Scatmag.com

November 2016

TRAI PROPOSES CAP ON CARRIAGE FEES FOR ALL ADDRESSABLE PLATFORMS


TAs part of its comprehensive new regulations that will apply uniformly to all Broadcasters, Cable Networks, HITS, DTH & IPTV platforms, the TRAI has proposed a new Interconnection Regulation.

BACKGROUND

The TRAI has been regulating interconnection (distribution of signals) of TV signals, via Cable TV, HITS, DTH and IPTV platforms, since 2004. However, to date there have been different interconnection rules applicable for Cable & DTH platforms. There have been many inconsistencies in the rules for different platforms, and matters have been taken to court by aggrieved parties. The Courts have asked the TRAI to take a complete fresh and consistent view and declare new regulations.

In October 2016, the TRAI has called for a consultation on its Draft Telecommunication (Broadcasting and Cable Services) Interconnection (Addressable Systems) Regulations, 2016. This new regulation has 2 highlights:

1. The Rules will be common and apply uniformly to Cable TV, HITS, DTH & IPTV platforms.

2. The Carriage Fee will be regulated and capped.

3. The minimum commission payable by TV Channels to distribution platforms.

 





UNIFORM RULES

Exactly the same rules will apply to all Digital Platform Operators (DPOs are DAS MSO, HITS, DTH & IPTV operators).

TRAI feels the interconnection regulations must maintain the fundamental underlying principles of non-discrimination & a level playing field.

There is a "Must carry" provision for all addressable systems, on first come first serve basis.

The TRAI has proposed standard formats for distribution platforms to ask broadcasters for signals, as well as a format for a 'Subscription Report' they must provide to all broadcasters, including free to air channels.


DISTRIBUTOR'S COMMISSION

Broadcaster must offer to a distributor (DPO), a minimum of 20% of the maximum retail price of its pay channel(s) or bouquet(s) of pay channels as distribution fee.

They may also offer discounts on the maximum retail price provided that the sum of discounts and distribution fee in no case shall exceed 35% of the maximum retail price, so declared.

CARRIAGE FEE RATES

TRAI has specified 20 paise per (Standard Definition) channel as the maximum carriage fee per sub per month that can be charged by any DPO -

Cable Network, HITS, DTH or ISP platform. For HD channels the max carriage fee proposed is 400 paise per channel per subscriber per month.

The carriage fee rate must be uniform and non-discriminatory for all channels.

DPOs of TV channels may offer discounts on the carriage fee rate declared by them not exceeding 35% of the rate of the carriage fee declared.

The proposed carriage fee falls further as the percentage of subscribers opt for that channel.

The carriage fee falls to zero if more than 20% of the subscribers opt for the channel.

Hence, effectively, no carriage fee can be charged for channels in the basic FTA package!

Table 1 Summarises the different slabs of maximum carriage fee that can be charged from a broadcaster.

Number Of Average Active Monthly Subscribers For A Channel
Max Monthly Carriage Fee
Less Than 5% 20 paise / channel / sub
Between 5% & Less Than 10% 15 paise / channel / sub
Between 10% & Less Than 15% 10 paise / channel / sub
Between 15% & Less Than 20% 5 paise / channel / sub
20% or More Zero

Table-1: Max Proposed Carriage Fee That Can Be Charged By Any CATV, HITS, DTH or IPTV platform.

DETERMINING NUMBER OF SUBS
TRAI has also attempted to bring in greater transparency via auditors, who will submit reports on the number of monthly subscribers.

SUBSCRIBER AUDIT
Every DPO must submit to each TV channel broadcaster an accurate subscription report for channels or bouquets (in the prescribed format), within 15 days from each calendar month end.

If the DPO fails to provide the subscription report within 15 days of month end, the broadcaster will have the right to raise a provisional invoice for 10% + amount over the previous month.

The broadcaster can disconnect its TV signals (after 3 weeks' prior written notice) if the distributor fails to provide the subscription reports for 3 consecutive months.

The broadcaster will raise invoices based on the subscription reports, clearly stating the current dues and arrears, if any, allowing at least 15 days to make payment. All arrears not listed for 3 months will lapse.

ALSO FOR CARRIAGE FEES
Similar provisions have been suggested for Carriage Fee invoices.

Every DPO must carry out an annual audit of its SMS, CAS, and other related systems. This audit report must be shared with each broadcaster.

TRAI AUDITORS
TRAI itself may empanel auditors for this purpose and the distributors will have to compulsorily get the SMS audited by these.

If a broadcaster is not satisfied, it may get an audit carried out not more than once in a calendar year.

DEADLINE
Comments have been invited from stakeholders by 28 October 2016. The TRAI will post all comments received on its website. After considering these comments, TRAI will issue its final Interconnection Regulation 2016. We will provide a detailed review for our readers of the final regulation declared by TRAI.