Television

CAS: MSO Alliance hits back at broadcasters

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NEW DELHI: The MSO Alliance, an apex body of multi-system operators, has hit back with a point-by-point rebuttal of issues raised by Indian Broadcasting Foundation on plans to rollout CAS.

The MSO Alliance, in a letter to the government, has said the argument of broadcasters that there should be no price control in a CAS-enabled regime is “not acceptable” to it.

Also, keeping commercial terms between broadcasters and MSOs and MSOs and cable ops outside the purview of standardized agreements “defeats” the whole purpose of the attempt at transparency, the Alliance has pointed out.

“In various CAS meetings, the government has indicated that it would be its endeavour in consumers’ interest to keep the cable bill of the consumers after the implementation of CAS at the same level as was there prior to the implementation. Therefore, the suggestion that there should be no price control in the CAS market is clearly unacceptable,” the Alliance’s letter, sent two days back, to information and broadcasting ministry states.

Stressing on the need for broadcasters to come out with MRP (maximum retail price of individual TV channels) to consumers, the Alliance has argued, “The concept of wholesale price to the operator, as is prevalent in non-CAS areas, is not going to work effectively in CAS areas and as such the broadcasters need to announce the individual (a la carte) MRP of their channels.”

The IBF in its submission to the government had said that providing MRPs of every channel to consumer is not advisable.

On the issue of banning carriage fee, the MSO Alliance has pointed out that such fees were not restricted to only carriage, but placement of channels for favourable access by viewers, which would mean earning more advertising revenue on the basis of viewership figures.

“Accordingly, if a broadcaster wishes to have specific placement and carriage of its channel in order to maximize its advertisement revenue, it has to pay the suitable carriage fee / placement fee as well to the MSOs purely as a normal business arrangement for using their infrastructure and for enjoying preferred placement,” states the MSO Alliance’s letter.

In a veiled threat to the broadcasting community, the MSO Alliance has further stated that should the government consider regulation of carriage fee, the pay channels should also be “prohibited from carrying advertisements and free to air (FTA) broadcasters should be asked to pay the placement fee as per frequency band desired by them in order to maximize their advertisement income.”

Full Text of MSO Alliance letter to govt.

This is with reference to the letter dated 5th April 2006 submitted by Indian Broadcasting Federation (IBF) to the Ministry of Information and Broadcasting recommending the steps required to be taken regarding the smooth implementation of CAS for notified areas. The point wise response of the MSO Alliance to the various issues raised by IBF is being given hereinafter:-

Curbing Piracy: In this context, it is submitted that we agree with the viewpoint of IBF that effective measures are required to be taken to curb the piracy. It is pertinent to point out that in non-CAS areas, the piracy control measures are completely non-existent, whereas in CAS areas, since the system is in digital addressable mode, the service providers have installed stare of art addressable systems from world renowned CAS system providers.

This will enable our members to carry out finger printing procedure at frequent intervals to detect and curb the instances of piracy. If the piracy is detected and conveyed to the service providers, authorization to the concerned STB can be cancelled by switching off the viewing card (VC) through SMS system. Accordingly in an addressable environment, piracy can be controlled in more effective manner than in non-CAS environment.

However, we would like to point out that as provided in The Telecommunication (Broadcasting and Cable Services) Interconnect Regulations, 2004 also the content by a broadcaster cannot be denied to a distributor of channels solely on the apprehension of piracy. The content provider must clearly establish that there are reasonable basis for denial of TV channels on the ground of piracy.

Quality of Service: (i) Section 9 of the Cable Network Regulation Act, clearly provides for use of standard equipment in cable television network. The said section reads as under: -

“No cable operator shall, on and from the date of the expiry of a period of three years from the date of the establishment and publication of the Indian Standard by the Bureau of Indian Standards in accordance with the provisions of the Bureau of Indian Standards Act, 1986 (63 of 1986), use any equipment in his cable television network unless such equipment conforms to the said Indian Standard.

(Provided that the equipment required for the purposes of section 4A shall be installed by cable operator in his cable television network within six months from the date, specified in the notification issued under sub-section (1) of that section, in accordance with the provisions of the said Act for said purposes.)

(ii) TRAI has already indicated that it will come out with its regulation / notification on quality of service in accordance with its recommendation dated 1st October 2004. We would request the Ministry to direct TRAI to issue draft QOS regulations immediately so that QOS is in place on the zero date.

Adjudication mechanism: A well-defined adjudication mechanism already exists under TRAI Act, 1997 with the establishment of TDSAT. The TDSAT is empowered under section 14 of the TRAI Act to adjudicate the disputes between a licensor and licensee, between two or more service providers and between a service provider and a group of consumers.

With the broadcasting services forming a part of telecommunication services w.e.f. 9th January 2004, TDSAT is adjudicating the various disputes amongst the stakeholders. Even then the Govt. can establish if it so desires any other cable specific regulatory and adjudicatory mechanism to the satisfaction of all stakeholders for smoother implementation of CAS.

However, in order to avoid overlapping jurisdiction, the area of operation of new adjudicatory mechanism should be clearly demarcated and defined. Any such new authority should be ideally technology neutral and must in all circumstances regulate broadcasters and content providers too. A good example is the Pakistan Electronic Media Regulatory Authority (PEMRA).

Standard agreement: While the broadcasters have agreed for drafting of standard agreements amongst the various stakeholders, the suggestion of excluding commercial terms from the purview of these standard agreements defeats the very purpose of this exercise.

One of the essential prerequisites for smooth implementation of CAS is that the commercial terms amongst the broadcasters & MSOs and MSOs & LCOs specially the distribution margin / revenue share across the value chain must be clearly defined by the regulator.

Another important issue is that of banning Minimum Guarantee in CAS as well as declaration of ala-carte MRP of channels to ensure effective choice to consumers. If these issues are kept out of purview of standard agreements then disputes are likely to emerge and may well jeopardize the entire implementation schedule of CAS. Accordingly, in the interest of implementation of CAS, as per pre-defined schedule and also to ensure the distribution of due revenue across the value chain in an equitable manner, it is imperative that commercial terms must form an integral part of the standard form of contracts. We however agree with IBF request that role and responsibility of all service providers be clearly defined in the relevant regulations.

Comfort Level: The suggestions of broadcasters in this regard are clearly unacceptable. Matters sub judice in TDSAT/High Courts and Supreme Court will naturally run their course. If the viewpoint of the broadcasters is to be accepted, then there CAS can never be implemented, as there would always be some ongoing disputes and litigations in the industry.

Further we are not clear as to what ‘comfort’ level the broadcasters are referring to as a pre-condition to deal with MSOs/LCOs.

Map of the Area: We agree with the suggestions of the broadcasters and all MSOs are willing to comply. We only reiterate our viewpoint that overlapping areas should be identified and included in the CAS notification.

Availability of STBs: As already indicated to the Ministry in various meetings also MSOs already have sufficient number of STBs to take care of the requirements in the notified areas. Moreover, regular procurements shall be effected through imports from and indigenous assembly/manufacture as and when required to meet the demands of the consumers in the notified areas. As far as coordination between MSOs /LCOs are concerned the Alliance sees no real problem once margins are in place and consumers are made aware of the pay channel rates.

Pricing: (i) In various CAS meetings the Govt. has indicated that it would be its endeavour in consumers’ interest to keep the cable bill of the consumers after the implementation of CAS at the same level as was there prior to the implementation. Therefore, the suggestion that there should be no price control in the CAS market is clearly unacceptable.

The broadcasters must come out with their MRP to consumers and must also clearly indicate the distribution margin across the value chain. The concept of wholesale price to the operator as is prevalent in non-CAS areas is not going to work effectively in CAS areas and as such the broadcasters need to announce the individual (a la carte) MRP of their channels.

We have also indicated in various meetings that an amount of Rs. 72 (excluding local taxes) fixed for basic service tier needs revision on account of escalation in various inputs costs as well as to account for inflation. Therefore, even for delivery of 32 channels for which the said amount of Rs. 72 was fixed in 2003, needs suitable revision.

The broadcasters have asked the Govt. to prohibit the cable operators from demanding the carriage fee. In this regard it is submitted that the MSOs/ cable operators have laid down huge infrastructure and have invested crores of rupees in establishing state-of-the-art digital headends. Moreover, the carriage fee paid by the broadcasters is not only towards the carriage of their channels through the said infrastructure established by MSOs but also towards placement of their channels at a particular frequency band so as to maximize the viewership of that channel which in turn would mean the earning of more advertisement revenue.

Accordingly, if a broadcaster wishes to have specific placement and carriage of its channel in order to maximize its advertisement revenue, it has to pay the suitable carriage fee / placement fee as well to the MSOs purely as a normal business arrangement for using their infrastructure and for enjoying preferred placement.

It is also pertinent to mention that DD DTH has already asked various private broadcasters to pay annual carriage fee of Rs. 1.00 crore (Rs. 10 million) per channel.

Should the Govt. consider the regulation of carriage fee, the pay channel broadcasters should also be prohibited from carrying advertisements and FTA broadcasters should be asked to pay the placement fee as per frequency band desired by them in order to maximize their advertisement income.

Regarding the level playing field between CAS and other platforms like DTH, IPTV, Broadband, etc, it is submitted that all these platforms are addressable and only cable at present is unaddressable. Accordingly, in order to create a level playing field the addressability should be introduced in cable distribution also as early as possible.

Regarding the price regulation in addressable cable distribution it is submitted that as discussed in various meetings also, DTH, IPTV & Broadband address new segment of customers who voluntarily opt for these distribution platforms and as such the price regulation may not be necessary.

However, in cable distribution the existing set of analogue cable subscribers are being mandatorily required to opt for digital delivery through STB in case they wish to avail pay channels. Accordingly, in the initial years it is imperative to have price control to ensure minimum hardships to the consumers during transitory regime.

Regarding the particulars of CAS subscribers, since transparent subscriber management system will be in place, it would be possible to give requisite details to the broadcasters in respect of subscribers availing pay channels.

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