Trai recommends 74% FDI in cable, DTH

MUMBAI: India‘s broadcast sector regulator clearly feels digital distribution platform providers need a higher foreign direct investment (FDI) cap than their content services counterpart.

In its recommendations sent to the Information and Broadcasting Ministry today, the Telecom Regulatory Authority of India (Trai) has recommended increasing FDI limit in DTH, national and state-level cable network operators and teleport to 74 per cent from 49 per cent.

Trai has also recommended the FDI cap on IPTV and Mobile TV to be set at 74 per cent. There is no foreign investment policy on mobile TV at present.

Trai has, however, suggested no change in the 26 per cent FDI cap for news & current affairs TV channels.

On the FM radio front, Trai is in favour of a 26 per cent FDI cap, up from the existing limit of 20 per cent.

Trai‘s FDI Recommendation
No.SegmentExisting Limit Recommendation
3.HITS74% (49%on automatic route)74%*
4. (A) Cable Networks- MSOs operating at National or State level49%74%* procided they undertake upgradation of networks towards digitalisation with addressability.
4. (B) Other MSOs 49%Status Quo*
5.Cable Networks- Local Cable Operators49%26%*
6.FM Radio 20%26%*
7.Downlinking of TV Channels100%Status Quo*
8.Uplinking of TV News & Current Affairs Channels26%Status Quo*
9.Uplinking of TV Non-News & Current Affairs Channels100%Status Quo*
10.Mobile TVNo Policy 74%*
* FDI below 26% is recommended through automatic route.

"FM radio and news & current affairs channels are of similar nature from the sensitivity point of view and so there is no justification to have different foreign investment limits for these services," Trai clarified.

With a clear focus on digitisation, Trai has said that the 74 per cent FDI hike would be open only to the MSOs operating at the national or state level and those who are taking up digitisation with addressability. For other MSOs, the foreign investment limit would continue to be 49 per cent.

Trai has also suggested that FDI limit for local cable operators (LCOs) should be at 26 per cent. Earlier they could attract 49 per cent FDI, like the multi-system operators, as there was no policy segregation between the two.

"LCOs are are mostly run by individuals or partnerships, where the requirement of foreign investment may not be an issue. Also the investment requirement of LCO is very much small as compared to broadcasters, MSOs and DTH operators," the broadcast sector regulator explained.

But why has Trai differentiated between carriage and content services? 
Says Trai chairman JS Sarma, "The carriage services are in the nature of infrastructural services whereas content services, especially the news & current affairs services, are considered more sensitive as the power of news content to influence public opinion may have a bearing on maintenance of public order, security of the State, and maintenance of communal harmony."
Interestingly, in August 2008, Trai had recommended enhancement of the FDI ceiling in news & current affairs from 26 per cent to 49 per cent. "We, however, reviewed the earlier recommendations as the visual impact of the TV channels coupled with almost instant reach to the masses far exceeds the impact of the print media in influencing public opinion," Trai said.

Monitoring content over numerous TV channels and in different languages across India on a continuous basis is very difficult. “In such a scenario, there is a need to maintain sectoral limit on uplinking of news & current affairs channels. Having regard to this, the earlier recommendation of the authority recommending enhancement of the FDI ceiling from 26 per cent to 49 per cent needs review,” Trai noted.

There will be no restriction on foreign investment for uplinking and downlinking of TV channels (other than news and current affairs TV channels).

Trai also recommended that all foreign investments less than 26 per cent should be through the automatic route. Investments of 26 per cent and above will require prior approval of the government.

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