Key Highlights of New Tariff Order and Interconnection Agreement:

Telecom Regulatory of India (TRAI) had rolled out a draft telecom tariff order (TTO) in October 2016. Post final approval from supreme court of India TRAI rolled out Tariff Order and New Interconnection regulation on 03 March 2017. This time TRAI have attempted to ensure transparency, non-discrimination, consumer protection and create an enabling environment for orderly growth of the sector. Following points specified in the regulation will have an impact on the broadcasting sector:

Multi-system Operators / Distributors:

–        New regulation demands declaration of following details to the authority & on a public portal, every distributor of television channels shall, within thirty days from the commencement of these regulations or within thirty days from the commencement of its operations, as the case may be, on its website, publish:

• Target markets as declared under sub-regulation wherein every distributor of television channel shall declare coverage area of each distribution network;

• The total channel carrying capacity of its distribution network in terms of number of standard definition channels;
• List of channels available on the network;
• Number of channels for which signals of television channels have been requested by the distributor from broadcasters and the interconnection agreements signed;
• Spare channel capacity available on the network for carrying signals of television channels; and list of channels, in chronological order, for which requests have been received from broadcasters for distribution of their channels, the interconnection agreements have been signed and are pending for distribution due to non-availability of the spare channel capacity.

–        Regulatory also mandated the MSOs to specify the territories of interconnection agreement. Following are the details for describing the territories for distribution of signals of television channels:

• The registered area of operation of the multi-system operator as mentioned in the registration granted by the central government;
• The names of specific areas for which distribution of signals of television channels has been agreed, initially, at the time of signing of the interconnection agreement; and

• The names of the corresponding states/ union territories in which such agreed areas as referred in clause (b) of this sub-regulation are located.

–        Compliance officer will be designated by the broadcaster and the distributor of television channel; who will ensure:

1. generating awareness for ensuring compliance with the provisions of these regulations;
2. reporting to the Authority, with respect to compliance with these regulations and directions of the Authority issued under these regulations; and
3. ensuring that proper procedures have been established and are being followed for compliance of these regulations.

–        To ensure smooth functioning and speedy restoration, the MSO will have to provide the LCO with at least 2% of total STBs active in LCO’s network with an upper cap of 30 spare STBs - as maintenance which are not pre-activated.

–        Distributors of television channels shall submit monthly subscription reports of channels and bouquet of channels to respective broadcasters as per the format specified under the Schedule VII, within seven days from the end of each calendar month. However, broadcasters will hold the authority to disconnect its television channel after giving a written three weeks’ notice, if DPOs fail to provide monthly subscription report.

–        The DPOs shall arrange a consumer friendly electronic payment options within SMS.

–        Authority through the new regulations has introduced a revised format submission of monthly subscription reports to broadcasters wherein the monthly average subscriber count will be derived based on the following format:

Local Cable Operators:

–        In the new regulation, authority has mandated LCOs to submit the Customer Application Form (CAF) to MSOs within 15 days.

–        The network capacity amount and distribution fee amount shall be shared in the ratio of 55:45 (MSO: LCO) between multi system operator and local cable operator respectively.

–        The LCO shall not replace STBs of the MSO with the STBs of any other MSO without prior receiving the requests from the subscribers through application forms for returning the STB of existing connections and for providing new connections through Customer Application Form. The new Set Top Box shall be activated only after entry of the customer details, as provided in new Customer Application Form, into the Subscriber Management System of the new MSO.

Broadcasters:

–        Each channel of broadcaster should now be offered to the distributors of television channels on a-la-carte basis. However, provided that the broadcaster may also offer its pay channels, in addition to offering of pay channels on a-la-carte basis, in form of bouquet. However, the bouquet should not include any "Free to air channel" and High Definition (HD) and Standard Definition (SD) variant of the same channel.

–        As specified under the new regime, Broadcaster shall not propose, stipulate or demand for packing of the channel in any bouquet neither directly nor indirectly to the distributor of television channels to subscribers.

–        Minimum guarantee commitment or minimum subscription percentage on subscriber base on its channel or bouquet shall not be proposed by Broadcaster directly or indirectly.

–        Payment of minimum guarantee amount for providing signals for television channels, shall not be demanded from other service provider.

–        Further broadcaster can offer its pay channels in the form of bouquet(s) and declare the maximum retail price(s), per month, of such bouquet(s) payable by a subscriber. However, such bouquet shall not contain any pay channel for which maximum retail price per month is more than rupees nineteen.

–        Broadcaster will have a liberty to offer promotional schemes to the distributor of maximum retail prices per month on a-la-carte pay channels however, the overall period should not exceed 90 days. Also, the frequency of any such scheme by the broadcaster should not exceed twice in calendar year.

–        A broadcaster will need to publish the reference interconnection offer on its website, so that it is in the compliance with the regulatory, for providing the signals of all its pay channels to the distributor of television channels. This should be done within 60 days of commencement of the tariff order or before launching the pay channel in case of new pay channel launch.

“As on 5th May 2017 – Sony Pictures Network India (SPNI), ZEEL, IndiaCast (which represents TV18 and Viacom18), Sun TV Network and Disney India have filed their respective RIOs in compliance with TRAI regulations. Star India has written to the Authority (TRAI) seeking 10 more days to publish its reference interconnect offer (RIO) under the new tariff order regime.”

–        As specified in the regulations, the maximum discount a broadcaster can provide on distribution fee should not exceed 35% of the MRP of its pay channel or bouquet of pay channel.

–        A minimum of 20% of pay channel MRP or a bouquet of pay channel of every broadcaster shall be declared as distribution fee. Provided that the distribution fee declared by the broadcaster shall be uniform across all the distribution platforms.

–        Broadcaster shall allow window of fifteen days to the distributor of television channel for making payments

–        Service provider shall not disconnect the signals of television channels without giving at least three weeks’ notice in writing to other service provider, clearly specifying the reason. In such cases, the subscribers of the particular network shall be informed fifteen days prior to the disconnection of signals of such television channels through scrolls on channels proposed to be disconnected.

–        Every broadcaster shall declare the genre of its channels and such genre shall be either:

·         Devotional

·         General Entertainment

·         Infotainment

·         Kids

·         Movies

·         Music

·         News and Current Affairs

·         Sports

·         Miscellaneous

Packaging – Bouquet:

–        The authority has also prescribed a rental fee of up to Rs 130 per month, excluding taxes, which distributor of television channel can charge from subscribers towards their distribution network cost to carry 100 SD channels.

–        Subscribers will have to pay additional Rs 20 per month excluding taxes for additional network capacity in bundles or lots of 25 SD channels.

–        Provided further that the maximum retail price per month of such bouquet of pay channels shall not be less than eighty five percent of the sum of maximum retail prices per month of the a-la-carte pay channels forming part of that bouquet.

–        As specified under the new regime a minimum of 20% of the maximum retail price of the pay channel or a bouquet of pay channel of every broadcaster will considered as distribution fee.

Carriage Fees:

–        The regulator has capped carriage fees for standard definition (SD) channels at 20 paisa per channel per subscriber per month and 40 paisa for high definition (HD) channels in the regulation.

–        The maximum discount a distributor of television channel can offer to a broadcaster for carriage fee should not exceed 35%.

–        TRAI through this regulation has regularized the carriage fees:

Audit:

–        Every distributor of television channels shall, once in a calendar year, cause audit of its SMS, CAS and other related systems by an auditor to verify that the monthly subscription reports are complete and correct.

–        Provided further that any variation, due to audit, resulting in less than zero-point five percent of the billed amount shall not require any revision of the invoices.

–        Incase the Broadcaster if of the view that requirements are not being adhered by the distributors, then it shall be permissible to the broadcaster to conduct the audit against such distributors.

–        As specified under Schedule II of the interconnection regulation 2017 - The distributor of TV channel will have to submit the copy of the report of the auditor in compliance of schedule III of Telecom. (Broadcasting and Cable) services Interconnection (Addressable System) Regulation 2017.

–        The DPOs can now get their systems certified from the auditor empaneled with TRAI.

Key Technical Amendments:

TRAI has also introduced some welcoming changes in the revised schedule (SCHEDULE III) Some of which are listed below:

–        Non-alteration of the data and logs recorded in CAS & SMS to ensure authenticity of the historical records for at least two years

–        The regulation has restricted user access to direct activate subscribers from CAS

–        Maintaining data and logs in CAS for at least immediate preceding two years

–        Insertion of watermarking at encoder end only

–        Mandating the Copy Protection Systems for STBs with recording facilities

Written By:

Aftab Shaikh