The Telecom Regulatory Authority of India (TRAI) has reduced the role of the content aggregators through its new Tariff Order, prompting multi-system operators (MSOs) and direct-to-home (DTH) service providers to instinctively feel that they can no longer be ‘bullied’ by the muscle power of Media Pro, MSM Discovery or IndiaCast UTV. Under the new regulation, content aggregators are barred from forming bouquets which have channels from more than one broadcaster. While curbing the powers of the content aggregators, the sector regulator has allowed them to function as ‘agents’ of broadcasters. The aggregators can continue to sell bouquets of more than one broadcaster, but they will be able to bundle channels from only one broadcaster (or its group companies).
The regulation notified by TRAI on 11th February will reduce the control of existing market powerful content aggregators over MSOs and DTH operators. If we go extreme we can conclude that this regulation will dismantle the joint venture developed by different broadcaster to run their channels. Big broadcasters, however, would have less impact. They have a wide spread of channels and would continue to command negotiating power. But the smaller broadcasters, especially news channels that were riding on the back of bigger bouquets, would feel the tremor.
Salient features of the Tariff Order
Only broadcasters and not content aggregators will have to publish the Reference Interconnect Offers (RIOs) and enter into interconnection agreements with distribution platforms. However, in case a broadcaster is using the services of an agent, such authorised agent can only act in the name of and on behalf of the broadcaster.
Content aggregators can act as agents of multiple broadcasters and negotiate deals on their behalf, but they cannot bundle channels of multiple broadcasters. However, broadcaster companies belonging to the same group can bundle their channels.
In case an agent acts as an authorised agent of multiple broadcasters, the individual broadcasters will be required to ensure that such an agent does not bundle its channels or bouquets with that of other broadcasters.
The regulation made mandatory for broadcasters to ensure that, their authorised agencies (aggregators) do not indulge in certain activities beyond the scope of the business of their principals (broadcasters).
Despite vehement opposition from the broadcasters, the TRAI has, thus, brought the content aggregators under the existing regulatory framework by amending the Tariff Order and Interconnect Regulation for digital addressable system (DAS). TRAI’s amended regulation, however, is silent as to who will collect money from the distribution platforms (MSOs and DTH Operators). According to a media lawyer, the broadcasters can authorise the aggregators to collect as the same is permissible under law. A time frame of six months has been prescribed for the broadcasters to amend their RIOs, enter into new interconnection agreements and file the amended RIOs and the interconnection agreements with the Authority. While amending their RIOs, certain bouquets may require reconfiguration to align them with amend regulatory framework.
The Need for Regulation
As on date, there are around 239 pay channels offered by 55 pay broadcasters. These channels are distributed by 30 broadcasters/aggregators/agents of broadcasters. The three content aggregators—MediaPro, IndiaCast UTV and MSM Discovery—distribute 140 pay channels, which is almost 58.9 per cent of the total pay TV channels in the country. A chart showing various channels distributed by the major aggregators is given on the opposite page. The three aggregators by virtue of their large market share compelled the distribution platforms to even carry unwanted channels that have very less stand-alone market value. The platforms, on the other hand, pushed these channels to the consumers to recover costs. In the process, the public, in general, ended up paying for ‘unwanted’ channels and this, in effect, restricted consumer choice, TRAI said. Since the aggregators distribute a large number of popular channels of different broadcasters, they are in a position to coerce the platforms into selling the channels at terms favorable to them, TRAI added.
The broadcasters/aggregators have opposed the amendments on the ground that they are in violation of Article 19(1)(g) of the Constitution and on the ground of jurisdiction of TRAI in the said matter. They have stated that it is a competition issue and the Competition Commission of India (CCI) has sole jurisdiction over it. Apart from this, they have also stated that aggregators play a vital role in the distribution of TV channels and provide a balanced platform, especially to smaller broadcasters, for negotiations with the DPOs, who, according to the aggregators/ broadcasters, have substantial negotiating power.
However, in contrast the small broadcasters, DPOs and cable operator associations, have stated that the proposed amendments would provide a level-playing-field and eliminate the monopolistic practices arising from the role that the aggregator has assumed viz. as surrogates for multiple major broadcasters. In support of the argument, Roop Sharma President of Cable Operators Federation of India (COFI) has stated that the cable operators were genuinely facing serious problems in the hands of pay channel aggregators who are nothing but cartels of pay channels to blackmail cable operators and MSOs as well as fleece the consumers. She further elaborated that LCOs were also angry with the government and the regulator that after running their business for more than 20 years using their own investments, instead of being helped to modernise their business and grow, they are literally being asked to hand over the control of their business to aggregators. 186 cases were filed by MSOs and LCOs against Media Pro in TDSAT in the year 2012 which provides sufficient indication of the level of discontent amongst the DPOs vis-a-vis the aggregators she added further. She further stated that the maximum numbers of cases are against Media Pro and, unsurprisingly, there is no case filed by either DEN or Siti Cable against the aggregator, precisely because they are Media Pro‟s vertically integrated partners. She also opined that removal of aggregators will also reduce the cost to customers.
Lacunae in the Tariff Order
The new regulations have not addressed many potent issues which have been plaguing the business and continue to beg solutions. Let us understand these issues.
There is no restriction on the ownership of agent companies or how many broadcasters they can represent.
Broadcasters belonging to the same group can bundle channels. This has prompted the existing large broadcasters to launch many more channels in all genres, particularly the genres which were not represented by them so that complete bouquet of channels having the required mix as prescribed by TRAI belongs to the group. In this way they can distribute all 5their channels including the unwanted or unpopular channels through their vertically integrated MSOs and capture higher viewership for all their channels.
There are no guidelines for DPOs to price to consumers. There are different price being charged by different MSOs for the same channel. This is discrimination against consumers of different DPOs.
Should the retail pricing be determined by the DPO or Broadcaster and who should communicate this to the consumer? Same goes for the packages. At present there is no transparency. A broadcaster gives his content to his integrated MSO at a price much lower than to the independent MSO.
Is the DPO the real content aggregator buying in wholesale and then retailing to consumers or is he merely offering his delivery infrastructure and payment gateway for a commission?
What is the business model TRAI envisages? Is it going to continue as a B2B or should there be complete transparency to consumer in a B2C approach?
Apart from restricting multi-broadcaster packages it is important that the DPO’s packages which are what subscribers eventually subscribe to are also restricted to some extent. Consumers must know what price they need to pay for each channel and this price should be same all over the country.
Government’s License Policy to sign ‘Pay’ content first also makes Aggregators Dominant. It is sad that government license policy requires MSOs to sign the content agreements first and then get the license. Content agreements are not signed because aggregators first ask operators to invest crores in the infrastructure and then ask for the content. Thus everything from license to providing a Cable TV/DTH/HITS service depends on aggregators who control the price and method of distribution of all popular channels.
Also important is that whatever deals the aggregators have with the MSOs, LCO revenue share should be based on the MRP of channels and packages to the consumers so that they do not have to live on the mercy of their MSOs.
In fact ongoing disputes between the aggregators, MSOs and LCOs in the last two years of Digitisation should give a good indication to TRAI how to deal with the situation.