January 2010

COURT STAYS HARYANA CABLE LICENSE AUCTION

In November, there were reports that the Haryana state government planned to auction 3 year licenses to run cable operations in every city and town in the state. Haryana is estimated to have approximately 7 million cable homes, representing almost 8 per cent of the 85-million cable homes in India. Haryana is also a lucrative market because it has affluent cities like Gurgaon and Panchkula. Some estimate the state to have approximately 1000 Cable networks and 300 MSOs, providing lively-hood and employment to more than 200,000 industry personnel.

AUCTION DETAILS

Reports were that the Haryana state government planned to license a single Cable TV network for its smaller towns, while cities would be geographically segmented & multiple licenses auctioned.

Ambala, Panchkula, Hissar & Faridabad would have a city-based single license holder whereas Chandigarh or Gurgaon being larger cities would have multiple operators. Talk was that the auction's reserve price for Panchkula (near Chandigarh) may be fixed at Rs 50 lakh to Rs 60 lakh and for Gurgaon the rate may be Rs 2 Crore.

ANTI CONSUMER

The state governments move was resented not only by cable operators but also by consumers who felt that they would be forced to subscribe to cable TV services from large corporates, offering un attractive prices. The emergence of goon power also could not be ruled out.

The Indian Cable TV revolution has primarily been enabled by the absence of 'License Raj'. Cable TV thrived and grew rapidly due to the enterprise of independently owned small & medium cable networks. In fact within 3 years of the commencement of Cable TV, India had more cable TV homes than the Govt. provided telephones in 50 years since the country's independence.

Licensing & monopolising cable TV networks is not only anti-consumer but also against the basic norms free enterprise.

CABLE OPERATORS RESENT MOVE

Incumbent cable operators, however, are unhappy. "Are we supposed to close our business and take something else if we fail to get a license? Or is the move aimed at indirectly promoting companies that enjoy political patronage, to take over CATV networks in the state?" said a Gurgaon-based cable operator who did not wish to be identified.

The Haryana cable operators' association could not act in November when the unconfirmed reports emerged in the press. They however prepared themselves to take legal action, once an official notification / advertisement was declared by the state government.

"This move, if implemented, will lead to job losses. We may take legal opinion on the matter soon," Paramjit Singh, a Chandigarh-based MSO and an active member of the state's cable operators' association, had told the press.

"Will the Haryana State Govt. auction DTH distribution also ?" queried a cable operator.

NOTIFICATION ISSUED

The Haryana government subsequently notified the Haryana Municipal (Laying of Communication cables and Erection of Dish Antenna) Amendment Bye-laws, 2009. This dictated that no cable operator will be able to provide services without a mandatory license obtained through an open auction in every town, city or municipal area.

HC RESTRAINT OBTAINED

On 17 December 2009, the Chandigarh High Court granted a stay against the Haryana government's move to auction existing cable TV in the state.

"The notice was sent out by the Haryana government in August and we got to know of it only in November and since then we have been representing to MIB minister Ambika Soni, Haryana CM Bhupinder Hooda, Navin Jindal and urban minister Shailaja. A cable operator in Hansi (a small town in Haryana) was sent an order to take down his cables - which was signaling that the government was meaning business. With this letter in hand we pleaded with the court , and the court granted a stay," explained an activist.

CENTRAL OR STATE ISSUE ?

It is relevant to note that Cable TV is an issued addressed by the central government. The Cable Act is declared by the centre, and states are only called upon to implement central laws governing the industry. This is similar to the police force which follows central laws, but is implemented by the state machinery.

Clearly, we have seen only the first stage of an important legal issue, that will have nationwide repercussions for Cable TV networks all over the country. This will be a landmark matter with national repercussions, if state governments can overnight force 20 year old Cable Networks to shut down, simply because they have not submitted the highest bid, in a new, adhoc auctioning process. n