January 2010

HITS GUIDELINES

On 12th November 2009, the Union Cabinet gave its consent for private players to establish a Headend In The Sky (HITS) servicing India. Subsequently, on 26th November, the I&B ministry has issued the detailed guidelines for grant of Permission to establish and operate HITS Services in India. We bring you the details:

LICENSING AUTHORITY

Companies desirous of establishing and operating Headend in the Sky (HITS) Service platform must obtain Permission from the Ministry of Information and Broadcasting in accordance with the following guidelines.

HITS -DEFINITION

"Headend-in-the-Sky (HITS) Broadcasting Service, refers to the multichannel downlinking and distribution of television programme in C-Band or Ku Rand, wherein all the pay channels are downlinked at a central facility (Hub/ Teleport) and again uplinked to a satellite after encryption of channels. At the cable headend these encrypted pay channels are downlinked using a single satellite antenna, transmodulated and sent to the subscribers by using a land based transmission system comprising of infrastructure of cable/optical fibre network."

The HITS platform is like a conventional MSO, except that the head-end is virtually located on a Satellite.

EXISTING LICENSEES

In 2003, HITS licenses have been issued Essel Group and Jain TV's NSTPL. Both these licenses will remain valid till the remaining period of permission, as long as they abide by the current guidelines. The operational HITS platform is required to submit a detailed plan for ensuring compliance to the guidelines & deposit the non-refundable entry fee of Rs. 10 Crores.

ELIGIBILITY CRITERIA

The applicant must be an Indian company with a minimum net worth of Rs 10 Crores.

The total direct and indirect foreign investment direct investments into the company shall not exceed 74% at any time.

The majority of Directors on the Board must be Indian Citizens. The Company, Directors, Managing Director, Chief Executive Officer(CEO), and Chief Financial Officer (CFO) will be required to be security cleared from the Ministry of Home Affairs.

CROSS MEDIA RESTRICTIONS

Broadcasting & DTH companies cannot collectively hold or own more than 20% of the total paid up equity.

Conversely the HITS licensee cannot hold more than 20% equity share in a broadcasting or DTH company.

Also any entity holding more than 20% equity in a HITS company shall not hold more than 20% equity in any other Broadcast or DTH company and vice-versa.

EXEMPTIONS

These restrictions do not apply to financial institutional investors.

Also, there would not be any restriction on equity holdings between a HITS platform and an MSO.

MULTIPLE HITS PLATFORMS

The government will not have a ceiling on the number of HITS licenses issued.

LICENSE VALIDITY

The HITS license will be valid for 10 years, but may be terminated earlier, if the required norms are not met.

The HITS license is non transferable, except with the government's prior approval.

LICENSE FEES

While there is no annual license fee, a non-refundable entry fee of Rs. 10 Crores is payable.

License and royalty (if applicable) for the spectrum used, would be payable as prescribed by Wireless Planning & Coordination Authority (WPC), under the Department of Telecommunications.

BANK GUARANTEE

A Rs 40 Crore bank guarantee must be submitted, within 1 month of the issuance of SACFA clearance by WPC.

The HITS permission holder must commence operations within 1 year of the SACFA clearance, failing which half of the bank guarantee will be forfeited. if operations do not commence in 2 years, the full bank guarantee will be forfeited.

The full bank guarantee will be refunded if the service commences within 1 year.

ONLY APPROVED CHANNELS

The HITS platform can only carry channels approved by the I&B ministry for uplinking/ down-linking.

The HITS platform is responsible for to ascertain and discontinue any channel on its platform that has refused to join any other authorised platform (eg. MSO, DTH or IPTV network) or has violated the Competition Act or the Programme Code and Advertisement Code as laid down under the Cable Television Networks (Regulation) Act, 1995.

NO PORNOGRAPHY

The HITS licensee must ensure that the subscribers of the service do not have access to any pornographic channel or to secret anti-national messaging.

CHANNEL CARRIAGE

The HITS platform must provide access to all channels on a non discriminatory basis, and cannot enter into any exclusive contract for distribution of TV Channels.

Besides free carriage of Doordarshan's 'Must Carry' channels, other DD channels must be offered carriage on the most favourable financial terms offered to any other channel.

TECHNICAL REQUIREMENT

The HITS platform can uplink and downlink in either the C or Ku bands. Indian or foreign satellites can be used, however, where the company does not have a satellite of its own or of its group company, proposals envisaging use of Indian satellites will be accorded preferential treatment. Satellite to be used should have been coordinated with INSAT System.

The HITS operator must provide signals directly satellite only to registered MSOs & Cable operators. Under no circumstances should the HITS operator provide signals directly from his satellite to the consumer. The HITS platform can providing signals, through its own cable network, if any.

The signals are to be provided to consumers only through QAM Set Top Boxes.

The HITS platform must operate a facility for monitoring and storing transmitted content for atleast 90 days.

INTER-OPERABLE STB

"The company is required to provide commercial interoperability with respect to its set top boxes so that if the subscribers decide to switch over to any other service provider or platform they should be able to do so at least cost. Commercial interoperability here would mean that in addition to offering the receiver set on an outright purchase basis, a subscriber should also have the option to purchase it on a hire-purchase basis or rental basis with a provision to return the set top box on such terms and conditions as may be laid down by regulations issued by TRAI."

NO FTA SIGNALS

Irrespective of its source, all HITS signals must pass through the encryption and digital addressable system located within the earth-station situated on Indian soil.

VALUE ADDED SERVICES

Value added services can be provided, but the government must be informed before the service commences. If the Value Added Service requires permission of a prior license, it will have to be obtained by the HITS platform, independently.

OTHER CONDITIONS

Besides the above conditions, the HITS guidelines spell out other requirements including inspection of facilities by the Government, compliance with National security conditions, exit clauses etc.

The HITS guidelines also provide detailed instructions for WPC (Wireless Planning & Coordination Authority) permission, etc.

Though the HITS guidelines are dated 26th November, they were available on the I&B Ministry website in Mid December. At the time of writing, the actual application forms were not available on the I&B website but are likely to be available in the near future.

Now that the I&B Ministry has declared specific details for HITS applicants, the next 3 months will probably see the emergence of any new, serious, HITS platform. The Rs. 40 Crore Bank guarantee and the bundled condition to commence operations within 2 years will ensure that only serious players put in their applications. n