Interconnect Issues Get A Re-look

TRAI Issues Consultation Paper on Interconnect Issues relating to Broadcasting & Cable Services

The TRAI had sent its Recommendations to the Government in October, 2004 on Issues Relating to Broadcasting and Distribution of TV Channels. Meanwhile, TRAI had also issued Regulations covering certain issues relating to Interconnection. The primary objectives of these regulations were:

(i) To provide a framework for access to content by various distributors so as to enhance competition and consumer choice.

(ii) To minimise disconnection and inconvenience to consumers on account of disputes between service providers.

(iii) Registration of details of interconnection agreements in accordance with the provisions of the TRAI Act.,

Drawing upon the response to the Consultation Note issued on 21 March 2006, TRAI has prepared this Consultation Paper. 

The TRAI issued Tariff Orders and Regulations to regulate the industry. The Tariff Orders were issued with the objective of regulating the price paid by the consumers for Cable TV services. The Telecommunication (Broadcasting and Cable Service) Interconnection Regulation 2004 dated 10.12.2004 was issued to ensure non-discriminatory access of content to all distributors of television channels and to safeguard the interests of consumers in case of disconnection of signals to a service provider in case of a dispute. The Regulation does apply to all areas – CAS and Non CAS areas. 

Most of the disputes and litigations have arisen on account of implementation of Interconnect Regulations. There were also some requests for review/ amendment of the Interconnect Regulations. There were a large number of complaints regarding violation of The Interconnect Regulation. Many cases were filed by service providers in the TDSAT. Out of 80 judgments posted on the website of TDSAT as on 5 April 2006, the number of judgments relating to cable TV sector was 54. Thus a need was felt to expand the scope of Interconnect Regulations so as to minimize the doubts and disputes/litigation.

Issues relating to the Register of Interconnect Agreements (Broadcasting and Cable Services) Regulation 2004, dated 31.12.2004 have also lead to a number of litigations. 

AMENDMENT OF EXISTING REGULATIONS

Any ambiguity in the regulations leads to different interpretations of the regulation and ultimately results in litigation. There are other clauses which are not ambiguous but are sometimes difficult to implement on account of difficulties in verification of facts.

Two Notice Periods

Two notice periods of One Month/ Two Working Days have been provided in the regulations for the notice to be given to a distributor of TV channels prior to disconnection of signals. The provisions of clause 4.1 of The Telecommunication (Broadcasting and Cable Services) Interconnection Regulation 2004 provide that the Broadcaster can disconnect a running Signal giving one month notice against violation of the agreement and two days notice in case no agreement exists and the distribution is unauthorised.

Thus two notice periods were prescribed to ensure that in the case of unauthorized distribution the broadcaster could quickly react and not allow the violation of his rights to continue unchecked. This lead to disputes regarding notice period applicable in specific cases. For example -

B 1.Cases where the broadcaster claims that the MSO/ LCO is providing signals outside the authorized area;

2. Cases where the agreement has expired and no valid agreement is in force;

3. Cases where a new LCO has joined an MSO;

4. Cases in which there is no written agreement.

5. Different areas prescribed for the same LCO/MSO by different broadcasters.

TRAI has asked comments on the following:

i Whether there should be only one notice period for the notice to be given to a distributor of TV channels prior to disconnection of signals?

ii If yes, what should be the notice period and whether this should apply to unauthorized retransmission/ piracy cases also?

iv If not, what changes should be made in the regulation to avoid disputes as to which notice period is applicable? In particular, how should unauthorized distribution bedefined?

Notice to disconnect

The Broadcasters/ MSOs are required to give notice to the distributor of TV channels prior to disconnection of signals. They are also required to inform the consumers about the impending disconnection of signals. As of now the Broadcasters/multi system operators have the option to inform the consumers about the notice to disconnect signals by way of a public notice in two local/ national newspapers or by way of a scroll on the concerned channels. 

The issues that arise out of this requirement are:

1. Sometimes, the notice to disconnect is given to the service provider but the public notice is not issued simultaneously. As a result the viewers get less than the stipulated time for protecting their interests;

2. Sometimes there is a dispute between the service providers as to whether the scroll was run or not.

3. There is also confusion as to whether the scroll should be run on all the channels in case the notice of disconnection relates to a bouquet of channels and time for which the scroll should be run.

Further there have also been cases of the channels of Broadcasters being switched off by MSO and Cable Operators. This causes inconvenience to the consumers for no fault of theirs. 

The issues for consultation are:

i Whether the notice period should be counted from the day of issue of public notice?

ii Whether the option available to broadcasters/ MSOs to give public notice by running a scroll on the channels should be done away with?

iii In cases where the Broadcasters have not switched off their channels whether the MSOs and the Cable Operators should be required to give notice to the consumers before switch off of any channel?

Access to content

An important feature of The Telecommunication (Broadcasting and Cable Services) Interconnection Regulation 2004 is the clause which mandates non discriminatory access to TV channel signals to all similarly based distributors of TV channel(s). The broadcasters/ MSOs have been given the option to provide the signals either directly or through a particular designated agent or any other intermediary. 

An agent or any other intermediary of a broadcaster/multi system operator must respond within thirty days of the request for providing signals of TV channel(s). However, there are complaints that even though the agent/ intermediary of the Broadcaster/multi system operator responds within the stipulated time, the distributors of TV channels are asked to furnish irrelevant details just to delay the matter. At times negotiations are needlessly prolonged defeating the purpose of the Regulation.

The issues for consultation are:

1. Whether a time limit should be laid down for the agent or any other intermediary of a broadcaster/multi systemoperator to either provide signals to any distributor of TVchannels once a request is made or to decline the requestgiving reasons for the same so as to enable the applicant to agitate the matter at the appropriate forum without loss of time?

2. Whether the time limit should also include time taken by the broadcaster to refer the distributor of TV channels who has made a request for signals to its agent or intermediary?

3. Whether the provisions for mandatory access and the nonexclusivity requirement in the Interconnect Regulation beremoved so that there is no mandatory requirement forchannels that are provided to only a digital platform / service to be made available to any other digital platform /service or on the cable platform?

4. Alternatively should these requirements be applied only to channels that have entered the market before a particular date?

Area of operation

Interconnect, in the context of pay TV channels represents the licensing, for a consideration, of Intellectual Property Rights (“IPR”) in creative content for the purpose of ultimate delivery to a paying subscriber. The area of operation is the basis on which, in the present non-addressable environment, broadcasters and cable operators enter into commercial arrangements.

The issue for consultation is:

1. Whether the obligation of the broadcaster to provide access to content to all distributors should be valid only as long as the MSO / LCO operations are restricted to the area as defined in the commercial agreement?

MSO as an agent of Broadcaster

The interpretation of Clause 3.3 of the Interconnect Regulation resulted in a number of disputes and many petitions have been filed in TDSAT. The disputes mainly pertain to the issue as to whether an MSO can be appointed as an agent of the broadcasters or not. The TDSAT has already adjudicated this matter in the Sea TV case (Petition No. 41© of 2005, Judgment dated 24 August 2005) and an appeal against this judgment is pending in the Supreme Court.

The issue for consultation is:

1. Whether the Regulations should specifically prohibit appointment of an MSO, directly or indirectly, as an agent of a broadcaster? 

Payment defaulters

The Interconnect Regulations provide that the clause which mandates non discriminatory access to TV channel signals to all similarly based distributors of TV channel(s)would not apply in the case of a distributor of TV channels having defaulted in payment. Sometimes LCOs switch from their affiliated MSO when they are either unable or unwilling to pay their outstanding dues to their affiliated MSO. 

The issue for consultation is:

1. Whether the Regulations should make it obligatory that the applicant-distributors shall produce, along with their request for services, a “No Pending Dues” certificate from the presently-affiliated MSO in respect of LCOs intending to get signal feed through such distributor or directly from broadcasters?

EXPANSION OF EXISTING REGULATIONS

There have been requests for expansion of existing regulations so as to bring more issues in their fold. The request for formulation of a Reference Interconnect Offer (RIO) has been recently made. Apart from this, there are other issues also as given below:-.

Subscriber Base

The service providers in non-CAS areas enter into interconnection agreements on the basis of negotiated subscriber base. The lack of any mechanism to measure/determine the correct subscriber base is the basic cause of many disputes. This problem can be divided into the following sub sections-

(i) Disputes on subscriber base between broadcaster/MSO and between MSO/cable operator during the course of a subsisting contract.

(ii) Disputes on subscriber base between broadcaster/MSO and between MSO/cable operator at the end of a contract and during negotiations forthe extension of the contract.

(iii) Disputes on subscriber base between broadcaster/MSO and between MSO/cable operator at the start of the contract i.e for a new service provider.

The issues for consultation are:

1. Whether the subscriber base should remain fixed during the term of validity of subscription agreement?

2. If not, what should be the methodology for periodic revision of subscriber base?

3. Whether it should be made mandatory to provide a list of the LCOs (with Subscriber base/ lump sum payments)/ households to the broadcasters/MSOs at the time of signing of the agreement?

4.How should the subscriber base be determined for new entrants?

Multi System Operator

In the light of TDSAT judgment in the case of Sea TV Network Ltd., many Cable Operators have started insisting on getting signals directly from the broadcasters claiming to be Multi System Operators. To bring down the number of disputes on this account, it may be worthwhile to define the term “Multi System Operator” more clearly.

The issue for consultation is:

1. Whether any minimum threshold of the number of subscribers and other parameters should be specified for a Cable Operator to be defined as a “Multi System Operator”and for being entitled to receive signals directly from broadcasters?

Renewal of Agreements

The interconnection agreements are normally valid for one year. Renewal of agreements is not done before the expiry of earlier agreement leading to allegations of unauthorized transmission/pressure tactics.

This problem can be overcome if the renewal negotiations are done before the expiry of the existing agreement.

The issue for consultation is:

1. Whether any time limit should be laid down for renewal of agreements prior to expiry of existing contract, so that in case the agreement can not be renewed, the subscribers get sufficient advance notice regarding discontinuation of those channels after expiry of existing contract?

2. What arrangements should be made for extension of the contract during negotiations after the validity of a contract has expired?

Conversion of FTA channels into Pay channels

Some FTA channels are converted into pay channels with time due to change in the business model of the broadcasters and all agreements have to undergo a change. 

The issue for consultation is:

i Whether any advance notice should be stipulated for FTA channels turning into Pay channels, so that in case the service providers are unable to reach an agreement, the subscribers get sufficient advance notice regarding discontinuation of those channels from the date of their conversion into Pay channels?

Reference Interconnect Offer

The TRAI should undertake an exercise similar/ akin to the RIO Regulations dated 12.7.2002 applicable to the telecom services – for approving the terms and conditions of model subscription agreements of dominant players and to regulate their activities in the broadcasting and cable TV services. 

The telecom industry and broadcasting & cable industry differ significantly on account of the fact that there is 100% addressability in the telecom industry, whereas the broadcasting & cable industry has to make a lot of progress in this direction. Moreover, the interconnection issues in CAS areas are very different from interconnection issues in non CAS areas.

The issues for consultation are:

a Whether an RIO should be issued by TRAI for approving the terms and conditions of model subscription agreements of dominant players and to regulate their activities in the broadcasting and cable TV services? If so, what should be the elements of such a model subscription agreement?

Monopoly in the last mile

It is generally felt that the LCO network is a local monopoly. At MSO level, the Cable industry is in a contestable market situation. Market entry by new MSOs or territory expansion by incumbent MSOs does not necessarily improve consumer choice, viewing quality or lower consumer price. 

The issues for consultation are:

i What steps need to be taken to ensure that the monopoly at the last mile is removed so that consumers can get choice?

ii Should a regulatory framework be laid down wherein the areas of operation and the number of operators are clearly defined?

Carriage fee regulation

Interconnect results in the provision of TV channels by a broadcaster to a distributor and the carriage thereof by such distributor to the consumer home. The limited delivery platform choice compels all broadcasters to use the capacity constrained analogue C&S platform to reach consumers. This has given rise to increase in carriage fees. TRAI had addressed this issue in its Recommendations on Digitalisation of Cable TV. It had been concluded there that it would not be possible to regulate Carriage fees till digitalisation happens and Non Discriminatory Carriage can be insisted upon.

The issue for consultation is:

i Whether carriage fees on cable networks should be regulated? If so, on what basis should this be done and how should carriage charges be calculated?

ii What should be the mechanism for ensuring that the ceiling for carriage charge is not exceeded?

Source: http://cablequest.org/articles/regulations/item/1394-interconnect-issues-get-a-re-look.htmlSource: http://cablequest.org/articles/regulations/item/1394-interconnect-issues-get-a-re-look.html