Regulators

For I&B ministry, lots of legislative action pending

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Tomorrow India‘s BJP-led 18-odd party coalition NDA government completes three years in office.So does the information and broadcasting ministry, in a way the nodal organisation for policy-making relating to broadcasting, uplinking, and the entertainment sector. On the occasion of three year‘s of existence - at times tumultuous - of the government, indiantelevision.com has a look at what the government and the I&B ministry have done, reviews the status of the policy decisions announced and effected and also looks ahead to what can be done in the remaining period of a five-year tenure.

For the last several months, India‘s information and broadcasting (I&B) minister Sushma Swaraj has not held her weekly Friday durbar for beat journalists which earlier used to be a regular fixture when over light, but tasty, snacks and tea the minister and the Press used to exchange information on the industry in her fifth floor office at Shastri Bhawan in the heart of the Capital. The occasion also presented journos with ample opportunities to get ‘exclusives‘ confirmed (or denied) and the minister with an audience which later disseminated the thought process of the government on various policies relating to the industry.

Her office staff and the Press Information Bureau, the government‘s PR outfit, insist that after having set a scorching pace during the early days in office, Swaraj is now taking a breather where policy decisions are concerned. It is also true that Swaraj, during her present stint at the I&B ministry and also during an earlier stint had been involved with some landmark policy decisions - their outcome notwithstanding - which showed a green signal for starting a KU-band direct-to-home TV service in India.

The next session of parliament in mid-Nopvember is likely to see some action on the introduction conditional access system (CAS). For this and other issues that affect the media and entertainment industry, read on...

POLICY ANNOUNCED
YEAR
STATUS
FM Radio
1999
Some private players have started operations in select cities. But feel Policy & high licence fee may bleed them.
DTH
2000
Non-starter till now. Only two companies have filed for licence in 2002.
Industry status to films industry
2001
A slow starter as only few films have been financed by FIs or banks which are still wary of risks in funding films.

Communications

Convergence

2001
Introduced in Parliament. But awaiting a Parliamentary panel‘s suggestions which has not yet submitted report to government
CAS
2002
Amendments to the relevant Act passed in Lower House, awaiting Upper House‘s nod amidst criticisms of reducing viewers‘ choice and govt. trying to have indirect censorship
FDI in print
2002
Broad policy announced allowing limited FDI in news category. But players awaiting final guidelines
FDI in films & advertising
2002
100% FDI allowed through automatic route. Response has been okay.

FM Radio ***

On 9 November, 1999, a day ahead of the deadline, Subhash Chandra‘s Zee group through an associate company submitted tender documents for its bids for all the 40 cities which were be opened up to private parties for FM radio broadcasting. Zee was not alone in doing so, many other high-profile corporates like the Reliance group, NDTV, RPG, Mid-Day and a PK Mittal company had also picked up tender documents for starting FM stations. 450-odd tender documents had been picked up by various corporates, big and small, including absolutely local entrepreneurs based in cities like Jallandhar and Jamnager.

When all the bids were opened finally by 2000, in all, 67 companies through 360 tenders had bid for 108 FM stations that were up for grabs in 40 cities. Since it was a new sector many companies had thought there money was to be made. So, in a trend, reflective of telecom biddings, the bidders played for high stakes. For example, 11 FM radio stations for Delhi went for a whopping Rs 71.25 million each. The successful bidders in Delhi (reserved price Rs 12.5 million) included New Media Broadcasting (a Zee associate company that has since closed shop), Bennett, Coleman and Company, Living Media, Dream Radio, Hind Broadcasting, Hindustan Broadcasting, Music Broadcasting, Millinneum Delhi Broadcasting and Observer Network. The lone channel in Chandigarh had gone for about Rs 66.5 million to New Media.

Cut to 2002. Only about a dozen FM radio stations are operational and increasingly the players are realising it‘s a tough nut to crack with revenues just trickling in. The bidding fee, coupled with other financial guarantees, has made this business less viable.

So much so now companies are surrendering their licences. Music Broadcast Pvt. Ltd-Star combine has done so for two centres out of their six. Ditto for Millinneum Broadcasting and Radio Mid-Day for Delhi. Some have dropped out altogether, including the Ambani-backed Observor Network and the Zee associate company.

While the private companies blame the government for framing a policy which was not business-friendly (in FM radio operations portfolio investment by FIIs up to 30 per cent, as per finance ministry guidelines, is allowed but no foreign equity), the government says that every detail was on paper with the tender documents and for the high bids the bidders were themselves to be blamed.

The case as it stands now, it seems Delhi and some other centres may see some radio stations by next year, while the industry feels more companies are likely to surrender their licences as the experience of those operating in the space are not very encouraging.

DTH ***

It was ironical that while on November 2, 2000, the government announced the broad policy relating to KU-band DTH service in India, a day earlier Star India‘s then executive director-DTH, Urmilla Gupta, had put in her papers after waiting for DTH to happen since 1997.


The announcement was greeted with cautious optimism then which is still the case. From the time of announcement of the policy till date only two applications - from a Star India front company and Subhash Chandra‘s satellite company ASC Enterprises - have been received by the I&B ministry. These two were also moved early this year.

Asked about the delay in starting a DTH service, a senior Star executive had told indiantelevison sometime back that a costly operation like DTH (a typical DTH operation would need investment between $ 400-500 million) cannot be started unless the government reviews its policy guidelines and goes in for some relaxation.

The Planning Commission and some others too, had suggested that the government should relax DTH guidelines which seem too stringent.

When the same question was put to the I&B ministry a senior bureaucrat retorted: "Policy guidelines cannot be changed for just one or two players. If more come forward and there is a genuine need, policies can be reviewed."

The existing DTH guidelines in a nutshell state the following:

*Total foreign investment, including FDI/NRI/OCB/FII, not to exceed 49%. Control of DTH company with resident Indian. Broadcasting and/or cable company holding limited to 20%.

Criticism: This ceiling should be hiked.

*An entry fee of Rs 10 crore, plus annual revenue sharing with government on 10% basis.

Criticism: The revenue sharing should be waived or deferred till the fifth year of operation.

*A bank guarantee of Rs 400 million for a 10-year licence period.

*Mandatory uplinking from India.

Criticism: Long-term agreements have been done abroad and cannot be cancelled soon.

* A year‘s time to set up earth station in India.

*Licencee to ensure a single SMS and open architecture set top box.

Criticism: There is nothing called open architecture as every technology and channel encryption is proprietary.

Thereby hangs another tale of a policy failing to kickstart the area concerned for investments. Last heard a Bureau of Indian Standards (BIS) committee is looking into the issue of open architecture and whether set-top boxes can be really ‘open‘.

Conditional Access Systems (CAS) ***

The movement to implement conditional access system in India to bring addressability in Indian cable homes gained momentum early 2002.

Hectic lobbying by broadcasters, cable industry and sundry players notwithstanding, Swaraj stood her ground in a bid to come to the Indian consumers‘ help who, allegedly, are having to pay steep monthly cable subscription fee for viewing cricket matches, saas-bahu fare, etc.

The move to get the amendments to the Cable TV (Network) regulation Act 1995, which would facilitate implementation of CAS, got passed in the Lok Sabha late one evening some months back through a voice vote.

But in the Upper House of Parliament, where the government does not have a majority, the members of Parliament wanted a debate during the last session of Parliament.

Amidst a drama of the I&B ministry withdrawing the Bill and Swaraj holding hectic negotiations with Opposition MPs to convince them of the benefit of CAS and with cable operators who threatened to cut off cable service to dissenting MPs, the issue could not be discussed in Rajya Sabha.

It‘s to be seen what happens of CAS during the next session of Parliament starting mid-November.

The biggest criticism of CAS is that the government was trying to control what viewers should see or not see by giving itself the right to determine which all free-to-air channels (specially news channels) should be part of the basic tier of service which would come at a nominal price.

It is another thing that till date the basic tier price also has not been decided and various permutations and combinations are still being worked out.

Communication Convergence Bill ***

In all fairness the blame for delay on this piece of legislation for the convergence era cannot be put at I&B ministry‘s doorstep. Because the Bill was introduced in parliament in 2001 by the then telecommunication minister Ram Vilas Paswan and after initial confabulation Swaraj really doesn‘t have much say in this.

The Bill is with Parliament‘s Standing Committee on IT and Telecommunication and the government is awaiting its reports and suggestions which may or may not get incorporated into the Bill for re-tabling before policy makers before being enacted into a law.

Meanwhile, the print medium which fought for decades for FDI to be allowed into the sector scored a major victory as an oscillating government finally some months backs allowed limited FDI in print medium in the news category - FDI up to 26 per cent in news category and 74 per cent in non-news category.

But these apart, Swaraj has seen to it that the film industry gets industry status paving the way for organised funding of films. This is still to pick up. She has also worked hard to get Indian films noticed in international film festivals and the market for Indian films widens through organised participation at international level.

What the government can do is to speed up the process of enactment of the Communication Convergence Bill, review the existing DTH policy without taking into account the players involved and also see that future policies for the sector is well thought of and investor friendly before being finalised.

Swaraj may just take hope from Nehru‘s famous words that there are miles to go before she takes a breather.

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