MUMBAI: The Telecom Regulatory authority of India (TRAI) released a consultation paper on ‘Issues related to Interconnection Regulation 2017'. The objective of the move is to consult all the stakeholders on issues related to target market, placement and other agreements between broadcasters and distributors.
The authority has received representations from quite a few regional broadcasters highlighting their concerns regarding the declaration of the target market by distributors of television channels (DPOs). As the existing regulations provide freedom to DPOs to declare their target market for the purpose of ascertaining the carriage fee, some of the DPOs have declared multiple states (or entire country in some cases) as their target market.
In this context, regional broadcasters are compelled to pay very high carriage fee. This has created a negative economic barrier for regional channels thereby limiting their presence on smaller distribution platforms as proposition to pay carriage fee for national market makes it unviable for such channels.
Not only does this put undesired financial burden on regional broadcasters, it makes them prone to undue arm twisting by the distributors, as their subscription continues to remain lower than the minimum prescribed threshold of five percent (5 per cent ), which is the limit under which a DPO is not mandated to carry any channel.
"Further, the placement agreement, marketing agreements or any other technical or commercial arrangements between broadcasters and distributors (apart from RIO-based agreements) are in forbearance. But now, quite a few complaints have been received from various broadcasters whereby it is being alleged that some DPOs are resorting to pushing for marketing/placement/promotion agreement, by exploiting the available forbearance,” TRAI said in a press release.
Recently, Telecom Disputes Settlement and Appellate Tribunal (TDSAT) also recommended the authority to examine the issue. According to a TDSAT order dated 29 July, the main challenge appears to be the wisdom of the regulator in giving liberty to DTH operators to declare their target areas.
Adhering to the orders, the authority had several meetings with each group of stakeholders in the industry including news broadcasters, broadcasters, DTH operators, MSOs and regional broadcasters to discuss their viewpoints and come forward with a balanced solution that is in the interest of both the concerned parties (DPOs and regional broadcasters).
According to some of the broadcasters, the decision of declaration of target market should be left upon them as it is their channel and they should have the freedom to decide that which sector of the population will opt for their channels. Almost all the regional broadcasters want that the target market should only be their respective state or city or territory and they should not be asked to pay carriage fee for the entire universe (PAN India).
However, DPOs have a different opinion. According to some of the distributors, the cost of infrastructure associated with running a channel is significant. In case the provision related to target market is altered to states, it will alter their revenue structure. According to them, any reduction in the revenue stream from carriage fee will result in additional subscription cost for the consumers. Moreover, any smaller target market will mean more and more broadcasters will achieve subscription threshold of 20 per cent. As soon as the subscription crosses the threshold, their carriage fee revenue will reduce to zero. As per extent provisions, a broadcaster is exempted from payment of any carriage fee if the monthly subscription of his channel in the target market exceeds 20 per cent.
As per TRAI, MSOs declaring its target market as the area covered under a head end or any smaller area within the total area covered by a head end can be an alternative. Another option which has been highlighted as a possible altenative is linking carriage fee to cost of carrying a channel. In this option the cost of carrying a channel may be worked out and the amount of carriage fee that a broadcaster may be required to pay the distributor may be capped at that level.
The highlighted questions are primary issues for consultation:
1. Do you think that the flexibility of defining the target market is being misused by the distribution platform operators for determining carriage fee? Provide requisite details and facts supported by documents/ data. If yes, please provide your comments on possible solution to address this issue?
2. Should there be a cap on the amount of carriage fee that a broadcaster may be required to pay to a DPO? If yes, what should be the amount of this cap and the basis of arriving at the same?
3. How should cost of carrying a channel may be determined both for DTH platform and MSO platform? Please provide detailed justification and facts supported by documents/ data.
4. Do you think that the right granted to the DPO to decline to carry a channel having a subscriber base less than 5 per cent in the, immediately preceding six months is likely to be misused? If yes, what can be done to prevent such misuse?
