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THE TELECOMMUNICATION (BROADCASTING AND CABLE SERVICES) INTERCONNECTION REGULATION, 2004
In exercise of the powers conferred upon it under section 36, and paras (ii), (iii) and (iv) of clause (b) of sub-section (1) of section 11 of the Telecommunication Authority of India Act, 1997 read with the Notification No. 39 (S.O No. 44 (E) and 45 (E)) dated 9.1.2004 issued from file No. 13-1/2004-Restg by the Government of India under clause (d) of sub-section (1) of section 11 and proviso to clause (k) of sub section (1) of the section 2 of the Telecom Regulatory Authority of India Act, 1997, the Telecom Regulatory Authority of India makes the following Regulation, namely:
1. Short title, extent and commencement—
(i) This regulation shall be called “The Telecommunication (Broadcasting and Cable Services) Interconnection Regulation 2004” (13 of 2004) (the regulation).
(ii) This regulation shall cover arrangements among service providers for interconnection and revenue share, for all telecommunication (broadcasting and cable) services throughout the territory of India.
(iii) This regulation shall come into force with effect from the date of its publication in the Official Gazette.
2. Definitions—
In this regulation, unless the context otherwise requires:
(a) ‘addressable system’ means an electronic device or more than one electronic device put in an integrated system through which signals of cable television network can be sent in encrypted or unencrypted form, which can be decoded by the device or devices at the premises of the subscriber within limits of the authorisation made, on the choice and request of such subscriber, by the distributor of TV channels to the subscriber;
(b) ‘agent or intermediary’ means any person including an individual, group of persons, public or body corporate, firm or any organisation or body authorised by a broadcaster/multi system operator to make available TV channel(s), to a distributor of TV channels;
(c) ‘authority’ means the Telecom Regulatory Authority of India established under sub-section (1) of section 3 of the Telecom Regulatory Authority of India Act;
(d) ‘authorized officer’ has the same meaning as given in the sub-section (a) of the section 2 of the Cable Television Networks (Regulation) Act, 1995, as amended;
(e) ‘broadcaster’ means any person including an individual, group of persons, public or body corporate, firm or any organisation or body who/ which is providing broadcasting service and includes his/her authorised distribution agencies;
(f) ‘broadcasting services’ means the dissemination of any form of communication like signs, signals, writing, pictures, images and sounds of all kinds by transmission of electro magnetic waves through space or through cables intended to be received by the general public either directly or indirectly and all its grammatical variations and cognate expressions shall be construed accordingly;
(g) ‘cable operator’ means any person who provides cable service through a cable television network or otherwise controls or is responsible for the management and operation of a cable television network;
(h) ‘cable service’ means the transmission by cables of programmes including re-transmission by cables of any broadcast television signals;
(i) ‘cable television network’ means any system consisting of a set of closed transmission paths and associated signal generation, control and distribution equipment designed to provide cable service for reception by multiple subscribers;
(j) ‘distributor of TV channels’ means any person including an individual, group of persons, public or body corporate, firm or any organisation or body re-transmitting TV channels through electromagnetic waves through cable or through space intended to be received by general public directly or indirectly. The person may include, but is not limited to a cable operator, direct to home operator, multi system operator, head ends in the sky operator;
(k) ‘direct to home operator’ means an operator licensed by the central government to distribute multi channel TV programmes in KU band by using a satellite system directly to sub-scriber’s premises without passing through intermediary such as cable operator or any other distributor of TV channels;
(l) ‘head ends in the sky operator’ means any person permit-ted by the central government to distribute multi channels TV programmes in C band by using a satellite system to the intermediaries like cable operators and not directly to subscribers;
(m) ‘multi system operator’ means any person who receives a broadcasting service from a broadcaster and/or their authorised agencies and re-transmits the same to consumers and/or re-transmits the same to one or more cable operators and includes his/her authorised distribution agencies.
(n) ‘service provider’ means the Government as a service provider and includes a licensee as well as any broadcaster, multi system operator, cable operator or distributor of TV channels.
3. General provisions relating to non-discrimination in inter-connect agreements-
3.1 No broadcaster of TV channels shall engage in any practice or activity or enter into any understanding or arrangement, including exclusive contracts with any distributor of TV channels that prevents any other distributor of TV channels from obtaining such TV channels for distribution.
3.2 Every broadcaster shall provide on request signals of its TV channels on non-discriminatory terms to all distributors of TV channels, which may include, but be not limited to a cable opera-tor, direct to home operator, multi system operator, head ends in the sky operator; multi system operators shall also on request re-transmit signals received from a broadcaster, on a non-discriminatory basis to cable operators.
Provided that this provision shall not apply in the case of a distributor of TV channels having defaulted in payment.
Provided further that any imposition of terms which are un-reasonable shall be deemed to constitute a denial of request
3.3 A broadcaster or his/her authorised distribution agency would be free to provide signals of TV channels either directly or through a particular designated agent or any other intermediary. A broadcaster shall not be held to be in violation of clauses 3.1 and 3.2 if it is ensured that the signals are provided through a particular designated agent or any other intermediary and not di-rectly. Similarly a multi system operator shall not be held to be in violation of clause 3.1.and 3.2 if it is ensured that signals are provided through a particular designated agent or any other intermediary and not directly.
Provided that where the signals are provided through an agent or intermediary the broadcaster/multi system operator should ensure that the agent/intermediary acts in a manner that is (a) consistent with the obligations placed under this regulation and (b) not prejudicial to competition.
3.4 Any agent or any other intermediary of a broadcaster/multi system operator must respond to the request for providing signals of TV channel(s) in a reasonable time period but not exceeding thirty days of the request. If the request is denied, the applicant shall be free to approach the broadcaster/multi system operator to obtain signals directly for such channel(s).
3.5 The volume related scheme to establish price differentials based on number of subscribers shall not amount to discrimination if there is a standard scheme equally applicable to all similarly based distributors of TV channel(s).
(Explanation.—‘Similarly based distributor of TV channels’ means distributors of TV channels operating under similar conditions. The analysis of whether distributors of TV channels are similarly based includes consideration of, but is not limited to, such factors as whether distributors of TV channels operate within a geographical region and neighbourhood, have roughly the same number of subscribers, purchase a similar service, use the same distribution technology.”)
3.6 Any person aggrieved of discrimination shall report to the concerned broadcaster or multi system operator, as the case may be. If the broadcaster or multi system operator does not respond in a satisfactory manner in a reasonable time period, but not exceeding thirty days, the aggrieved party can approach the appropriate forum.
3.7 The provisions of clauses 3.1 to 3.6 shall apply to the con-tracts already entered into, after 90 days from the date of this regulation coming into force.
4. Disconnection of TV channel signals-
4.1 No broadcaster or multi system operator shall disconnect the TV channel signals to a distributor of TV channels without giving one month notice indicating the brief reasons for the pro-posed action:
Provided that in case a distributor of TV channel is re-transmitting signals for which he/she is not authorised and thereby affecting the commercial interest of the concerned broad-caster or multi system operator, the notice period shall be two working days giving reasons to the concerned distributor of TV channel for such action.
Explanation—A distributor of TV channels is said to be authorised if there exists any agreement between the broadcaster, including his/her agents permitting the distribution of the broad-casting service by the said distributor of TV channels, either through a written agreement or through an oral agreement. Consequently, no notice would be required if there is no agreement, written or oral, permitting the distribution of the broadcasting service.
4.2 Broadcaster/multi system operator shall inform the consumers about the dispute to enable them to protect their interests. Accordingly, the notice to discontinue signal shall also be given in two local newspapers in case the distributor of TV channels is operating in local area and in two national papers in case the distributor of TV channels is providing services in a wide area. Alternatively, consumers can be informed through scroll on the concerned channel(s). Where a broadcaster or a multi system operator decides to give this notice through a scroll the multi system operator or the cable operator, as the case may be, must carry the scroll in the concerned channel(s).
5. Explanatory Memorandum.
5.1 Annexure A to this order contains an Explanatory Memorandum for the issue of this regulation.
ANNEXURE A
EXPLANATORY MEMORANDUM
1. The distribution of cable TV in India is characterised by a few dominant broadcasters and large multi system operators (MSOs). Some of these players have become even stronger as vertical integration has taken place. Last mile operations on the other hand are highly fragmented, and therefore, there are large disparities in the bargaining power of various players of the distribution chain.
2. The vertical integration may improve efficiency as it reduces the transaction between upstream and downstream operations but at the same time, vertically integrated companies may be able to use the vertical integration in certain circumstances to reduce competition. The anti-competitive behaviour could take the following forms:
(i) Vertical price squeeze may happen when a vertically integrated broadcaster increases the price of a TV channel for competing operators but maintains the same price for operator affiliates. The effect would be to reduce or squeeze the margins.
(ii) Exclusivity of the content could be another form whereby popular TV channels can be denied to a competitor so as to promote the broadcaster’s own distribution network.
(iii) Denial of carriage by a vertically integrated cable system of TV channel of the rival company.
Non Discriminatory Access
3. In India, competition for delivery of TV channels is not only to be promoted within the cable industry but also from distributors of TV channels using other mediums like direct to home (DTH), head ends in the sky etc. It is important that all these distribution platforms are promoted so that they provide consumers with choice. It would be very important that at this stage vertical integration does not impede competition. Vertically integrated broadcaster and distribution network operators would, in the absence of strong regulation, have the tendency to deny popular content to competing networks or to discriminate against them.
4. One method of checking these practices is to stop at the source any chance of anti-competitive behaviour by ruling that vertical integration will not be allowed. This route could, however, impede investments and in the long run adversely affect competition. The only DTH platform today has a degree of vertical integration. There is another pay DTH platform which is awaiting approval from the government that also has a degree of vertical integration. DTH is the platform most likely to provide effective competition to cable operators. Restriction of vertical integration could therefore, lead to a situation where the DTH roll-out could be affected and hence competition. It is for this reason that the alternative route has been looked at; controlling anti-competitive behaviour wherever it manifests itself. These issues are dealt with in the following paragraphs.
5. Generally, TV channels are provided to all carriers and plat-forms to increase viewership for the purpose of earning maxi-mum subscription fee as well as advertisement revenue. However, according to some opinions, if all platforms carry the same content, it will reduce competition and there will be no incentive to improve the content. Some degree of exclusivity is required to differentiate one platform from the other.
6. Exclusivity had not been a feature of India’s fragmented cable television market. However, the roll-out of DTH platform has brought the question of exclusivity and whether it is anti competitive to the forefront. Star India Ltd and SET Discovery Ltd do not have commercial agreements to share their contents with ASC Enterprises on its DTH platform and at present are exclusively available on the Cable TV platform. ASC Enterprises claims that the future growth will remain impacted by the denial of these popular contents. Space TV—a joint venture of Tatas and Star, is also planning to launch its digital DTH platform. It has applied for licence to the government for the same. The DTH services have to compete with Cable TV. If a popular content is available on Cable TV and not on the DTH platform, then it would not be able to effectively give competition to the cable networks.
7. The issue has to be seen primarily from the consumer’s perspective. If all channels are not available on one DTH platform, then the consumer may have to install more than one dish to view his favourite channels. If the content is not available on all platforms, then they would not be treated as the same and would be presented as different products having different content. If content, especially popular content, is exclusively, available on one DTH platform, then there may not be effective competition. The consumers would also have limited choice as subscribing to one particular DTH platform may not ensure the availability of content of his/her choice.
8. The DTH platform would have to be seen as a carrier of TV channels and its vertical integration with the broadcaster cannot be the reason for content denial to the other distributors. The DTH platforms would have to compete on the strength of the quality of service, tariffs and packaging of the TV channels and not on the content.
9. DTH is quite clearly the most effective competitor for cable TV today. It would be illogical for a consumer to establish two arrangements to view the differing content of two platforms when he has access to the entire content through cable. Moreover, if a popular content is available on the cable network and is not available on the DTH platform, it would never be able to give an effective alternative to the cable services. Competition between cable and DTH will be enhanced if all the content is available on both platforms. Similarly the cable industry should not be denied content that is available on DTH. Therefore, in the interest of consumers it is essential that all channels are available on all platforms on a non-discriminatory basis. This would promote competition amongst different platforms and thus would be beneficial for the consumers.
10. The Authority has also looked at international experience in this regard. In India, the problem is that broadcasters may not provide content to rival platforms and this could adversely affect competition in terms of price and quality of service. It is there-fore, necessary that there should be regulations in place that can be invoked if content is denied in a manner that stifles competition. Thus a general ban on exclusivity at this stage has been envisaged.
‘Must provide’ through whom?
11. There is high cost involved in the distribution of TV channels if the market is fragmented. To reduce the distribution costs—broadcasters/ multi system operators should be free to provide access in the manner they think is beneficial for them. The ‘must provide’ of signals should be seen in the context that each operator shall have the right to obtain the signals on a non-discriminatory basis; but how these are provided - directly or through the designated agent/distributor—is a decision to be taken by the broadcasters/multi-system operator. Thus the broadcaster/multi system operator would have to ensure that the signals are provided either directly or through a particular designated agent/distributor or any other intermediary.
12. In order to expedite the inter-connection process the Authority has further provided that in case an agent does not respond to the request for providing signals within one month of the request, then the applicant would be free to approach broad-caster to obtain signals directly.
Quality of TV Channel Signals
13. Some cable operators had apprehended that in case TV channel, signals are provided through cable and not directly then the quality of transmission could deteriorate and accordingly it was suggested that agents must provide services through IRDs. The Authority through this regulation has framed the principle of non-discriminatory access, which also includes non-discriminatory access in terms of quality of signals. Operators can seek relief if it is found that the quality of their signals is being tampered with.
Safeguards for Broadcasters
14. In this context it must be recognised that certain basic criteria must be fulfilled before a service provider can invoke this clause. Thus the service provider should be one who does not have any past dues. Similarly, provisions for protection against piracy must be provided. However, the content provider must establish clearly that there are reasonable basis for the denial of TV channel signals on the grounds of piracy.
Volume Discounting Schemes
15. An important aim of non-discriminatory conditions is to ensure that a vertically integrated supplier does not treat itself in a way that benefits itself, its subsidiaries or its partners and has material effect on competition. The broadcaster/multi system op-erator must offer the required channels on terms that are no less favourable than those on which it provides equivalent services to its own affiliated operators.
16. Broadcasters and multi-system operators are also offering discounting schemes including volume or bulk discounts. Such discounts are not considered anti competitive if these are consistently available to similarly based distributors of TV channels. However, such discounts will be treated as anti competitive if provided on preferential basis to one or select group of operators. The Authority has identified three factors which may not be exhaustive relating to the subscriber base, technology of the distribution of TV channels and geographical region and neighbour-hood.
Discrimination in providing TV channel signals
17. In case any distributor of TV channel feels he/she has been discriminated on terms of getting TV signals compared to a similarly based distributor of TV channel, then a complaint must be filed with the broadcaster or multi system operator, as the case may be. In case the complainant is not satisfied with the response, he/she may approach the appropriate forum for relief.
Disconnection of Signals
18. An important issue in the cable industry is the disconnection of signals to settle a dispute. Usually, this means that without notice the signals by a broadcaster or multi system operator are cut off leaving consumers in the lurch. This implies that the consumer who has not defaulted nevertheless has to bear the brunt of the dispute between the operators. It is, therefore, necessary to find some solution that will protect the consumers without compromising the ability of the broadcaster/multi-system operator to settle their dispute. It has, therefore, been decided to impose a restriction on the broadcaster/multi system operator that they cannot cut off the signals without giving at least one month’s notice. This would give some time for the affected parties to obtain relief. This notice should also be given through the newspapers so that consumers also have an opportunity to approach the necessary forum to ensure that their interests do not suffer on account of a dispute to which they have not contributed in any way. Broadcasters have suggested that this requirement of notice period should be exempted when dis-connection occurs for piracy and copy right violation and violation of the non-financial terms and conditions of the interconnect agreement. In the case of unauthorized re-transmission of TV channels, it may be necessary for Broadcaster or Multi System Operator to disconnect signals of TV channels without giving one-month notice. In such cases the Authority has decided that after giving a notice for two working days, the signals may be disconnected.
Consultation on draft regulation
19. The draft regulation had been put on the website of TRAI and time was given to all stake-holders till 5 November 2004 for comments on the draft. A number of comments have been received and these have been carefully analysed. Since the number of comments is very large, and in some cases, are in the form of modifications to the draft, the gist of the comments have been briefly summarised, section by section in the Annexure to this Explanatory Memorandum and the response of Trai for each of the comments has been set out. Wherever necessary, the draft has been modified in the light of the comments received. Some other changes have been made to make the regulation clear. Some issues have also been raised which are not relevant to the issue of these regulations – these are being separately examined.
ANNEXURE TO EXPLANATORY MEMORANDUM ON ‘THE TELE-COMMUNICATION (BROADCASTING AND CABLE SERVICES) IN-TERCONNECTION REGULATION, 2004
(13 OF 2004)
(THE REGULATION)
1. Short title, extent and commencement—
Stakeholders’ comments
After the words “service providers” the words “and distributors of TV channels” should be added.
Trai’s response
Service providers include distributors – a definition of service providers has been added to clarify this point. (new definition added at clause 2(n) of the regulation).
2. Definitions-
Stakeholders’ comments
(i) Agent or intermediary should not be directly or indirectly a distributor of TV channels.
(ii) Broadcaster should also include his/her agent or intermediary.
(iii) Broadcasting services – it should be clarified that these refer to those services intended to be received by the general public in India.
(iv) Cable operator – the definition should include one who provides such a service either directly or indirectly.
(v) Cable service – it should be clarified that this means the transmission only with the authorisation of the broadcaster.
(vi) The definition of MSO should exclude with reference to consumers, since an MSO is not supposed to reach subscribers directly.
(vii) The regulation should apply only to those distributors who meet certain minimum qualifications.
(viii) The definition of addressable system should be expanded to include other technologies such as DTH, Broadband and Mmds.
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