Regulators

TRAI managed to give broadcasting as much importance as telecom in 2014

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NEW DELHI: A decade after broadcasting was handed over to it, the Telecom Regulatory Authority of India (TRAI) appears to have given equal if not more time to the broadcasting sector, thanks largely to convergence of technology.



Thus, issues like spectrum, marketing and even FM radio have got equal space during the Regulator’s work as telecom, apart from the digital addressable system (DAS) introduced in 2011.



TRAI also mastered the art of marketing during the year 2014. It developed radio jingles in Hindi, English and 10 regional languages on VAS/UCC which were aired on various FM channels in 84 cities across the country for one week in the months of June, July, August and October 2014.



 Admitting in its annual report that it had failed to carry out periodic reviews to make inflation- linked adjustments, TRAI said it had finally done so in concurrence with the Supreme Court. Thereafter it issued two tariff orders on 31 March and 31 December as far as broadcasting was concerned.



Based on the rise in the wholesale price index (WPI) over the last five years and considering other relevant factors, the Authority came to a conclusion that an overall 27.5 per cent inflation hike is to be allowed, both at the wholesale and retail levels. Taking into account the consumer’s interest, the Authority prescribed that this hike be implemented in two installments. The first installment of 15 per cent was made effective from 1 April 2014. This was notified vide the Telecommunications (Broadcasting & Cable) Services (Second) Tariff (Eleventh Amendment) Order 2014 dated 31 March 2014. The second installment for the remaining inflation-linked increase has been made effective from 1 January 2015. This is expected to give adequate and reasonable time to all stakeholders to adjust to these hikes. To take care of the second installment of the inflation linked hike, the Authority notified the Telecommunications (Broadcasting & Cable) Services (Second) Tariff (Thirteenth Amendment) Order 2014 dated 31 December 2014.



In a matter relating to a tariff order prescribing tariffs for commercial subscribers, the Supreme Court in April 2014, asked TRAI to come out with a new tariff dispensation for such subscribers. Accordingly, on 16 July and 18 July 2014, TRAI notified amendments to tariff orders / regulations pertaining to commercial subscribers of broadcasting and cable TV services. These amendments bring in clarity regarding the manner of distribution of TV signals to commercial subscribers, prescribe tariffs based on intended use of the TV signals, and aim to enhance transparency in tariff regulation.



During phase I and phase II of digitisation of cable TV sector, it was noticed that the authorised agents/aggregators of the broadcasters were forming large bouquets, combining channels of different broadcasters and forcing it on the DPOs viz. cable, DTH, HITS and IP TV operators. This was resulting in distortions in the market. Incidentally, the Ministry of Information and Broadcasting (MIB) had also sent a reference to TRAI requesting for a review of the regulatory framework with regard to aggregators. The amendments aim at contributing to the orderly growth and overall development of the sector by streamlining the distribution of TV channels from broadcasters to DPOs. The salient provisions in these amendments are:



 A broadcaster is now defined as an entity having the necessary government permissions in its name. Only the broadcaster shall publish the Reference Interconnect Offers (RIOs) and enter into interconnection agreements with DPOs. However, in case a broadcaster, in discharge of its regulatory obligations, is using the services of an agent, such authorised agent can only act in the name of and on behalf of the broadcaster.



As far as FM radio is concerned, TRAI on the request of MIB made recommendations on the amount of migration fee to be charged from existing FM operators on their migration from Phase-II to Phase-III of FM Radio Broadcasting. The permissions for operating FM Radio as per Phase-II policy were granted by MIB during the period 2005 to 2009 in 86 cities. As per the Phase-II policy, the permissions were granted for a period of 10 years to each FM Radio operator and there is no provision for extension of permission in the Phase-II policy.

Therefore, Phase-II permissions will start expiring from 31 March 2015 onwards. There was no great incentive for an existing operator to pay a migration fee and operate as per the Phase-III policy only for the balance period of Phase-II permissions. Accordingly, the Authority in its recommendations on ‘Migration of FM Radio Broadcasters from Phase-II to Phase-III’ dated 20 February 2014 recommended a period of permission of 15 years after migration from Phase-II to Phase-III. The salient features of the recommendations are:

TRAI reiterated early implementation of its recommendations on minimum channel spacing of 400 KHz for FM radio broadcast issued on 19 April 2012, which will in effect increase the number FM channels in each city for auction. The period of permission to operate the existing FM channels on migration from Phase-II to Phase-III will be 15 years.



In the DTH Guidelines, under which licenses are issued to DTH operators, there is no explicit provision for an extension or a renewal of the licenses on completion of the license period. In this regard, the MIB sought recommendations of TRAI. After examination, the Authority concluded that to allow the DTH operators to continue their business after the expiry of the stipulated 10 year license period, the government will have to issue a new license. Accordingly, the Authority looked at the issues concerning the DTH sector holistically and, after following the due consultation process, sent its recommendations to the MIB on “Issues related to New DTH Licenses” on 23 July, 2014.



 Apart from removing the ambiguity over renewal of licenses, these recommendations suggest that the government came out with a new licensing regime for DTH sector which, amongst others, allows for longer license period, rationalised license fee, rationalised and regulated cross-holding and vertical integration between broadcasters and distribution platform operators including DTH operators. The recommendations also suggest a mechanism for migration of operators from the existing regime to the new regime. A new licensing regime, incorporating the provisions in the said recommendations, is expected to bring in, amongst others, certainty in DTH business, ease taxation pressures, attract better investments in the sector etc. and, thereby, promoting the overall efficiency in DTH operations.



 Ensuring plurality of voices in the media, that is, availability of fair, balanced and unbiased representation of a wide range of opinions and views, is critical for any democratic polity. Ensuring both external plurality, namely multiple voices in the national media market, and internal plurality, that is presentation of a range of facts and news in an unbiased manner by a media outlet, are fundamental in the working of a democracy.



Regulatory restrictions on cross-media holdings seek to ensure external plurality in the media market, while restrictions in vertical holding by any entity of a broadcaster and a distribution entity are important to ensure that the distribution channels remain open to all desirous of presenting an opinion or view to the public. Finally, content regulation is critical in a time when news is increasingly seen as an asset belonging to a media entity’s owners to be monetized for political/ business/ or pecuniary gain.



Recommendations on “Issues related to Media Ownership” were issued on 12 August

The key issues addressed and the concerned recommendations included defining who owns a media entity and controls it – in brief, an entity that possess not less than 50 per cent of voting rights in the media entity or can appoint more than 50 per cent of the members of its board of directors will be deemed to control it. The Recommendations also take into consideration control through debt, and has recommended the loan threshold that will deem the lender to be in control of a media entity.



The restrictions recommended on cross-media ownership apply on the media entities that cover news and current affairs genres in the television and print segments only, as impact of radio and internet in India on opinion formation is marginal. In the print segment, only daily newspapers, including business and financial newspapers, should be considered.

The MIB had sent a reference to TRAI seeking recommendations of the Authority on extension of permission granted to Community Radio Stations (CRS) in India. According to the 2006 Policy Guidelines for CRSs, the period of validity of Grant of Permission Agreements (GOPA) is five years and the guidelines contain no provisions for the renewal/ extension of permissions. The validity of the GOPAs issued under these Guidelines for some of the CRSs, had expired on completion of five years, requiring them to stop operating. The Authority, therefore, in an interim reply suggested continuation of the GOPAs on the same terms and conditions.



CRS are an important medium for empowerment and social development of the local communities. Therefore, going beyond the terms of reference from MIB, the Authority in a pre- consultation process sought inputs from CRS permission holders on the issues relevant for the growth of CRS in the country based on their experiences over the past decade. Several responses were received; these inter alia included comments on procedural matters; technical issues; content; aid and assistance.



In addition to the issues highlighted, the Authority also noted the important role, the CRS play in serving the local communities by providing relevant information/alerts during natural calamities and emergency situations. The Authority, after analysing all issues comprehensively, sent ‘Recommendations on Issues related Community Radio Stations’ to MIB on 29 August, 2014. The salient features of the recommendations included initial permission for operating a CRS to be five years; extension of permission for five years at a time, to be allowed following performance evaluation; and CRS to be allowed to broadcast locally relevant news and current affairs content sourced exclusively from AIR, in its original form or translated into the local language/ dialect.



MIB sent references to the Authority to provide its recommendations on issues relating to ground based channels being operated by cable TV operators and programming services being offered by DTH service providers to their subscribers. Collectively these kinds of programming services provided by the Distribution Platform Operators (DPOs) are referred to as Platform Services (PS).



At present, the PS offered by DPOs are not subject to any specific regulations or guidelines. Similarly, there are several ground-based broadcasters who provided local TV channels to cable operators for distribution which are also not covered by any specific regulations. Since, all of these platform services and local channels are being operated and distributed without even a simple registration system in place; the possible impact of the content carried on these channels on the law and order/ security situation is a cause for concern. In addition, the differentiated treatment under the different policy guidelines applicable to the different types of DPOs has to be addressed, to provide for similar regulatory frameworks for what after all are inter-changeable services. Therefore, there is an urgent need to establish a simple, robust and fair regulatory system that addresses all concerns regarding the PS being distributed on cable TV networks.



After an extensive consultation process in which open houses discussions were held with stakeholders in all four regions in India, the Authority forwarded its recommendations on ‘Regulatory framework for Platform services’ to the government on 19 November 2014.

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