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Why The TRAI Went After TV Content Aggregators; Impact On Online Distribution?

In a regulation released yesterday, the Telecom Regulatory Authority of India has attempted to put an end to what may be deemed as cartelization from major Indian broadcasters, via distribution firms in which the broadcasters themselves own stakes. Note that these distribution firms – like Indiacast, Media Pro and MSM Discovery – also distribute content to IPTV providers, and some, like Indiacast, also distribute content on YouTube in India. The TRAI has announced the following key changes to regulation, which might end up being contested in court, since it threatens the existence of these businesses:

– Only a broadcaster shall publish Reference Interconnect Offers (RIO’s) and enter into interconnection agreements with Distribution Platform Operators such as cable operators, MSO’s and DTH companies.
– The broadcaster can use an authorized agent, which acts on behalf of the broadcaster, but will have to ensure that the agent does not alter the bouquets offered in the RIO of the broadcaster.
– In case an agent acts as an authorized agent of multiple broadcasters, the individual broadcasters shall ensure that the agent doesn’t bundle its channels with other broadcasters. Only broadcast companies belonging to the same group can bundle their channels.

The TRAI has given broadcasters 6 months to amend their interconnection agreements, and file them with the TRAI. Broadcasters have opposed these, on the grounds that they are in violation of Article 19(1)(g) of the Constitution and on the ground of jurisdiction of TRAI in the said matter. They have also argued that the Competition Commission of India (CCI) has sole jurisdiction over it.

Why Was This Done?

According to data published by the TRAI, the top three aggregators – Indiacast, Media Pro and MSM Discovery – together accounted for 58.6% of total pay TV channels in India – around 140 of 239. They control all the top 5 channels, 9 of the top 10 channels, 17 of the top 20 and 38 of the top 50 channels in India, as per TAM data. There are 55 broadcasters offering pay channels in India, distributed by 30 broadcasters, aggregators or agents. The amendments have been brought in as per demands from MSO’s and cable operators, looking to prevent being strongarmed by distribution companies.

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As per the TRAI:

– Broadcasters have to enter into interconnection agreements to ensure that all content is available on all platforms: Broadcasters are mandated by TRAI to enter into interconnection agreements with the DPOs for the carriage of their TV channels, and they distribute through aggregators, who then provide content to Distribution Platform Operator (DPO) such as an IPTV or a DTH player, and to the last mile operator (MSO/HITS which distribute to the Local Cable Operator).

– Aggregators are in a position to coerce DPOs and sell the channels at terms favorable to them: Many broadcasters, especially the larger ones, appoint aggregators for distribution. The aggregators publish the RIOs, negotiate the rates for the bouquets/channels with DPOs and enter into interconnection agreement(s) with them, and leave DPO’s with no option to subscribe to these bouquets, and it is alleged that they then have to push these packages to consumers to recover costs. As a result, the public ends up paying for unwanted channels, restricting consumer choice.

– Deals can also be selective: According to the TRAI, Media Pro was offering channels of NDTV as a part of certain bouquets only to platform operators of cable TV sector and not to the DTH operators, which NDTV was dealing with directly. NDTV had only given rights for platform operators of the cable TV sector. Broadcasters are mandated to offer the same bouquet to all platforms, and this was in violation of the guidelines.

– During the implementation of digital addressable cable TV systems (DAS), Phase I and Phase II, when MSO’s were being pushed for digitzation, MSOs have complained that they were forced to accept unreasonable terms and conditions to obtain signals of the broadcasters through some of the major aggregators, that too at the fag end of the implementation deadline.

– Smaller vs larger broadcasters: Broadcasters (apparently, the larger ones) have argued that aggregators provide negotiating power to smaller broadcasters. However, small broadcasters, DPOs and cable operator associations, have stated that the proposed amendments would provide a level-playing-field and eliminate the monopolistic practices arising from the role that the aggregator has assumed viz. as surrogates for multiple major broadcasters. One cable operator associations pointed towards vertical integration stating that 186 cases were filed by MSOs and LCOs against Media Pro in TDSAT in the year 2012, but none by DEN or Siti Cable.

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MediaNama’s Take: Why This Isn’t Entirely Fair

The distribution companies, like DTH providers such as Dish TV, Tata Sky have typically either controlled access to consumers for pay channels, while MSO’s have controlled access to distributors like cable TV operators. Despite these entities being paid by consumers for access to broadcast content, they have invariably not been neutral platforms, and have additionally charged broadcasters carriage fees for making their content available to audiences. For broadcasters, this impacts their entire business, because availability of content impacts advertising.

In our opinion, a carriage fee is not in the consumers interest, because their access to content (which they’re paying a DTH or a cable operator for) is not neutral. Broadcasters tried to counter being strong-armed by distributors by forming distribution ventures, to level the playing field.

By taking away their right to form distribution ventures, the TRAI is allowing distribution ventures to manipulate supply once again. Bigger broadcasters might end up paying less carriage fees, and smaller ones might be forced to pay much higher. The broadcast distribution networks are not neutral, and this is a problem that reminds us of the Internet’s net neutrality situation.

Consumers also do not have a choice, in terms of switching service providers: they are locked in after paying significant fees for Set Top Boxes which aren’t inter-operable.

To ensure that the ecosystem operates in a manner that is in consumer interest, the TRAI needs to ban carriage fees, and make interoperable set-top-boxes mandatory.

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Regulation Needs Clarification

Also, what is not clear here is how this regulation impacts distribution of content by broadcasters: as of now, it only appears to take into account streaming of content via DTH and MSO companies, but what about asynchronous distribution of content? If IPTV is covered under this regulation, then is the Internet too? The TRAI needs to address issues of the present with an eye of the future. Because the regulation restricts broadcasters from signing differentiated deals with different distribution companies, how would this regulation impact deals that companies like Media Pro and Indiacast ink with entities like Box TV or YouTube? Will they be allowed to do these deals, or will online platforms have to deal with each TV channel separately?

STAR, Zee, DEN & Turner Form JV For Channel Distribution Across Platforms
IndiaCast & DisneyUTV Form Distribution JV For TV Channels
Times Television Network Inks Distribution Deal With TheOneAlliance

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