Television
Report on Shemaroo

2 days for downlink deadline: TV channels slumber on

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NEW DELHI: With the deadline to adhere to downlink norms just two days away, not only does confusion reign, but television channels are still making last ditch attempts to push back the D-day.

A senior government official admitted that the number of applicants seeking landing rights in the country is still "very low" compared to doubts and queries being raised. "This is surprising considering the deadline is 10 May," the official added.
If this lackadaisical attitude is not enough, government officials say, TV channels are still seeking clarifications whether those uplinking from India also need to register under the downlink guidelines.

For example, a senior executive of a news organization told Indiantelevision.com that he doesn't think his company needs to apply under the downlink norms as it has completed all formalities and given the necessary information while seeking a green signal for uplinking from India.

"We have sought a clarification from the I&B ministry. Though we think downlink norms are more for those channels uplinking from outside India, but if the government insists, we would have to do the needful," the news executive explained.
Ditto for some international news channels like the BBC, CNN, which want to be on the right side of the law, but are confused on some portions of the downlink guidelines that state news content and advertisements targeted specifically at Indians would not be allowed and for which special waiver has to be taken on a case-by-case basis.

''BBC World is aware of the timetable set out by the Indian government for completion of all formalities of registration under the new down linking guidelines issued on 11 November 2005. In compliance with the timetable, BBC World has prepared its application and will submit the same within the 10 May deadline set,'' a BBC spokesperson said.

The downlink guidelines, formulated in November 2005 states, "No person/entity shall downlink a channel, which has not been registered by the ministry of information and broadcasting under these guidelines."

The seeming confusion is being created by Clause 1.1 in the guidelines, which goes on to say, "The entity applying for permission for downlinking a channel, uplinked from abroad, must be a company registered in India under the Indian Companies Act, 1956, irrespective of its equity structure, foreign ownership or management control."

In a country like India where there's negligible restrictions on beaming into the country or the capability to be accessed by cable networks, according to industry estimates, 350-400 TV channels of various hues can be downlinked. Of this, almost 50 per cent can be considered regular TV channels.

Though the government is always wary of giving out such information, it is estimated 130-150 TV channels, including news, sports and general entertainment, uplink from India.

However, of the 75-odd popular channels, which in some form or other are in demand in 61 million cable homes in India, 35-40 per cent uplink from outside India and most of them are yet to file their papers with the government.

The Indian government issued an ultimatum last week that those channels not fulfilling all the downlink criteria by 10 May 2006 would be denied landing rights.

The I&B ministry also posted on its website communications sent to the Indian Broadcasting Foundation, Star Group, Time Warner and a lawyer. The missive made it clear that the deadline of 10 May stays.

The lobbying against the downlink norms as a whole and partly is understandable. The moment a television company sets up a permanent establishment (PE) in India, as per downlink norms, its tax liabilities in India would go up drastically. Rather, more the revenues collected in India, higher would be the tax component.

Recently, Economic Times reiterated this fact in a report also. "After unveiling the downlinking policy for satellite television channels, the government is set to re-examine the tax treatment of revenues earned by foreign TV channels (FTCs). These companies earn advertising revenues from ad agencies, sponsors, and subscription revenues from cable operators.

"The task force on emerging issues in non-resident taxation, constituted by the finance ministry, is understood to have made an attempt to bring greater clarity and certainty in the tax treatment of FTCs. This, in turn, may enable India to get a larger share of the pie. Going by the recommendations, FTCs will be liable to pay tax in India if they have a permanent establishment (PE) here. Alternatively, a dependent agent who has the authority to conclude contracts, also constitutes a PE," the newspaper said.

Before 2001, foreign TV channels used to pay taxes on a presumptive basis on their advertisement revenues earned in India, which ranged between 35-40 per cent.

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