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2017 was a regulatory roller coaster and the ride continues

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NEW DELHI: The year 2017 for the media industry certainly couldn’t be called easy from the point of doing business despite efforts and claims by the federal government that significant progress had been made in the regard.

The downside of demonetisation of high-value currency notes not only continued to be felt well into 2017, but the introduction of the GST (goods and services tax) in July and its compliance added to the woes as it increased paperwork and investment in human resources for the entire media sector. The cascading effect of the tax and monetary policies on the general economy of the country had a telling effect on the media and entertainment industry as companies, big and small, struggled to keep up with compliance (and sliding revenue) and changing guidelines owing to teething problems.

2017 began with broadcast and telecoms regulator TRAI’s new set of guidelines relating to tariff, QoS and inter-connection, issued in the second half of 2016, being challenged by one of the biggest broadcasting companies (in terms of reach and revenue), Star India, and its ally Vijay TV in a Chennai court. Separately, two other DTH companies filed a similar challenge in a Delhi court.

Over a year later, the regulator’s guidelines-touted to be an effort in creating fair ground rules for all stakeholders leaving them free to take commercial decisions-remain in suspended animation as the Chennai court is yet to deliver its final verdict till the time of writing this piece though the arguments and other legal processes have been completed.

And, then Ministry of Information and Broadcasting (MIB) got in Smriti Irani as minister, a person with a background in the media and TV industry and as someone with strong views on issues. The sudden cancellation of a programming contract to Balaji Telefilms, awarded by pubcaster Doordarshan after a tendering process, could be cited as Irani’s aggressive stand on matters relating to her ministry and the media sector. Ditto for Doordarshan’s parent company Prasar Bharati deciding suddenly during the year not to renew contracts of some private sector TV channels that rode piggyback on DD’s free-to-air DTH platform Free Dish. The latter case is now being debated at the disputes tribunal.

Over the 12 months in 2017, the MIB came out with a series of regulations, ranging from advisories on condom ads (the flip-flop was surprising) to a sharp hike in processing fees for clearances without clear definitions on some matters to the dos and don’ts of covering sensitive developments, all of which have left most industry players uneasy.

A section of the industry also feels that the government has cleverly fired the gun, at times, keeping it on the shoulder of TRAI. Even while the regulator is in the process of wrapping up a consultation on various points of ease of doing business in the broadcast and cable sector, towards the fag end of the year, the MIB requested the regulator to examine whether TV channel permissions to beam into the 183-odd million TV homes in the country could be auctioned and the entry-level threshold increased-all aimed at arresting the spiralling number of applications seeking permissions to start a new channel. If legislated, it would be a sort of first where TV channel permissions, and not spectrum, would be auctioned.

Another directive causing concerns for broadcasters is an MIB order making provision for processing fees on account of change of satellite, channel name/logo, language of channel, category of channel, mode of transmission, teleport, teleport location and change in the category of a channel from a GEC to a news channel for temporary uplink of a live event. The regulation stipulates that a processing fee of Rs 100,000 would have to be paid by a TV channel if seeking temporary uplink permission for, say, a cricket match. Nothing wrong in putting an amount to undertake processing.

But what is troubling the TV channels is that the fee of Rs 100,000 is for each channel. So, for example, if a broadcaster having four sports channels proposes to telecast live a test cricket match for five days, then the amount for processing of temporary uplink permission by MIB would be Rs 100,000 each for five days for each of the four sports channels (100,000x5x4). That, stakeholders point out, is quite a large sum of money for a five-day match telecast in different languages over several TV channels.

The MIB also, for the first time, introduced new categories of channels, namely regional and national. As per the extant uplinking and downlinking guidelines of 2011, however, all the licences, whether it is an Assamese or a Tamil language channel, are for pan-India channels and can be distributed throughout India. In fact, many broadcasters obtain multi-language permission for their channels to be able to run in multiple language feeds. The ministry later had to come out with clarifications defining what constitutes a national channel and what is a regional channel, which makes things a bit more complicated in sharp contrast to the federal government’s claim of having created a more conducive business environment in India, a senior executive of a broadcast company opined. What’s more, some experts pointed out, it was surprising that the MIB took the decision on re-classification of TV channels because such policy decisions would ideally need to be ratified by the federal cabinet of ministers.

The TRAI, however, was banking on its ground rules for the broadcast and cable sectors to herald a new era that is not to be–not at least in 2017. But the regulator’s earnestness to hold a dialogue with stakeholders cannot be faulted despite questions being raised on some of its consultation papers; the one on STB inter-operability, for example. The TRAI should be lauded for upholding principles of net neutrality, in general, and giving thumbs down to content availability in a walled-garden environment, while in the US the FCC is preparing ground to dismantle net neutrality regulations that claimed to be protecting consumer interest.

What comes out quite clearly in the year of disruptions and a clear change in the ways media, especially TV news, functions is that the thin line blurred between ethics and the dance-on-the-unethical-side-while-remaining- technically-correct.

The all’s-fair-in-love-and-war thinking was written all over the audience measurement controversy that broke out involving a new news channel that debuted with a bang and the incumbents of the news genre in 2017. Accused by a section of news channels of using dual LCN or frequency strategy to increase sampling and snacking to up audience ratings, the new news channel hit back saying all other players too had sometime used the same strategy. Subesequently, the regulator had to step in directing stakeholders to desist from using practices that were not allowed in the TRAI’s books.

Such instances-apart from the now-contested TRAI directive barring use of the `landing page’ by TV channels-highlight one thing: if the industry craves for a light-touch regulatory regime, restraint and maturity is needed from the industry, too. For example, despite the TRAI cracking the whip on dual LCNs, many TV channels, including the not-so-new-news-channel-on-the-block, were repeatedly accused by competition of continuing to use the dual LCN strategy throughout 2017.

If the TRAI-and the government-hoped its guidelines and advisories would reduce litigation in the broadcast and cable sectors, the dream is yet to be fulfilled. The website of broadcast and telecoms disputes tribunal TDSAT states there are approximately 800 cases (in both sectors) still pending till 22 December 2017 if statistics from January 2017 were considered. The high pendency was despite the fact that TDSAT disposed of hundreds of other cases in 2017.

The broadcast and cable industry would hope that 2018 would be less challenging, at least from the point of view of regulations. Some issues (like the consultation paper on uplink/downlink of TV channels, online video piracy and lack of any guideline for M&As for the media sector), however, continue to rankle even as we all enter 2018, not to mention that a proposal to review DTH guidelines, involving issues like rationalising revenue sharing with the government and renewing of licenses have been seemingly put in the cold storage by the government.

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