Indiantelevision.com Team

(23 September 2008 7:00 pm)

NEW DELHI: The Telecom Regulatory Authority of India, today issued a consultation paper on Media Ownership in which it stressed the need to lay down a holistic and clear cut approach towards cross-media and ownership restrictions for the future growth of these sectors.

The Consultation Paper has been released at the instance of the Information and Broadcasting Ministry which had on 22 May asked Trai to give its recommendations on the need for cross media and ownership restrictions for radio, broadcasting and print medias. These recommendations have been sought under Section 11(1)(a) (ii)and (iv) of the Trai Act.

Trai reiterated its recommendations given to the government at different points in time with regard to different media. The regulator has been recommending similar restrictions in its various recommendations on Private Terrestrial TV, Headend-In-The-Sky (HITS) and Mobile TV.

Trai has asked all stakeholders to give their responses by 24 October to enable it to finalise its recommendations.

At present, there are restrictions in ownership of companies seeking licenses/permissions or registrations under various Policy Guidelines issued from time to time for electronic media. At present, such restrictions are in place only with respect to DTH services and private FM radio.

The Ministry has identified the issues that are to be deliberated more widely and deeply. These include the need for Cross Media and ownership restrictions, and whether the existing laws are adequate to address the concerns or a separate legislation is needed; whether there should be restrictions on ownership of cable/DTH/IPTV/Mobile TV companies by broadcasting/telecom companies or vice versa with more and more broadcasting and telecom companies entering into delivery of service; and study the policy structure and restrictions in other parts of the world.

The Ministry had clarified that the Authority in the present context should also include print media while examining the need for any cross media restrictions vis-à-vis broadcast media, particularly in view of the increasing trend of the print media entering into broadcasting sector.

A Trai press release said media ownership was a subject of intense debate and Government review in both developed and developing countries around the world.

Almost all of the developed democratic countries like USA, UK, Canada, Australia, France etc. have restrictions on common and cross media ownership. Many of these countries have recently reviewed the media ownership rules. The main concern is regarding having effective control/ownership of radio, TV and print media. A prevalent practice is to restrict the control to two out of the three media.

Also there are restrictions in the broadcaster controlling the delivery services. The control is measured in terms of equity participation, geographical area (coverage), viewership/circulation, number of licenses etc.

The objective of the Consultation Paper is to provide for competition, diversity and plurality of players, news and views.

The issues under consideration are cross media ownership across different segments of media such as print/ television/ radio (horizontal integration); cross holding restrictions to prevent consolidation including ‘vertical integration’ within a media segment such as television or radio; market share in the city/state/country within each media segment; and cross control/ownership across telecom and media segments.

In its recommendations on Phase-III of Private FM Radio licensing on 22 February, 2008, the Authority had recommended that at least three channels excluding All India Radio in any district will be given to three different entities.

Once this condition is met, then the existing operator/ permission holder can bid for the remaining channels and may be declared successful for any channel where his bid is highest subject to the condition that maximum number of channels to a permission holder in the district will not be more than 50 per cent of total channels in the district. It had said that the existing ceiling limit of 15 per cent of total FM Radio channels in the country permitted to a permission holder is no longer valid as the fear of monopoly is no longer real. This limit is also not practical, as the total number of channels will vary depending on availability. Hence such limit should be withdrawn.

In its recommendations relating to Internet Protocol Television, Trai has said telecom service providers providing IPTV service will be subjected to percentage of Adjusted Gross Revenue (AGR) as license fee as applicable from time to time which is presently 6 per cent, 8 per cent, and 10 per cent for access service licensees in category “C”, Category “B” and category “A” circles and 6 per cent for ISPs.

Under the existing licensing conditions Unified Access Services license (UASL) and Cellular Mobile Telephony Service (CMTS) License are permitted to provide triple play service and IPTV is permitted under this provision. Recently the government has permitted ISPs having net worth of more than Rs 1 billion to provide IPTV services after obtaining permission from the licensor.

On Content Regulation, the Authority says telecom licensees while providing TV channels through IPTV shall transmit only such channels in exactly same form (unaltered) for which broadcasters have received up-linking/down-linking permission from the Ministry of Information and Broadcasting.

In its recommendations of 23 January this year on issues relating to Mobile Television Services, the Authority made recommendations on consolidation and vertical integration which are similar to those prevalent for DTH services. The Authority referred to the existing cross holding restrictions for DTH and recommended that any mobile television licensee should not allow any broadcasting company or group of broadcasting companies to collectively hold or own more than 20 per cent of the total paid up equity in its company at any time during the License period.

Simultaneously, the mobile television licensee should not hold or own more than 20 per cent equity share in a broadcasting company. Further, any entity or person (other than a financial institution) holding more than 20 per cent equity in a mobile television license should not hold more than 20 per cent equity in any other broadcasting company or broadcasting companies and vice-versa. However, there would not be any restriction on equity holdings between a mobile television licensee and a DTH licensee or a HITS licensee or a MSO/cable operator company.

The Authority held that the purpose of imposing cross holding restrictions is to ensure that content providers and different distribution platforms do not become vertically or horizontally integrated as such a situation would be against the interests of subscribers. Mobile television will also be a distribution platform for television channels. Accordingly, it would be appropriate for cross holding restrictions to be placed on the mobile television licensees vis-à-vis broadcasters to prevent monopolisation of content and to foster healthy competition.

The uplinking/downlinking guidelines should be amended to enable the broadcasters to provide signals to all distributors of TV channels such as cable operators, multi-system operators, DTH operators, HITS operators, IPTV service providers.

The Authority in its recommendations to the Government on Headend In The Sky (HITS) on 17 October 2007, had said a HITS operator shall not allow Broadcasting Companies and/or DTH licensee company(ies) to collectively hold or own more than 20 per cent of the total paid up equity in its company at any time during the License period.

Simultaneously, the HITS Licensee should not hold or own more than 20 per cent equity share in a broadcasting company and/or DTH licensee company. Further, any entity or person holding more than 20 per cent equity in a HITS license shall not hold more than 20 per cent equity in any other Broadcasting Companies and/or DTH licensee and vice-versa. This restriction, however, will not apply to financial institutional investors. However, there would not be any restriction on equity holdings between a HITS licensee and a MSO/cable operator company.

While analysing the issue of cross holding restrictions, the Authority expressed its view that “…cross holding restrictions is a must to avoid vertical integration and to prevent discriminatory practices among the players in the distribution chain. Such cross holding restrictions are required to promote true competition. In order to ensure that vertical integration does not take place between broadcasters and the HITS operators, it is necessary to build cross holding restrictions between these two categories of service providers."

Similarly, in order to maintain a clear dividing line between DTH operators and HITS operators so as to maximize competition between these two competing distribution platforms, stipulations regarding cross holding restrictions should be built in here as well.

The issue of cross holding restrictions was also covered in the recommendations of the Authority on Digitalization of Cable Television, which were sent to the Government on 14 September, 2005. In these recommendations, the Authority came to the conclusion that wherever several broadcasters have interest in cable networks, a decision on this issue of restrictions on the equity/ loans of broadcasters in cable networks needs to be taken after getting a clear picture of the interest of new licensees and after taking a general decision that will apply to all forms of delivery.

The Authority recommended amendments in The Cable Television Networks (Regulation) Act 1995 to specify terms and conditions containing restrictions on cross media holdings, accumulation of interest, License fee, and other conditions, like the roll out obligations.