TRAI – A Wrong Choice for Broadcast Regulations

Although TRAI has been given the task of regulating the broadcast industry since 2004, it has not proved its mettle in doing so. Every regulation and tariff order issued by TRAI has been challenged in the courts and stayed. Industry is still in chaos and every stakeholder is taking the system for a r ide. The situation is back to the origin of the industry when it was like the ‘Wild West’ where powerful and moneyed people ruled. It is becoming clear that all policies of Digitisation have failed to be implemented. No government can force 600 million people to migrate to a new technology by showing a stick. 

Since no law is working, people in power are taking full advantage. Monopolies of a few are on the increase. No investments are coming up, no broadband penetration is increasing, carriage fee and placement fee has not come down. Consumers are confused and no indigenous manufacturing is visible because there is no demand. Who would block one’s funds in such uncertain conditions.  

Even at the time industry was handed over to TRAI in 2004 for the purpose of regulations, it was not the right decision. Not because TRAI could not have done it but because the intention behind the handing over was not sincere. Since elections were coming in 2004, both NDA and UPA were worried about the impact of forcing a new technology of CAS on people who were not used to paying for any individual TV channel, leave aside paying for an STB.

So, to find a way to delay implementation of the CAS law that was passed by the parliament in 2002, the government conveniently passed the baton to TRAI for regulation of the industry and implement CAS. The main purpose of doing so was only to delay the process till elections were over. The second important reasons for deferment was pressure from the large international pay broadcasters who knew that Indians were not economically well off to afford paying for pay channels and would mostly opt for free to air channels available in plenty at a fraction of subscription in analog mode.  

This is evident from the fact that firstly, Broadcasting Service Regulations Bill that was supposed to replace the Cable TV Act of 1995 was never passed and secondly many important recommendations given to I&B Ministry by TRAI on matters like monopolies and market domination in the industry, restructuring of cable TV Industry, Cross Media Holdings, Media ownership by government and political bodies etc, issues that should have been resolved before such a massive exercise of digitization was implemented, were never accepted or acted upon. This lackadaisical attitude and ill planning has cost the industry very dearly. 

The easiest thing for TRAI as a regulator at that time was to freeze the subscription Tariff at December 2003 level and start the long process of regulating the industry all over again. 

Drawbacks of TRAI as a Broadcast Regulator are:- 

1.It comprises of officials taken from Telecom and Communication Ministry who have no knowledge of broadcasting.

2.TRAI was used to regulate the Telecom industry comprising of a few large players, working in a highly organised environment.

3.Whereas, Cable Television industry was highly disorganized, mostly comprising of thousands of small to medium level Cable Operators operating networks from less than 100 connections to not more than 5000 connections.

4.TRAI never tried to understand the ground reality in the Cable TV industry where millions of subscriber connections are owned by Cable Operators for so many years and consumers are very much used to their personalized 24x7 services and other local community based services like live programming from the local religions places, schools, community functions etc. People have developed special relationship with their cable operator that it is difficult for them to now switchover to the delayed and automated replies of computerized consumer services of large MSOs.

5.MSOs, some of them supported by Pay broadcasters, who entered the market in 1994, could not create a stable business relationship with LCOs because their focus was only to capture the last mile from these small operators and consolidate their own market to make it valuable for International players to come and invest in them. They wished to own them for further investments and glow them into large Broadband networks competing with telecom companies like it is happening in U.S., U.K or other developed markets.

6.While giving the responsibility to TRAI to regulate the broadcast industry, government made Cable TV and broadcasting as Telecom Services but the infrastructure was not declared as Telecom infrastructure, with the result that TRAI regulated the distribution of content on cable TV infrastructure without trying to regulate the physical infrastructure. This kept the industry as its primitive level. As no viable business model could be developed between the MSOs and the LCOs to make them co-exist working independently as a part of the same integrated network, investments could never be made. 

TRAI went wrong in its assumption that after giving directions on paper, large players will on their own find a viable business model to integrate these smaller players into consolidated networks with a permanent relationship and ultimately make them their own part within a few years.  

Another mistake TRAI has done is that it let itself get influenced and guided by the large corporate including Pay broadcasters and MSOs while framing the regulations. It did not understand a wee bit, what the cable TV consumer needed. 

Neither, the broadcaster nor the large MSOs know how to deal with individual consumers as they do not have a direct contact with them. Cable Operator who knew the consumers well were never taken seriously as both TRAI and the Ministry was led to believe by the large players that Cable Operators have been under-declaring connections, making both the government and the broadcasters suffer heavy losses, not giving them their dues. The reality is that it is the consumers who cannot afford to pay broadcasters, the high subscription charges demanded from them. 

Cable Operators in order to create a large subscriber base, simply made their subscriptions flexible, depending on the economic level of the subscribers, providing the same content to all. Under these circumstances they could not give Tax on behalf of 100% subscribers, because subscription from the lower rung of the society were extremely low, sometimes lower than the amount of tax the state government desired from them. With pay channels, they always had negotiated deals, so the question of under-declaration does not arise.

Source: http://cablequest.org/news/regulations-news/item/5968-trai-%E2%80%93-a-wrong-choice-for-broadcast-regulations.html