A Bolt from the Blue

An unrelated judgment by Supreme Court of India forces TDSAT to dismiss all petitions against TRAI’s  ‘ad cap’ regulations filed by broadcasters including News Broadcasters Association.

Supreme Court of India on 6th December 2013 put an end to numerous litigations in TDSAT against TRAI's authority to make certain regulations ruling that the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) had no power to examine and decide questions on the regulations set by the Telecom Regulatory Authority of India (TRAI). The Court added that the aggrieved parties could challenge the validity of TRAI's regulations in the High Court. 

Although this judgment was by a Bench on a large number of appeals moved by state-run Bharat Sanchar Nigam Ltd (BSNL), Cellular Operators  Association of India (COAI), Tata Teleservices and Reliance Infocomm, it created a furore in the broadcasting industry as many petitions filed by News Broadcasters Association and other broadcasters including Sun TV, E24, 9XM, Mastii, B4U and MTunes were dismissed by TDSAT on 11 December 2013. While passing the judgement TDSAT stated:-

“The tribunal was engaged in preparing the judgment and it was able to write the judgment to a large extent but in the meanwhile, the decision of the Supreme Court has come on December 6...In this judgment, the Supreme Court has definitively held that in exercise of the power vested in it under section 14 (b) of the Trai Act, 1997, TDSAT does not have jurisdiction to entertain challenge to the regulations framed by the authority under section 36 of the Act,” the tribunal said.

TV channels including National Broadcast Association (NBA) had approached TDSAT against the TRAI quality of service ad cap regulations of May 2012. NBA is a body of 26 broadcasters that operates 53 news channels in India.

TRAI gives regulations on issues like rates, inter-connection and quality of service. The TRAI Act was changed by an ordinance from January 24, 2000, establishing TDSAT to take over the adjudicatory and dispute functions. According to the Trai site, TDSAT was set up to adjudicate any dispute between a licensor and a licensee, between two or more service providers, between a service provider and a group of consumers, and to hear and dispose appeals against a direction, decision or order of Trai.

In May last year, TRAI had notified regulations directing broadcasters to restrict commercial advertisement durations on their channels to 10 minutes per hour, along with 2 minutes dedicated for promotion of their programming content, taking the ad-cap to 12-minutes per hour.

All broadcasters, particularly the News Broadcasters and Music Channels opposed these regulations that significantly restrict advertising on television, which, if imposed would damage the business model of TV broadcasters accelerating the growth of digital advertising in India, with video advertising, in particular, benefiting from this move.

The maximum duration limit of advertisements allowed was 12 minutes per hour, but with the leftover advertisement duration (if any) carried over to the next hour. This is applicable to advertising spots, info-commercials and house inventory from the broadcaster. Ad breaks were allowed only during breaks for live sporting events, like half time in football or hockey match. Only full screen ads were allowed.

Broadcasters were asked to ensure that the audio level of advertisements should not be higher than the audio level of the programs and finally, the broadcasters had to submit the details of ad carried in their channel in the format specified by TRAI, within 15 days from the end of a quarter.

Primary objective of these regulations was striking a balance between giving a consumer a good TV viewing experience and protecting the commercial interests of broadcasters. TRAI notified the “Standards of Quality of Service (Duration of Advertisements in Television Channels) Regulations” dated 14th May 2012. These regulations, besides prescribing that the limit of advertisement duration should be adhered to on clock hour basis, also provided that :

(i) advertisements should be carried only during breaks in live sporting action 

(ii) time gap between consecutive advertisement sessions should be of minimum 30 minutes in case of movies and 15 minutes otherwise 

(iii) no part screen advertisements should be permitted etc. 

These regulations were challenged by some of the broadcasters in the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) mainly on the grounds that regulation on advertising time and its corresponding effect on the broadcaster's revenues would adversely affect the growth and competition in the broadcasting industry and also Sports channels, by very nature of the business, stand on a different footing as compared to other genres because of the reasons such as periodic availability of content, limited shelf life and mandatory sharing with Prasar Bharati. 

Sports Broadcasters had also stated that content was obtained at huge cost and with very stringent conditions which strictly regulate how the events would be broadcast with specified timelines allotted to advertisements. So, to minimize other breaks that may occur after a long time, they demanded that part screen advertisements should be allowed. According to broadcasters the “part screen” and “drop down” advertisements are integral forms of advertising and statutory rules already exist under the Cable TV Act to regulate the format and duration of advertisements that may be carried on television channels. 

During hearing of the matter in TDSAT, on 17th July, 2012, TRAI had stated that the regulator was inclined to consider the issues raised by the broadcasters in the appeal. Consequently, the Authority decided to amend the said regulations vide their regulation of 22 March 2013. TRAI basically defined a clock hour in this regulation as starting from 00.00 to 00.60 so that the cap of 12 minutes will be applicable in each hour of the clock anf cannot be carried forward as is the practice with the broadcasters.

 Immediately on dismissal of their petition by TDSAT, NBA and other broadcasters filed a writ petition in Delhi High Court against the TRAI Regulation. The Delhi High Court has given broadcasters some relief passing an interim order on 17 December asking Telecom Regulatory Authority of India (TRAI) not to take any coercive action against the news broadcasters for not following the 12-minute mandated ad cap. The next date for hearing in the case is March 13, 2014.

Broadcasters have been flouting these regulations since many years as section 7(11) of Cable TV Network Rules 1995 as amended in 2005/06 was very clear on duration of advertisement in a TV channel every hour. However this clause did not mention the cap imposed in every clock hour with result that broadcasters were balancing additional ad duration in the peak time during the Night or in non-peak hours by reducing the ad timing there. 

It is surprising that the government never cared to implement these regulations in public interest. Whereas, while introducing mandatory digitisation it always took shelter of public interest and provision of quality of service to consumers. It is also ironical that while drafting the regulations ad cap duration has been kept the same for all types of channels and for all genres, news or non news.

As is known, advertisers citing the current economic situation had opposed the ad cap as they cannot cater to the increase in ad rates. However, some national broadcasters (who have been following the 12-minute ad cap) are increasing their ad rates in phases and some big advertisers are even buying slots at increased prices. However, such deals are customised and not universal. Most of the GEC channels have already started adhering to the ad cap regulations.

There is no differentiation between FTA and pay channels in the regulations. There are more than 800 registered channels in India out of which only about 200 of them are pay channels, rest of them are free to air channels surviving only on advertisements. 

Pay channels earn from advertisements as well as subscriptions and hence laying down same ad duration caps for all types of channels is unfair. 

Almost all FTA channels are of Indian Origin introduced by Indian businessmen where as pay channels are mostly owned by foreign companies or have substantial shares of foreign companies. 

The pay channels exploit the markets in India as well as foreign countries with the same content and because of their  powerful reach get all types of advertisements like scroll, clipping, half screen, logo, full screen, in content advertising, sponsorships and also film promotional programmes making many times the revenue earned by the FTA channels. All such exploitations are being ignored by the government as well as the regulator. Let us see what justice is now done by the High Court.

Source: http://cablequest.org/articles/digitization/item/3980-a-bolt-from-the-blue.html
Source: http://cablequest.org/articles/digitization/item/3980-a-bolt-from-the-blue.html