We invited Uday Verma, former Secretary – Ministry of Information & Broadcasting, to look at Koan Advisory Group’s publication Indian TV Broadcasting At A Crossroads – An Assessment of Regulatory Outcomes and the Way Forward, written by Shivangi Mittal and Varun Ramdas, and share his observations on the impact of TRAI’s regulation of television broadcast in India.
Verma — who, during his tenure as I&B Secy, oversaw implementation of DAS, self-regulatory mechanisms for both news and non-news channels, and stakeholder-driven audience measurement body BARC — observes: ‘A new broadcast policy, which is visionary, balanced and conducive to the growth of this sector is indeed needed’.
There are close to 200 million TV households in India, with the choice of over 900 channels. Distributors deliver content to these households through one of three technologies – cable, DTH or Headend in the Sky (HITS). Broadcasters provide distributors with content – which fuels this ecosystem. While the TV sector has seen remarkable growth in the last two decades, it has also faced multiple challenges and disruptions. Most of these have been in the form of regulatory mandates.
A recent report (the “Report”) titled, “Indian TV at crossroads” by Koan Advisory, a New Delhi-based consultancy, argues that the TV broadcasting sector needs urgent regulatory reform. The report traces the role of regulation in this sector from 2004, a time the sector was unorganised and informal, when the Telecom Regulatory Authority of India (TRAI) was asked to regulate broadcasting as an interim measure.
The Report highlights the outcome of the New Tariff Order (NTO) in March 2019. While the NTO sought to ensure that consumers pay only for what they choose, reports show that its implementation caused bills to rise by an average 25% and 26 million pay-TV subscribers to cut their connections. Channels like AXN and Delhi Aaj Tak stopped operations in India, finding it impossible to survive. Other reports have suggested that more channels may go the same way. Since its implementation, the sector has also lost revenues accruing to INR 85 billion
The objective of TRAI regulations were to (a) provide greater consumer choice; (b) encourage transparent business practices; and (c) make TV services affordable. These objectives have not been fulfilled, according to the authors of the Report Shivangi Mittal and Varun Ramdas.
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Consumers today continue to face difficulties in choosing and paying for channels. Opaque business practices and high subscriptions costs persist. Furthermore, Parliament, empowered committees and judgements have stressed that the regime that regulates the infrastructure and transmission aspects of broadcasting (TRAI) is inadequate to regulate the content on broadcast media, the Report states.
It is important to breakdown the factors that may have led to these alarming conclusions on the functioning of TRAI. First, a case can be made that TRAI has made broadcasting regulation an exercise in micromanagement with its frequent economic intervention. In sixteen years of TRAI’s regulation of the TV sector, tariff orders that set prices of channels have been issued and amended a whopping thirty six times.
The Report further states that it is possible to trace almost every adverse outcome in the sector to price regulation. For instance, price regulation has distorted incentives for businesses to invest in quality to improve consumer welfare. Consequently, there is a divide between business interest and consumer interest.
In a departure from other industry reports that only highlight market challenges or opportunities, this latest Report also recommends a practical regulatory reform process in three steps
To buttress this further, the Report highlights the outcome of the New Tariff Order (NTO) in March 2019. While the NTO sought to ensure that consumers pay only for what they choose, reports show that its implementation caused bills to rise by an average 25% and 26 million pay TV subscribers to cut their connections. Channels like AXN and Delhi Aaj Tak stopped operations in India, finding it impossible to survive. Other reports have suggested that more channels may go the same way. Since its implementation, the sector has also lost revenues accruing to INR 85 billion.
Furthermore, the TRAI now plans further changes to the NTO framework, a move that has led some broadcasters and consumer organisations to challenge them in courts. The Report says that the new regime has led consumers, suffering from the complex process of channel selection, rising subscription charges and poor quality of service, to feel frustrated with their TV connections and consider getting off the TV grid.
This Report begs the question for the government to consider an overhaul of broadcasting regulations. And it cannot be denied that the issue of tariffs need resolution quickly. Along with providing a desirable degree of relief to consumers, the smooth and orderly growth of the sector must also weigh equally with the regulator
Secondly, TRAI Regulations make broadcasters dependent on advertisement revenues by restricting subscription revenue. The Report attributes the domination of sensational and formulaic content to this. Limited revenue from subscription dis-incentivise broadcasters to produce differentiated and innovative content. For distributors, these regulations restrict their revenues to a fixed fee and they do not feel the need to upgrade and provide better service. At the consumer end, monopolies at the last mile deny alternatives and consumers have no mechanism to urge distributors to provide better service.
An argument is made in the report that content on broadcast media should be treated differently from the carriage of that content. Since 2004, successive governments have side-stepped this issue leading to the limited effectiveness of TRAI. Despite content being the main selling point for TV channels, neither TRAI nor the quasi-judicial Telecommunications Dispute and Settlements Appellate Tribunal (TDSAT) legally require representation by an intellectual property expert or a creative industry expert. This limits TRAI’s perspective and consequently its approach which is more suited to telecom than broadcast.
In a departure from other industry reports that only highlight market challenges or opportunities, this latest Report also recommends a practical regulatory reform process in three steps. At the outset, it recommends a broadcasting policy which can provide a roadmap for the sector, like the telecom policy. This is to provide regulatory certainty to industry and also act as a guide for policymakers and regulators. This policy can also lead to a restructuring of regulation in the sector.
Further, the Report recommends two specific alternatives for regulatory restructuring. Either, the existing mechanism (TRAI) should be revamped to address challenges such as inadequate institutional capacity and enforcement capabilities, or the government should consider new legislation and establish a separate specialised regulator for broadcasting. Finally, the authors recommend an audit and enforcement process to provide feedback on regulation and compliance.
Taken all aspects into account, the Report does well in citing concerns as well as illustrating viable options that the government can consider, if there is political will to help the TV sector develop and survive this current crisis. It begs the question for the government to consider an overhaul of broadcasting regulations. And it cannot be denied that the issue of tariffs need resolution quickly. Along with providing a desirable degree of relief to consumers, the smooth and orderly growth of the sector must also weigh equally with the regulator.
Even otherwise, there is much in the Report that deserves serious consideration. Many of the concerns highlighted by the Report have been discussed and debated within the Ministry of Information and Broadcasting at some point of time. Perhaps the time has come to take a comprehensive look at the extant legal and regulatory regime governing the broadcasting sector and bring about changes and modifications that reflect current reality. A new broadcast policy, which is visionary, balanced and conducive to the growth of this sector is indeed needed.
Download the Koan Advisory report here: INDIAN TV BROADCASTING AT A CROSSROADS — An Assessment of Regulatory Outcomes and the Way Forward