TDSAT allows MSOs to ask for carriage and placement fees

With each passing day, digitisation has instigated newer discussions in the media industry. Recently, the News Broadcasters Association announced about the broadcasters' nod to payment of carriage fees, albeit in the range of 50 paise-Re1 per channel per subscriber. Soon after that, on October 19, TDSAT (Telecom Disputes Settlement & Appellate Tribunal) has passed a judgement that strikes out three important clauses of the TRAI regulations dated April 30 and May 2.

The latest judgement apparently tries to bring equality between the provisions given to the DTH and the MSOs. As per the judgement, the restriction placed on the MSO (Multi-System Operator) for demanding placement fees in terms of May 2012 Regulation are set aside as the same restriction is not applicable for the DTH operator.

It also states that the placement charges, if any, will depend upon the mutual agreement between the broadcasters and the MSO, as in the case of the DTH players.

As per the Interconnection (Digital Addressable Cable Television Systems) Regulation 2012 (No. 9 of 2012), MSOs in DAS areas cannot ask for carriage fees in case the MSO seeks a channel. This clause has been set aside as the same provision is not there for DTH operators and MSOs in non-CAS areas. However, it is for the regulator to decide whether similar provision which exists in case of non-CAS area DTH operators should also be there for DAS area operators.

Lastly, the direction that the MSOs must set up head-ends having carrying capacity of 500 channels is also set aside. If the market forces play an important and significant role in the matter of carrying capacity of the MSO, the same may not be required to be regulated.

However, if the regulator deems fit, it may consider making provision for MSOs to have capacity to carry a number of channels based on different categories of area, city or towns or rural areas in which the MSO will operate.

Two of the other important clauses of the regulation were also challenged, but were upheld by the court. One of these was the compulsion of carrying minimum 100 FTA channels by each MSO and the other clause was of the sharing pattern between the MSO and the local cable operator (LCO), where 35 per cent went to the LCO.

afaqs! tried to explore how the industry reaction to the new judgement. Many of the media representatives, both MSOs and broadcasters, agreed that the NBA's announcement of the range of carriage fees between 50 paise-Re1 will not hold true. The negotiations will have to be started from scratch between all the broadcasters and MSOs.

However, the MSO industry is quite positive about the TDSAT judgement. The industry is optimistic about the fact that there is no implication on the DAS mandate.

On the face of it, the judgement is good for DAS. It further strengthens the foundation of DAS.

There is a lot of competition in the distribution segment with DTH players and a few national MSOs, along with the regional and smaller MSOs. Under the circumstances, it will not be fair to put a restriction on the number of channels to be carried.

It is a positive development that the court has left it to the market forces so that we are now free to provide any number of channels, based on the requirement of that region. As for the placement fees, it is sure that everything must be reasonable enough for all the stakeholders involved in the decision.

Charging placement fees is justified as it will help us to provide the channel packs at reasonable rates to the consumers and we can bring out more variety in these packages, too.

K Jayaraman, CEO, Hathway

The provision of the number of channels is completely dependent on the supply-demand graph. If, in a particular town, 500 channels are asked by the consumers, we will provide them. However, the ground reality is that in smaller towns and rural areas, the demand for the number of channels isn't so high.

It is more of a flexibility than a judgement, I feel. We have been given the flexibility for the number of channels. The technology up-gradation to increase the number of channels depends on the set top boxes used by the MSO. Hathway, however, has new boxes which are capable of providing 500 channels.

Regarding the placement fees, I feel that the terms set by TDSAT are favourable. The charges and the necessity of applying the charges have been left to the market forces, more than anything else. Now, whether these translate into earnings or not will be seen in due course of time.

Anuj Gandhi, group CEO, IndiaCast

Earlier, when bandwidth was a challenge for the distribution platforms, carriage fees and the placement fees played a very important role. However, now that the capacity is not an issue any more, the carriage and placement fees should be reasonable, while even in the digital scenario, it is justified that the two charges should be applied. It would be hence lower than the amount paid earlier.

With this judgement, TDSAT has tried to bring MSOs in parity with the DTH players. Also, by allowing to carry less than 500 channels, I feel some demand-supply problem will arise. Considering that there is no capacity problem, if say 300 channels are carried, the carriage fee may increase, while for carrying 500 channels, the fee would be less for each of the channels.