NEW DELHI/MUMBAI: A fresh Telecom Regulatory Authority (Trai) order on interconnect agreements, issued on a day when the nation is grappling with the interim Budget, can open up a Pandora's Box in the broadcast and cable industry, threatening to bring out into the the public domain, major aspects of commercial agreements.
According to the Trai order, "As per the provisions of the regulation titled `The Register of Interconnect Agreements Regulations 1999' (2 of 1999), all the service providers of telecom services, including broadcasting & cable services, are required to register with the Authority any interconnect agreements to which they are parties within the time frame specified in that regulation."
Though the present order would be debated, analyzed and criticised, in lay man's terms, it would mean that all agreements that broadcasters sign with MSOs and MSOs with cable ops would now have to be conveyed to the regulator. The regulator would see that discriminatory or predatory pricing is not adopted by a dominant player or those players that have interests in more than one service segment.
For example, if Zee Turner was making available all Zee and Turner channels to Siti Cable (Zee Telefilms' cable arm) at a certain price, while making the same channels available to Hathway (in which Star has 26 per cent stake)
at a price higher than Siti Cable's, Trai may step in as it does in the telecom sector. The scenario can be the same for Star-Hathway vis-?-vis Siti Cable.
A Bangalore-based telecom analyst told indiantelevision.com that a mechanism like the one employed by Trai is used the world over by regulators to prize open discriminatory pricing. "It may look cumbersome, but Trai is behaving like a true regulator and the broadcast and cable industry is getting a taste of what a regulator is capable of doing," the analyst said.
Various intra-industry agreements in the broadcast and cable sector were seldom disclosed for public consumption taking refuge behind the line that "commercial agreements are confidential." Now, these agreements would have to be registered with the Trai. The telecom analyst however pointed out that as telecom companies have done, here too people would find a way around the rules and regulations.
If the cable and broadcast industry is thinking that interconnection is something that only happens in the telecom sector, they should read the full Trai order.
TRAI has defined interconnection, while bringing about some amendments in the existing rules, as commercial and technical arrangements under which service providers connect, including through electro-magnetic signals, their equipment, networks and services to enable their customers to have access to the customers, services and/or networks of other service providers.
The broadcasters and MSOs, by and large, are stunned and busy studying the finer prints of the Trai order. The distribution head of a major broadcaster head even feigned ignorance that an order had even been issued by the Trai and queried whether it was a rumour or actual fact.
A representative of an MSO in Delhi admitted, "This order looks tricky and can cause an upheaval in the industry."
Another representative of a Mumbai MSO said, "The Trai looks to be attempting to force media into the telecom mould." According to him, the Trai was losing sight of the major difference between the broadcast and telecom sectors - which was that the distribution chain in the broadcast sector was linear (broadcaster-MSO-LMO) and generally geographically distinct, unlike in telecom where lateral inter-link-ups were witnessed.
However, the cable operators seem to be a happy lot. Said Cable Operators Federation of India head Roop Sharma, "This is something that we had wanted as it would put the MSOs too under pressure." Concurred National Cable & Telecom Association's Vikki Choudhry, "Now the broadcasters would see that their pricing game would go awry."
It's not quite so simple though. Pointed out SET India CEO Kunal Dasgupta, about the Trai order: "The understanding that the MSOs constitute a large chunk of our distribution business is a myth. Ninety per cent of our (distribution) revenues are from affiliate cable operators and only 10 per cent are from the MSOs. That should answer your question."
What Dasgupta appears to be implying was that if the Trai were to force the broadcasters to come clean on all the distribution agreements thay had in place, it would probably be snowed under by the sheer volume of paper work involved.
As Trai continues to grapple with the complexities of the broadcast and cable sector, information and broadcasting minister Ravi Shankar Prasad must be feeling relieved to have the regulator around to do the fire-fighting.
