reflected in these categories. He stated that the TRAI had gone overboard in describing the type, length and look of the adverts, in a consultation paper issued in 2012. And even though it was later dropped, it never had any mention of section 7 (11) of the Cable TV Networks (Regulation) Act. Also, the proposed 10+2 regulation finally did not mention that TRAI was using section 11 of the TRAI Act in order to enforce section 7 (11) of the CATV Act. I wonder what the classification of ads to do with the annoying effect of the ads. To my mind, any ad inserted in a content can be annoying to consumers and putting a cap on their duration has nothing to do if the ad is a paid one or not.
However, when TRAI argued that it was for the benefit of consumers that the regulation is being framed it was countered by the NBA saying that viewers need choice. If they wanted channels free of ads they should be ready to pay more for the service or else they have an option to switch channels. The channels said they are happy to consider it post DAS is implemented which according to a KMPG report will make subscription and advertisements a 50:50 affair. 
TRAI counsel even prayed that the TRAI’s procedure may have been faulty but the bench should not strike down the ad cap regulation on account of the above.
I wonder who stopped channels to charge less for their valuable content. In any case value of their channels is not a quantifiable entity. It should be left to the consumers if they accept a channel and pay for it, That has already been taken care by TRAI by mandating a-la-carte distribution of channels and empowering consumers to have their choice. So if a channel content is good, more consumers will go for it and more revenue will also come. How can the regulator ensure that all consumers must opt for all the channels so that each one makes enough money? A private business is a private business. Government can regulate the procedures but can not ensure profitability.    
It is also worth noting that Ministry of information and broadcasting (MIB) has also taken a soft stand towards law violations by the broadcasters by ignoring the violations for so many years. Not only this, when the issue came into light now, the Ministry is still protecting the broadcasters by writing to the TRAI to go easy on them till digitization gets fully implemented. 
The NBA lawyer also clarified that the Bengal Cricket Association vs MIB and Doordarshan judgement does not apply to private broadcasters as is stated in Para 79 of the case. Although the case was read against the channels, it claims that the argument that ‘airways are public property’ only applies when you are seeking a teleport licence for setting up a TV station. While thinking of granting a licence, Article 19 (1) of the constitution that speaks about freedom of speech and expression, can be thought of but not after it has been granted.
Another point argued was that when TRAI says it is laying down standards of quality under Section 11 of the TRAI Act, as per precedents it had itself set, it can only include technical aspects such as tariff regulation and never content. According to the NBA, duration is content.
To support the contention that TRAI only has recommendatory authority, the NBA lawyers pulled up SO 44 and 45 fr0m the TRAI notifications which said "Broadcasting and cable services to be telecommunication services and showed that it is mentioned in it by the central government that TRAI only has a recommendatory function regarding duration of commercials." 
SO 45E 1 b states “Without prejudice to the provisions contained in clause (a) of sub-section (1) of section 11 of the Act, to make recommendation regarding (b) the parameters for regulating maximum time for advertisements in pay channels as well as other channels”.
Even though broadcasting has no correct definition, the NBA read fr0m the TRAI explanatory memorandum 2012 it mentioned broadcasting services to be ‘dissemination of signals.'
The bench wondered that when a licence is issued, the terms and conditions need to be read properly, and if the ad cap regulation issued by TRAI adds anything to section 7 (11) of the CTN act, then should it be accepted. The agreement between the licensor and licensee is only for section 7 (11) and if points like clock hour and reporting to TRAI come into the picture, it is in excess of the section.
The bench said that one cannot change, modulate or supplement the terms of the licence. If TRAI had implemented it under sections 11 and 12 of the TRAI Act that address the issue of licensing and advertisements then such problems wouldn’t have come up.
To see what happens at the end, we will have to wait for the judgement next month.


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