India’s ministry of Information and Broadcasting has sought the views of the telecom regulator TRAI, on measures to prevent monopolistic operations of cable operators in India, both Local Cable Operators (LCOs) and Multi System Operators (MSOs, which aggregate LCOs). The intent here is to ensure that cable TV distribution in a state is not monopolised by a single cable operator, and consider “the issue of accumulation of interest in terms of market share in a City, District, State or country by individual MSOs and LCOs in the Cable Sector.”

Why This Is Important

This has implications for the distribution of wireline Internet services because, quite often, Local Cable Operators or MSO’s are franchisees of ISPs and provide Internet services. LCO’s typically have neighborhood monopolies, or limited competition, which leaves customers at their mercy, without adequate choice; I remember instances of LCO’s cutting each others wires to try and put the other out of business.

DTH services have challenged these neighborhood monopolies of cable servicesbut consumers don’t have enough choice for Internet Services. WiMAX implementations are few and far between, and getting the right of way to lay cable has been too expensive. There has been no unbundling of the last mile, in case of BSNL and MTNL, thus limiting consumer choice.

While we don’t know what the TRAI will recommend, but the breaking of LCO and MSO monopolies is going to lead to a strange situation: it will lead to fragmentation among cable operators and MSOs, and also create an unusual situation wherein ISP Licenses are state-wise.

The Government press release:

The Ministry of I&B has sought views of TRAI on the measures to prevent monopolistic operations by MSOs and LCOs. Ministry has requested TRAI to provide its recommendations under Section 11 (1) (a) on the following:

“In order to ensure fair competition, improved quality of service, and equity, should any restriction be imposed on MSOs/LCOs to prevent monopolies/accumulation of interest? If yes, what restrictions should be imposed and what should be the form, nature and scope of such restrictions?

Accordingly, amendments required in the Cable Television Networks (Regulation) 1995 Act and Rules framed thereunder may also be suggested.’’

Multi System Operators (MSOs) and Local Cable Operators (LCOs) are required to be registered with local Post Offices to be able to operate in the permitted areas of registration. However as per recent amendments in the Cable Television Networks (Regulation) Amendment Rules 2012, it has become mandatory for MSOs to get registration from the Ministry of Information and Broadcasting to operate in those areas which are notified for analogue switch off.

It has been observed that the cable TV distribution is virtually monopolized in some States as operation of the entire cable TV network is dominated by a single entity in that State. At present, there are no restrictions on the issue of accumulation of interest in terms of market share in a City, District, State or country by individual MSOs and LCOs in the Cable Sector. MSOs and LCOs are free to operate in any area(s) of their choice after obtaining registration from the Ministry. It is felt that such monopolies may not be in the interest of consumers and may have serious implications in terms of competition, pricing and healthy growth of cable TV sector in that market.

Earlier, the Ministry had made a reference to TRAI on 16th May 2012 to examine and recommend measures to address issues of cross media restrictions and safeguards. With this reference, the issues of monopolies in the broadcasting sector in the most comprehensive sense is set to get addressed by TRAI.