(3 March 2008 7:30 pm)

NEW DELHI: The Telecom Regulatory Authority of India (Trai) today issued its consultation paper for reviewing foreign direct investment (FDI) caps in different segments of the broadcasting sector.

The sector regulator has sought stakeholders' suggestions on the series of FDI caps proposed by the government, which includes 74 per cent for teleport, direct-to-home (DTH) and Hendend-In-The-Sky (HITS) but 49 per cent for cable TV networks.

• Whether the foreign investment limits need to be revised as proposed
  
  
• Whether the proposed limits are acceptable for the reasons given in the reference or there are some other reasons? Any other reasons in favour of the proposed limits may please be elaborated
  
  
• If the proposed limits are not acceptable then the reasons for non-acceptance may be given. In such a case, the comments should also indicate the appropriate foreign investment limits
  
  
• Whether the foreign investment limits could be revised to some other level with sub limits for FDI and FII within these limits
  
  
• Whether the foreign investments should be permitted through the automatic route or should there be a sub limit beyond which foreign investments would need FIPB approval

The government has taken into consideration various issue of national security etc., before making the suggestions, Trai has said. Accordingly, the cap for Broadcasting (News and Current Affairs) has been sought to be retained at 26 per cent.

Though this is the beginning of the recommendation process, and caps are yet to be finalised, the MSO (multi-system operator) Alliance critiqued this as discriminatory, holding that HITS cannot operate without cable.

However, Trai says also that apart from the issues arising from the proposal of the government, there are other issues which relate to the need for a comprehensive policy on foreign investment limits for different segments of the broadcasting sector.

Trai has asked for suggestions on whether it will be more reasonable to classify the different segments of broadcasting sector in terms of carriage services (such as Cable Services, HITS, DTH and teleport) and content services (such as private FM radio, Television Broadcasting etc.) for the purposes of laying down foreign investment limits

It says that such a classification would enable liberal foreign investment limits for one category and more conservative limits for the other category of services.

Trai feels that convergence of technologies in telecom and broadcasting sectors has made it possible to provide many broadcasting services (such as mobile television services, IPTV services) using telecom networks as well as broadcasting networks.

Hence, it feels there is need to study whether the foreign investment limits for such segments of broadcasting sector should be brought in line with the foreign investment limits for telecom operators.

Interestingly, Trai has a different query on whether foreign investment limits should be raised to 100 per cent so as to permit companies incorporated in India but with 100 per cent foreign holding to provide broadcasting services in the country, with appropriate monitoring mechanism in place coupled with content regulation through programme and advertising codes.

When pointed out about the last few provisions, that seem to take the wind away from the MSOA sail, it says that these are not part of the main issues for consultation, and hence, "it is an afterthought and the proposals are incomplete and discriminatory".

"HITS is a satellite based cable operation and Trai itself says they have to come through cable, and cannot go direct to subscriber, so this discrimination is founded on no logic.

"If this comes through, one can raise an issue with the government that since cable operations can only be done through a cable network license holder, then HITS operators, who are not necessarily cable operators, must take a cable network registration." MSOA officials said.