(6 July 2005 9:00 pm)

NEW DELHI: In a move that has taken the industry by surprise, stealthily the Indian government has effected wide-ranging changes in the DTH guidelines, thus making shareholding restructuring more stringent.

The less-publicized changes, notified on 1 June 2005, are in the form of additional clauses in the license agreement for direct-to-home (DTH) television services.

For example, an addition under clause 1.7 makes any changes in the equity pattern of a DTH company that much more difficult to effect.

The clause reads: "Any change in the equity structure of the licensee company as well as amendment to shareholders agreement, wherever applicable, shall ONLY be carried out in consultation and with prior approval of licensor (the information and broadcasting ministry)."

Earlier, there was no such diktat and a standard rider used to be put in that any changes in the shareholding pattern would have to be brought to the notice of the government. Most of the time, such information was made available to the authorities after the changes had been done.

Now, any changes in equity pattern and shareholders' agreement will have to be done "in consultation" with the government. This could mean that big brother has the power to cancel a license if it doesn't approve of the proposed changes in any way even before they have been put in place.

The other additions to the DTH guidelines are clauses 5.2, 6.5 and 6.6. Some of the amendments also put the onus of keeping on the right side of the law on the DTH platform managing company and not on other stakeholders of the industry.

Take clause 5.2, for instance. It says that the licensee shall "invariably ensure" subscribers of the service do not have access to any pornographic channel or to secret/anti-national messaging. "If the licensee fails to do so, the license shall stand cancelled," the clause adds.

The notification reiterates that the must-provide clause, as suggested by the sector regulator, is mandatory for DTH services.

Clause 6.5 states a licensee shall not carry the signals of a broadcaster against whom any regulatory body, tribunal or court has found the following:

(i)Refused access on a non-discriminatory basis to another DTH operator contrary to the regulations of TRAI (sector regulator).

(ii)Violated the provisions of any law relating to competition including the Competition Act.

Exclusivity too has been formally turned into history through clause 6.6, which categorically states a licensee "shall not enter into any exclusive contract for distribution of TV Channels."

The government has also made it the sole responsibility of a licensee "to ascertain before carrying its signals on its platform" whether any broadcaster(s) has violated any of the listed offenses.

"In respect of TV channels already being carried on the platform, the licensee shall ascertain from every source, including the licensor, TRAI (sector regulator), tribunal or a court, whether broadcasters concerned or the channels are in violation of the above conditions.

"If any violation so comes to its notice, the licensee shall forthwith discontinue to carry the channels of the said broadcaster," the government has explained.

The changes made in the guidelines come into effect from the date of notification and are applicable on license agreements already executed.

This decision has been conveyed to various arms of the government, including the department of telecommunications, home ministry, finance ministry and autonomous bodies like the Telecom Regulatory Authority of India (Trai) and pubcaster Prasar Bharati.

Quizzed on the latest government move, an existing DTH service provider expressed ignorance. Ditto for a wannabe DTH player.