Friday, 11 July 2014

Local Video Channels and VAS under Scanner

Telecom Regulatory Authority of India (TRAI) on 23 June 2014 have issued a consultation paper for regulating channels and services offered by local cable operator and direct-to-home (DTH) operators called platform services. 
“Platform Service, according to TRAI are programmes transmitted by the Distribution Platform Operators, exclusively to their own subscribers and doesn’t include Doordarshan channels and TV channels permitted under Downlinking guidelines.”  

In its consultation paper, TRAI explained that TV channel distribution platforms like cable operators, Multi-System operators, Direct to Home (DTH), Headend in the Sky (HITS) or IPTV primarily re-transmit TV channels permitted by I&B Ministry. However, in addition to the re-transmission of permitted TV channels, some of these platform operators also operate their own local ground-based channels, which generally provide movies, music related programs, local community-based programs, local news and current affairs to their own subscribers. Also many operators including DTH operators provide value added services like Karaoke channel, educational channels, interactive games, video-on-demand etc.
These local ground based channels or value added services operated by cable TV operators are presently not subject to any specific guidelines unlike private satellite TV channels permitted under the uplinking/ downlinking guidelines of MIB. Earlier, the Authority in its recommendations on ‘Restructuring of cable TV Services’ dated 25 July, 2008 had recommended that LCOs shall be permitted to transmit their ground based channels, which will be subjected to Programming code and Advertisement code as prescribed in the Cable Television Network (Regulation) Act, 1995 and any other instructions issued by MIB from time to time. 
MIB, vide their letter dated 17 January, 2013 has sought recommendations of TRAI on the issues related to local ground based channels of cable TV operators. Following the reference made by MIB, the authority has issued this consultation paper after more than a year of getting the reference from the Ministry. Now through this CP the Authority seeks comments/views of all the stakeholders on the issues related to platform services so that a proper regulatory framework can be put in place. The issues on which TRAI seeks recommendation from stakeholders are given in the subsequent paras. 
Eligibility Criteria : Since the content is transmitted through PS channels, so the main responsibility of ensuring compliance to stipulated terms and conditions would vest on the DPOs, it becomes essential that the entity offering the PS channels is legally responsible and registered under an appropriate regulatory framework. In this regard one way to ensure uniformity in the legal status of all the DPOs, is that the DPO offering PS must be a company registered in India under the Companies Act. In the new Companies Act procedural simplifications have been made and with online system available for registration of Company through MCA website, the process has become very quick and simple. Thus, even small MSOs who are already registered with MIB as an individual can now register as a company under Companies Act, 2013 without having to fulfill onerous requirements.  
FDI limits for PS Channels : As of now MIB has permitted 26% foreign investment in private satellite News channels through automatic route  however, MSOs registered under the Companies Act can access foreign investment limits up to 74% with 49% under automatic route. If such MSOs operate local news channels, the FDI limits in some cases might exceed the permissible limit of 26% leading to an anomalous situation which needs to be addressed. Exclusion of ‘News & Current Affairs’ category of programs from PS channels would address the anomalous situation.  
Net-worth of DPO : The Authority wants whether minimum net-worth condition is required for offering PS especially when these channels are being operated by the existing registered/ permitted DPOs.  As per the Downlinking guidelines, the applicant company should have a minimum net-worth of Rs. 5 Crore for downlinking of first (Non-News or News & Current Affairs) television channel and Rs. 2.5 Crore for downlinking of each additional television channel. The requirement of net-worth is generally to ensure that only serious players enter into the sector. 
Security clearance of PS channels : At present the PS channels of the DPOs do not require security clearance, whereas for the TV channels being broadcast by authorized private broadcasters, security clearance is required. Without the security clearance, these TV channels cannot be registered with the MIB. For uniformity in addressing security requirements, it may be considered necessary that PS channels also be subjected to the same security clearances as are required for private satellite TV channels.  
Registration of PS channels : One of the options, according to TRAI, could be that all PS channels to be offered by DPOs should also be registered with the MIB which presently grants the registration/permission to DPOs for operating the TV channel distribution network. Since DPOs are spread across India, it is desirable that a time-bound centralised online system for registration is introduced by the MIB. This could be in line with the e-governance policy of the government, the authority stated. It has also proposed that at the time of registration of a PS channel, the DPO should declare the type of programmes to be transmitted through such PS channel. These programmes should be in conformity with the programmes permitted over PS channels. Any change in the programme type should be informed to the MIB 30 days prior to such a change. 
Period of registration : As per downlinking guidelines, the initial permission for downlinking of channels is granted for a period of 10 years and a renewal of permission may be considered for a period of 10 years at a time subject to certain conditions. On similar lines, for PS as well, the validity for initial registration can also be 10 years. 
Geographical area of operation of PS channels : Another issue is whether there should be any restriction on the geographical area of operation of PS channel. In the present CP it has been proposed to permit specific kind of programs only for transmission through PS channels. These include the local level programs and movies on demand, educational programs etc., which are not local in nature. If that is agreed to, then one could argue that the market forces themselves would compel the DPOs to restrict the transmission of local level programs to a certain local geographical area, as these programs may not be of much interest countrywide. 
Permission/annual Fee : Since PS channels will be restricted to subscribers of the concerned DPO only, they do not attract the provisions related to ‘must carry’ and ‘must provide’ which are applicable to registered channels permitted under downlinking guidelines. Therefore, one may argue that the fee charged in the instant case for PS channels may not be the same as or may be lower than that for registered channels permitted under the downlinking guidelines. 
Cap on total number of PS channels operated by DPO : Another issue for consideration is whether there is a need for limiting the total number of PS channels that can be operated by a single DPO. This limit may be specified as a % of total number of channels offered by that DPO or a fixed number (say 10 channels) or a combination of above i.e. a % of total number of channels offered or a fixed number (say 10 channels), whichever is lower. 

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