TRAI to frame New DTH Guidelines

On 10th of December the Telecom Regulatory Authority of India (TRAI) had held an Open House Discussion on issues related to DTH services in India.  Already two consultation papers had been issued on the subject earlier; one on 1st October 2013 on ‘Issue/Extension of DTH Licence’ and the second on 14 November on issues related to ‘new DTH licences’. This discussion was held after getting the response on both the above consultation papers from the stakeholders.

TRAI did this exercise after receiving a reference from the Ministry of Information and Broadcasting (MIB) dated 3rd September 2013, wherein MIB has sought the recommendations of TRAI. Consultation Paper mentioned certain modifications to be carried out in the DTH Guidelines and the licence agreement to reflect the policy changes that have taken place since 2001, such as the broadcasting sector coming under the purview of TRAI/TDSAT, in 2004. The issue of the annual licence fee being presently sub-judice, was also to be tackled. During discussions with the Authority, as part of the consultation process, the DTH industry stakeholders requested that since a new licence is to be issued, it would be in the interest of the sector that a comprehensive review of the existing DTH licence conditions be taken up, not only taking into account the policy changes but also considering technological developments and overall performance of the sector since the notification of the DTH Guidelines in 2001. A migration mechanism to the new guidelines being framed is also to be devised as an option to licencees who have yet to complete existing licence periods.

Many stakeholders suggested that old guide lines may be retained as they exist but TRAI Chairperson, Dr Rahul Khullar made it clear that many things have changed in the last ten years and required the Guide Lines to be completely changed.  He said that he would like to prepare totally new Guidelines for the DTH Sector on the lines of Telecom Industry.

Major issues that are bothering the industry and discussed in detail in the open house discussion are given below.

Technical Interoperability

Technical interoperability gives flexibility to the consumer to change his/her service provider without changing the CPE (Customer Premises Equipment) and by just changing the smart card like done in mobile communications. This concept is a way forward as it already prevails in the international market. As per the current DTH licensing guidelines the DTH operators have to be interoperable but none of the operator has shown that their set-top-boxes are interoperable which means they have been flouting the licensing conditions. Cable Operators Federation of India President Mrs Roop Sharma comments that TRAI or MIB  has never issued even a single query or notice to these DTH operators which clearly shows that there is a bias in the minds of MIB and TRAI because on a very small matter actions are taken against cable operators where as these big corporate houses are allowed to go scot-free.  Not only the above, since Integrated Digital TV sets have already been introduced all over the world, it will be in consumer interest to implement technical interoperability in DTH at the earliest. It will also encourage indigenous manufacturing since STBs will be available in the open market.

However, Responding to the TRAI consultations most of the DTH players want Set-top box (STB) interoperability to be kept out of the new licence guidelines. only Dish TV and Cable Operators Federation of India have suggested a common interface for technical interoperability like it prevails in other developed markets. Tata Sky, Videocon d2h, Reliance Digital TV and Airtel Digital TV have pointed out that technical interoperability is not only difficult to achieve since different DTH operators have deployed different technologies but it is also commercially unviable. Technical interoperability is difficult since some platforms operate on MPEG-2 DVB-S technology while most others have chosen MPEG-4 DVB-S2-8PSK.

 In its supplementary consultation paper the authority had recommended that the government should ensure that the BIS specifications are based on open architecture and should incorporate the latest technological developments with respect to the technical interoperability of DTH STBs, taking into account its practicability as well as the international experience. The BIS specifications must clearly specify the contours of interoperability between the STBs based on different technological standards. TRAI had also stated that the licence conditions should be amended to mandate compliance to the latest BIS specifications for the STBs to be offered to all the new subscribers. For compliance, the operators must be given a suitable period of say six months from the date of notification of such specifications. While stating that it is supportive of technical interoperability, Dish TV suggested that interoperability should be based on a Common Interface (CI) to be mandatory provided on STBs and a conditional access module (CAM) card be made available to all those desiring the facility. Similar suggestion has been made by cable operators Federation of India supporting technical interoperability. The CI interface, it said, is a global standard for worldwide use of STBs and CAMs. CI is a technology which allows separation of conditional access functionality from a digital TV receiver- decoder (Host) into a removable conditional access module (CAM). Tata Sky submitted that TRAI must follow a technology neutral policy as recommended by it in its recommendations on “Policy Issues relating to Uplinking/Downlinking of Television channels in India”. The authority must allow DTH operators to adopt the most flexible DTH technology, Tata Sky said. Videocon d2h posited that interoperability of DTH STBs should be omitted as the very purpose for which the requirement of technical compatibility was originally included in the DTH licence has been satisfied with commercial interoperability. Besides, the DTH service providers offer an option to their subscribers for obtaining the DTH hardware on sale and also on hire purchase or rent basis as per their schemes. Bharati Airtel-owned DTH brand Airtel Digital TV believes that interoperability should be left to the selling model of an STB, wherein a consumer has a choice to purchase a technically interoperable/neutral STB by paying the full cost as opposed to rental or other purchase method available in the market. It submitted that technical interoperability should not be mandated in the new DTH licence conditions and efforts should be made to bring all operators to the highest standard to make STBs interoperable in future.

Reliance Digital TV submitted that the issue of technical interoperability should be brought into perspective beyond just as a means of providing the customer an exit option from the incumbent service provider, to adding an otherwise muted open market of retail STBs and broader adoption of technological innovation in the country. The operator said that it is not in the business of supplying STBs. “Today, we are forced to supply the STB, which is only via-media terminal to deliver our products, i.e. pay-TV content and VAS. We would desist ourselves from supplying STB for basic pay-TV services if there were sufficiently capable, secured and open standardised terminals in the market,” it said. As per the company, the aim of technical interoperability should be to promote more open STBs in the retail market so that customers have a wider choice and continue to get support beyond the warranty period. Reliance Digital TV believes that it is not possible to field upgrade or construct any box to support all the features in a single box without compromising the security needed to fulfill obligation to the content owner. Additionally, it suggested that the product manufacturers ‘may’ be allowed to carry a logo for interoperability at different levels including CAS interoperability, network interoperability etc. “Government should arrange/appoint interoperability testing labs, similar to Cablelabs (USA) or Digital TV lab (Europe), for conformance tests, against reference CAMs. Manufacturers could label their products with the compliance test certificates along with any additional capabilities. This will promote open market product as an industry, where consumers have choice during purchase,” Reliance Digital TV said. 

Illegal DTH Connections in neighbouring countries.

Another important issue which did not come up during the discussion but was reported by COFI later pertained to DTH STBs going out of the country to neighbouring countries like Pakistan, Afghanistan, Nepal, Bangladesh, China and Thailand. This is a serious matter that affects security and economy of the Nation said a memo from COFI.

 As per news reports only Pakistan has more than 2 million STBs of Indian DTH operators. Containers full of DTH STBs go to these countries under the name of some electronic equipment and there is a well managed pipeline to receive payments through Hawala and distribute these STBs to Cable Operators and individuals. Payment for these STBs are routed via another country like Singapore using online medium. In Pakistan Indian DTH STBs are available for Rs 3,500. Prepaid cards are used to renew subscriptions online.

Cable Operators in these countries use these boxes to extract Sports channels, popular Hindi channels and some other International Channels like HBO and Cartoon Network which are available as pay channels in these countries. Even governments of these countries have raised this issue and trying to ban this practice which is increasing every day. We are attaching some news cuttings that report such incidents.

We are sure if the DTH operators are submitting the SMS report of their connections to TRAI every quarter, these connections also must be included in that or else figures of DTH connectivity reported to TRAI are fudged. Government does not get any tax on these payments. This matter needs a serious investigation.

MDU services not to be allowed on DTH

MDU services are being provided by DTH operators without there being any provision in the Guidelines. According to a communication from COFI, since TRAI has defined a ‘state’ as a relevant market for an MSO and DTH operators have the market in the whole country, MDU must not be allowed on DTH services as this will be creating unfair competition between MSO and DTH. MDU competes directly in the cable operator’s territory jeopardizing the employment of thousands of small cable operators creating mass unemployment in the country. This aspect has become more important as high rise buildings with hundreds of flats are coming up in India and each building is like a territory of a small cable operator. DTH doing MDU in such buildings hits badly on the employment of a small operator. “This must not be permitted in India where government spends thousands of crores to create employment” says Roop Sharma, president COFI.  TRAI vide its recommendations dated  25th Aug’06 had taken care of this concern and had advised that licensing conditions be amended to ensure that there is a proper regulatory mechanism to govern the installation of MDU and consumers are given a fair choice as MDU set-up tends to be monopolistic and deprive the consumer of a choice. The recommendations of TRAI are as under :

“Accordingly, the Authority recommends the following:-  The DTH license conditions should be amended to specifically permit use of MDU technology subject to the following conditions-

a) The DTH service provider should not insist on any exclusive arrangement for installation of MDU technology to the detriment of other distributors of TV channels;

b) Signals from the MDU technology shall not be provided to a consumer outside the multi-dwelling unit building, where the MDU technology is installed;

c) The MDU technology should not carry the content from any other service provider other than the DTH service provider; and

d) The DTH operator shall obtain written consent from those subscribers living in a multiple dwelling unit who are desirous of availing the facility of MDU technology, before installing the same. A general permission obtained from office bearers of the Residents Welfare Association/Group Housing Society will not be considered sufficient.”

COFI has requested that immediately appropriate instruction should be given that MDU installation need to be stopped till the appropriate amendments in the licensing condition are done. Cable Operators feel that government through digitalization has been trying to help DTH operators as the cable operators do not have sufficient set-top-boxes and DTH operators have been providing digital signals for many years. 4. Cross Media Holdings

There should be no cross holding  / control in a DTH company by a broadcaster, TV channel Aggregator or TV channel distributor. Channel Aggregator should also be included among the entities that would be debarred from controlling any DTH or other distribution operator.

It may also be ensured that no cross holding company or another media company extends loan facility/ financial assistance to a DTH company.

Further, COFI has Demanded that-

1. State Govt and Nodal Officers responsible for Digitalisation should also ensure DTH operators do not violate licensing conditions.

2. License of DTH operator violating the Guidelines should also be cancelled.

3. TRAI must recommend to the government that entertainment tax by states should be rationalised and made same to all subscribers of television services; DTH, Cable, IPTV or Mobile TV. There should be no need for operators to go to courts and get the entertainment tax waived or exempted. Applicability of law should be same for every service provider.

4. If TRAI considers DTH as a telecom service, DTH operators should also be made to contribute to USO Fund.

5. Licence fee for DTH services : Licence fee for DTH services should be charged at the rate of 8% of the AGR where AGR be calculated by excluding Service Tax and Sales Tax actually paid to the Government, if Gross Revenue had included components of Sales Tax and Service Tax. It should also be ensured that any “carriage fee” collected by a DTH company in the form of cash or barter deal should be reflected in the AGR.

6. Mandatory Submission of carriage fee RIO by the DTH operator : It should be mandatory for every DTH operator to file the carriage fee RIO so that they cannot discriminate between different broadcasters approaching them for carrying their channels.

This is also necessary to figure out the actual amount of Gross Revenue of DTH operator. As in some cases because of the barter deal the real amount of carriage paid for channels is not accounted for, so in such cases the carriage amount declared in RIO can be taken as the value for arriving at the correct figure of Gross revenue.

Cash received against an STB/ CPE in any transaction; sale, hire purchase/ rent) be reflected in the AGR. All STBs/ CPEs must be provided to the consumers strictly as per TRAI regulation for the purpose. 

7. Conditions for renewal of license : Since the sector is matured, growing and flourishing it is time that government treated it as a large scale industry and ensured that adequate revenue is collected from the industry commensurate with its earnings. Also the DTH players are all global companies with deep pockets having vertically integrated supporting companies but are in the habit of cribbing all the times using various forums like FICCI, ASSOCHAM, CII, CASBAA that they are paying heavy multiple taxes and are incurring losses. This is only to influence the mind of the policy makers. Small cable operators also pay entertainment tax and service tax and other levies as DTH operators do. Government has to understand the scope of their nationwide business. On one hand in the public forums they declare India as the largest DTH market in the world and on the other hand they crib that their business has become unviable due to multiple taxes which they have been actually avoiding taking matters to the courts. If their condition was so bad, they should have quit the business. It has also been suggested that for renewal  of licences  following conditions may be fulfilled by all DTH players:-

a) All dues as required by existing regulations, irrespective of whether a court case is going on should be cleared unless a stay has been given by the concerned court.

b) There should not be any serious  violations of licensing conditions at more than three occasions.

c) If  a matter is in the court for any purpose, an NOC from the Court should be obtained and submitted to the government .

d) Details of investors including foreign investors, both individuals as well as institutional should be submitted to the Ministry.

e) A fresh security clearance from Home Ministry and clearance from Finance Ministry should be obtained since ten years is a long period and many changes would have taken place.

f) Any DTH operator having a criminal case against him during the licence period should become ineligible for renewal of licence.

g) Even during the licence period if the DTH operator gets convicted on criminal charges, his licence should be cancelled.

h) There should be an additional fee for advanced services like interactive television, games, 3D & HDTV services as they fetch higher subscriptions.

TRAI is likely to give its recommendations on DTH Guidelines to the I&B Ministry in January 2014. There may be many drastic changes in the Guidelines that will attempt to stop rampant violations of guidelines and exploitation of consumers by the DTH Operators. Also, the new conditions may force DTH operators to consolidate as they would meet a tough competition with the developing digital cable TV sector.

Source: http://cablequest.org/articles/regulations/item/3979-trai-to-frame-new-dth-guidelines.html
Source: http://cablequest.org/articles/regulations/item/3979-trai-to-frame-new-dth-guidelines.html