Report on Shemaroo

Comment: TRAI uplinks progressive recommendations; now MIB, others need to downlink them

Most existing norms unchanged; an Open Sky exhorted

The approximately Rs 1,400 billion Indian broadcasting and cable sectors, reeling under the impact of a slow economy and hemmed in by erratic policy-making, would be breathing a bit easy after TRAI’s recommendations on issues related to uplink and downlink of TV channels and teleports.

And, why not?  When the consultation paper on uplinking and downlinking guidelines was released by TRAI in December last year, the concept paper had sent alarm bells ringing in the media industry. Reason? The consultation paper had references about auctioning of satellite spectrum and TV channel permissions, introduction of AGR (adjusted gross revenue) sharing based licence fee (the concept of licensing itself was a debatable issue) and introduction of other changes.

Most media houses sensed that an auction and AGR-based licensing and spectrum regime could have an irreparable impact on the industry, a la telecom sector, where winding down of businesses and pink slips are becoming common. Even more worrying for the sector was the assertion by TRAI --- probably egged on by the Ministry of Information and Broadcasting (MIB)’s reference letter on the issue --- that the administrative permissions received by TV channels under the existing norms were licences under Section 4 of the Telegraph Act, 1885, which in itself is an antiquated piece of legislation harking back to the 19th century.

Though TRAI may not have been directly responsible for suggesting in the consultation paper, issues that rankled the industry, it did experience a rare united and collective views of the industry. Though consensus among stakeholders is rare, on this matter there was no such hesitation. And, an open house forum organised by TRAI on the issue to get further feedback could be cited as an example of this rare unity of views.

Most attendees to the open forum conveyed loud and clear that concepts like auctioning of TV channels’ permission and AGR-based annual revenue sharing (with the government) would do more harm to the industry than any good. What’s more, some of the industry representatives reminded TRAI of its recommendations for National Telecom Policy 2018 where it had suggested “review” of all levy and fees imposed on telecom service providers.

In the final recommendations issued earlier this week, TRAI has categorically struck down the possibility of either auctioning of permissions and/or spectrum and steered clear of AGR altogether. Rather, it has taken a highly progressive stance, which if accepted by MIB and other government organisations can inject the much-needed fuel in the industry for it to propel forward faster over the next decade.

By not increasing any substantial financial burden on media companies in this sector, TRAI has enabled the capex to go into creating newer ventures, innovative products and business models, and other expansionary activities, rather than simply paying fees and levies. Though the suggested framework has been left mostly untouched from the perspective of administrative fees, there are a few notable changes.

The annual licence fee for uplinking of a TV channel has been enhanced from Rs 200,000 to Rs 300,000. Similarly, the annual fee for downlinking of a TV channel has been increased to Rs 750,000 from Rs 500,000. Also, the fee for downlinking of channels uplinked from abroad has been increased to Rs 22,50,000 per annum.

TRAI, while exhorting the likes of MIB, Department of Space and DoT to streamline processes, has interestingly suggested transfer of permissions between two companies be permitted only in the case of mergers and acquisitions as recognised under applicable laws. However, free transfer has been recommended for permission of a TV channel to its subsidiary company or holding company or a subsidiary company of the holding company. The caveat being such a company should have a valid uplinking and downlinking permission.

A time period of only one year has been given for operationalisation of a TV channel and a lock-in period of one year from the date of operationalisation of a channel for the transfer of permission of such a channel too has been introduced.

As for teleports, no change in the amount of one- time non-refundable processing fee levied for seeking permission for establishing a teleport has been suggested. Similarly, it has been suggested that no entry fee is levied for granting permission for establishing a teleport. However, for each antenna, a fixed annual license fee of Rs 300,000 has been recommended.

What will also come as a relief to the teleport industry is that TRAI has refrained from restricting the number of teleports in India.

And, once again TRAI has nudged Department of Space and Department of Telecoms to take time-bound and liberalised policy decisions relating to satellite capacity. Though not said upfront and in so many words, the regulator has pitched in for foreign satellites too. “The issue of open sky policy for Ku band frequencies may be taken up by MIB in INSAT Coordination Committee (ICC) meeting and the open sky policy should be adopted.”

Any regulator would vouch that it’s hard to please the core constituency and stakeholders don’t always agree with its stand, but on the uplink/downlink matter the industry would agree with most of the suggestions of TRAI --- and also breathe a little easy.

Hang on, don’t pop the champagne yet. TRAI can only make suggestions --- it admitted so in an open forum --- and it’s up to MIB, DoT and Department of Space to accept the suggestions and implement them. And, therein lies the catch because quite a few other sets of TRAI recommendations have been gathering dust in various corridors of power.

Also Read :

Uplink, downlink issue: TRAI pushes for a liberal regime keeping most existing norms unchanged

TRAI extends dates for comments on uplinking/downlinking consultation paper

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