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Update: Cable TV, DTH ops against capping of carriage fee paid by broadcasters
MUMBAI: Digital cable and direct to home (DTH) platforms are against the capping of amount of carriage fee that a broadcaster is required to pay to a distribution platform operator (DPO).

In their submission to the Telecom Regulatory Authority of India (TRAI), the digital cable and DTH operators have asserted that the DPOs have not misused the flexibility of defining the target market for determining carriage fee.

The All India Digital Cable Federation (AIDCF) has submitted that its members have aligned coverage area with the head-end and have declared such area (State) as target market.

“The declaration of target market comprising potential subscribers who would be enjoying the services rendered by the distributors, forms an important aspect of their marketing plans and any restriction on the same would stand in the way of effective retransmission of channels to subscribers and would also curb the fundamental right of the DPOs to carry business freely,” AIDCF submitted.

It further stated that the carriage fee under the new regulatory framework has been appropriately determined and the same needs no revision. It added that the framework in its current form with respect to the concept of carriage fee aids in effective implementation of principle of ‘must carry’.

“However, it is pertinent to mention that as of today, only few of the Broadcasters have approached us for the carriage of the channel through the said Agreement and the same speaks volume about the very intentions of the Broadcasters.

DTH operators Dish TV, Tata Sky, and Bharti Telemedia have stated that there is no reason to define the Target Market for DTH since it is a Pan-India service provider unlike digital cable.

Bharti Telemedia has suggested that the flexibility to decide on the Target Market should be extended and allowed between the Broadcaster and the Distributor as per their mutual agreement and such terms can be captured in the interconnect agreement to bring transparency.

On the capping of carriage fee, Dish TV stated that the issue of carriage fee should always be kept at forbearance as it is a matter between a broadcaster and a DPO. It also pointed out that the regulator has already put a cap of meagre 20 paisa per subscriber in case of a channel seeking placement on the DPOs platform.

“Now further cap on the said carriage fee merely on the basis of the complaints made by the regional channels does not find any logic as the subscriber base of a DTH operator is not limited to any particular region unlike a local MSO,” it added.

Bharti Telemedia stated that a DTH operator should be allowed to recover its capital investments from the broadcasters since there is a significant operating expenditure involved in creating the infrastructure for carrying the channels.

Tata Sky averred that the the previous regulatory regime was able to manage the differing aspirations of all the broadcasters through a mutually negotiated settlement because of forbearance.

It has requested TRAI to do away with any kind of prescriptive carriage fee or for that matter any kind of caps. Further, it noted that the regulations should allow for the resumption of mutually negotiated agreements.

On the issue of determining the cost of carrying a channel, AIDCF stated that the cost of carrying a channel may be determined after taking into consideration the OPEX and CAPEX of the DPOs. “However, the Authority after due consideration and consultation has appropriately fixed the carriage fee and therefore the same needs no intervention,” it stated.

Dish TV stated that there is no reason for any change in the prescribed provision of 20 paisa per subscriber in case of DTH operators while Tata Sky is in favour de-regulating carriage fee price.

On the misuse of right granted to DPO to not carry channels having less than 5% subscriber base, AIDCF stated that the clause should be retained as the time period of six consecutive months is sufficient enough to ascertain whether or not a channel is being well received and/ or demanded by the subscribers. Further, the same also saves the distributors the unnecessary costs associated with carrying unpopular channels.

Tata Sky noted that the DTH operators have a limited bandwidth capacity. It also argued that any regulatory mechanism which empowers broadcasters to cling on to a DPOs platform irrespective of the market conditions of popularity, subscription, payments etc. would be unfair towards the platfollus. The negative impact will be more impactful on DTH operators who have a finite carrying capacity.

“Break up of multiple regional target markets for a pan India DTH operator could lead to the operator being reduced to a regional channel operator, irrespective of its reach. As permitted under the old regime, the DTH Operators did not have the obligation of must carry. This was due to capacity constraints and it also gave freedom to the Operators to choose and carry the most optimal content catering to the pan national audience,” it added.

Dish TV stated that the question is itself contradictory as the entire thrust of the authority behind issuance of the new regulatory framework was the fact that the non-popular or not so popular channels are being packaged with the leading and most popular channels of the broadcasters leading to the consumers pay for the channel which they do not want to watch.

The AIDCF as well as DTH operators have urged the TRAI against regulating the interconnection agreements such as placement, marketing or other agreement in any name.

AIDCF stated that any attempt to regulate agreements relating to placement, marketing etc. will curb the right of distributors to carry on business freely and would count as unnecessary incursion in their business affairs.

Tata Sky stated that the existing regulations have introduced complexities in the business-to-business interactions of DPOs with broadcasters. Forbearance is aligned to the actual market value of the offering, especially with respect to subscribers. We do not agree that the level playing field gets distorted under forbearance.

“Moreover, each broadcaster has differing needs, capabilities, and often caters to a different segment of the subscribers. It needs to be recognised that our industry is not just another `service’ industry, but an industry ruled by ‘content’. The current ‘one size fits all’ approach for Carriage fee has led to a market failure. Hence, we believe forbearance is the best way forward not just for Placement and Marketing but also for Carriage fee,” it submitted.

Bharti Telemedia opined that the new framework has regulated the Reference Interconnection Agreement and has rightfully allowed forbearance on other contractual agreements including the marketing and promotion agreements.

“However to ensure that such forbearance is under check, the Authority has mandated the inclusion of any agreement, for any kind of fee for a channel, between two service providers as part of interconnection agreement which also needs to be reported to the Authority. Therefore, the Authority has not only ensured that the current incorporated provisions act as safeguard/s against potential misuse but they also bring the transparency.”

Airtel Digital HD Recorder / Kerala Vision Digital TV
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