Zee Entertainment Enterprises Limited (ZEEL) PDF

RESPONSE OF ZEE ENTERTAINMENT ENTERPRISES LIMITED
TO
CONSULTATION ON
DRAFT TELECOMMUNICATION (BROADCASTING & CABLE SERVICES)

(EIGHTH) (ADDRESSABLE SYSTEMS) TARIFF ORDER, 2016
ISSUED ON 10TH OCTOBER, 2016
AND
DRAFT TELECOMMUNICATION (BROADCASTING AND CABLE

SERVICES) INTERCONNECTION (ADDRESSABLE SYSTEMS)
REGULATIONS, 2016
ISSUED ON 14TH OCTOBER, 2016
From:
(i) A. Mohan
Avnindra.mohan@zee.esselgroup.com
(ii) Viresh Dhaibar

Viresh.dhaibar@zee.esselgroup.com
Sr. INDEX Page
No. No.
1. INTRODUCTORY COMMENTS 3
2. SECTION I IGNORES MAJORITY FEEDBACK FOR 7

REGULATED RIO
3. SECTION II DETRIMENTAL TO CONSUMER 13

INTERESTS
4. SECTION III ADVERSE IMPACT ON BROADCASTERS 16

REVENUES
5. SECTION IV ISSUES PERTAINING TO OPERATIONS, 21

PROCEDURES AND IMPLEMENTATION
6. SECTION V ISSUES NOT ADDRESSED 26
7. SECTION VI SUMMARY RECOMMENDATIONS FROM 27

ZEEL
8. CONCLUSION - DE-GROWTH OF THE TELEVISION & 36

BROADCASTING ECOSYSTEM
9 ANNEXURE - A 38
10 ANNEXURE - B 43
ZEEL RESPONSE TO TRAI Page 2 of 46

INTRODUCTORY COMMENTS
Zee Entertainment Enterprises Limited (ZEEL), welcomes the consultation

on the Draft Telecommunication (Broadcasting and Cable Services) (Eighth)
(Addressable Systems) Tariff Order, 2016 (hereinafter referred to as Draft
Tariff Order) and the Draft Telecommunication (Broadcasting And Cable
Services) Interconnection (Addressable Systems) Regulations, 2016
(hereinafter referred to as Draft Interconnect Regulations). We note that
TRAI has released the Draft Tariff Order and Draft Interconnect Regulations
with an intent to create an enabling environment for orderly growth of the
television broadcasting sector in the light of various developments related
to technology, emergence of multiple distribution platforms, evolving
business models and enhanced addressability across platforms. We further
note that TRAI has undertaken, a comprehensive review of the existing tariff
framework for the addressable systems, whereby a unified regulation has
been prescribed for DACS / DTH / HITS / IPTV Platforms.
We appreciate the initiative of TRAIs attempt to evolve a new tariff structure

that enables the consumers with the freedom to choose from an array of
options with affordable a-la-carte and bundled television broadcasting
services as per the consumers preferences and paying capacity, while
ensuring transparency in the entire value chain.
We have noted following salient features:
Broadcasters are mandated to offer all channels on a-la-carte
DPOs can decide the retail price of a pay channel which can be equal
to or lower than MRP. There is no limit prescribed on the minimum
cap for deciding the retail price
MRP has to be same across all platforms
MRP of a pay channel can be different in different Geographical areas
We understand that the tariff issues related to TV Sector has been the
subject of consultation earlier as well. However, TRAI while formulating the
proposed draft Tariff Order and Interconnect Regulations not only has not
considered the Regulated RIO model suggested by majority of the
stakeholders but also there are several relevant suggestions/ comments,
being part of the earlier consultations, that are still un-attended/ un-
addressed in the Draft Tariff Order/Regulations which needs due
consideration by the Authority by incorporating the suggestions/comments
provided herein below before coming out with the Final Tariff Order &
Interconnect Regulations. In addition, our submission for harmonization of

the provisions of the Copyright Act with the TRAI Act also apparently has
not been considered while coming out with the draft Tariff Order &
Interconnection Regulations.
We would like to submit that we have carefully reviewed the consultation

and wish to suggest that the Draft Tariff Order if implemented in its current
form and shape may pose multiple challenges in implementation and would
be detrimental to the consumer interest.
We have supported our response with detailed analysis and have cited
examples to substantiate our submissions. We now wish to proceed to give
our response herein and the same should not in any manner be construed
as a waiver of any comments made in our earlier submissions to the
Authority.
POSITIVE INITIATIVES IN DRAFT TARIFF ORDER
Without prejudice to our submission that it is the Regulated RIO model

which is best suited and has also been suggested by majority of
stakeholders for the Addressable regime, we appreciate the initiatives taken
by TRAI to address a few existing challenges vis--vis the wholesale and
retail tariff models on the presumption that TRAI is going ahead with the
integrated distribution model instead of the Regulated RIO model. The
submissions made hereinafter are on the said presumption and are in the
alternative. Among other things, the points listed below may be construed
as positive initiatives for the overall development of the sector with a specific
caveat that unless all our suggestions made in this response are
incorporated harmoniously in the final draft Tariff Order, the positives
referred below may not turn out to be helpful for the stakeholders at large
including Broadcasters like us.
(1) Broadcasters prerogative to fix MRP
Pricing of content should always be decided by the broadcaster and

popularity of content will determine how many consumers opt for that
channel. If there are not enough subscribers opting for the channel at
that price, it will automatically lead to correction in pricing in due
course. Therefore, the principle of economics of pricing being linked to
the demand of the product will come into play. This will ensure that
there is minimal market distortion.
TRAI has taken the welcome step by enabling Broadcasters to prescribe

MRP of their pay channel to the consumers.

However, as detailed in subsequent paragraphs fixing of genre wise
ceiling based on historical prices and restriction on discount while
prescribing the relationship between MRP of a-la carte channel(s) and
bouquet of channel(s) of a broadcaster is wholly unnecessary in the
current MRP price regime. This issue has been elaborated in the
subsequent Sections and needs to be suitably addressed by
modifying/amending the relevant stipulations in the draft Orders.
(2) No discrimination in pricing among various addressable platforms
Non-discriminatory pricing will enable platforms to have a level playing

field while competing with each other. Also, in this way, the DPOs will
try to focus on improving the service levels, distribution infrastructure
and other essential services like subscriber management, billing,
complaint redressal, collection of subscription revenue etc. as the
content costs for them will become same.
(3) Pricing flexibility based on Geographical Area
TRAI has correctly observed that the popularity of different channels

varies in different Geographical Areas (as defined in the Draft Tariff
Order). For example, if Channel A is popular in Delhi and trying to build
consumer awareness in Rajasthan, keeping lower MRP in Rajasthan
will increase sampling chances of Channel A. Unless viewers sample
this channel, they are unlikely to pay for it. Differential pricing enables
innovative pricing strategies and should be encouraged as it would help
broadcasters in giving discounts in the target Geographical Area while
maintaining revenues from those Geographical Areas where it is
popular.
In light of the above, we strongly recommend that the provisions made

in the Draft Tariff Order regarding differential pricing in different
Geographical Areas be continued.
(4) Forbearance on Premium channel pricing
Premium channel by nature have very niche viewer base and as such
should not be governed by any of the retail price caps as proposed for
normal channels. Also, it is essential for the industry to encourage
development of variety in content and production of good quality
content across different genres.
Encouraging Premium channels will also encourage investments in the

TV sector while incentivizing broadcasters for the same. While

forbearance on premium channel pricing is a welcome measure, we
believe the same should be allowed for all channels.
(5) Introduction of Must carry provision
The consultation on Interconnect Regulations proposes must-carry

provision for all addressable systems, on first-come-first-serve basis. It
also mandates DPOs to publish information about its platform
including available capacity and declare the rate of carriage fee. There
is also a requirement to publish this information within 30 days.
This is a welcome step aimed at removing the artificial entry barriers

for created by the DPOs to prevent entry of new channels without
paying hefty carriage fees. Enforcement of must-carry, must-provide
and non-exclusivity is necessary to stop the discrimination done by
DPOs.
However, as detailed in subsequent paragraphs the Must Carry

provisions in the form as stipulated in the draft Orders/Regulations
have lot of issues which are required to be addressed while finalizing
the draft Orders/Regulations. In order to ensure that Must Carry
provision is exercised in its true spirit, the placement and marketing fee
are also required to be brought within the regulatory ambit.
(6) Increased frequency of subscriber reporting 4 times a month
Accurate and timely subscriber reporting is the foundation stone for the
billing and revenue assurance of a Broadcaster. With the provision of
capturing four data points in a month, accuracy of subscriber reporting
increases and provides more appropriate billing criteria from the
Broadcaster to the DPO.
As correctly captured by the authority, this is aimed at preventing any

kind of manipulation as well as also include those subscribers who are
active for less than 30 or 31 days, in a calendar month. However certain
clarifications are required to be issued by TRAI in this behalf to remove
ambiguities.

(7) Requirement to appoint Compliance Officer
This will ensure conformity and proper reporting with respect to

compliance of regulations. However, DPOs having average subscribers
of less than 2 lakhs have been exempted and are not required to appoint
compliance officers. This will dilute the very purpose of introducing this
provision. DPOs can possibly circumvent this provision by splitting the
subscriber base among multiple entities. While compliance is
mandatory for all service providers, the threshold of requirement to
appoint a compliance officer by a DPO should be reduced from 200,000
to 50,000 customers.
(8) Introduction of regulation on carriage fee
Despite capacity not being a constraint in the digitized era, DPOs

continue to charge high carriage fees. The current proposal of slab-wise
carriage fees is therefore a step in the right direction. It is very important
that carriage fees should not be charged from channels which have a
penetration of more than 20% in the target market.
While introduction of carriage fees is a very welcome move, we have

highlighted a major shortcoming with respect of placement and
marketing fees being kept out of regulatory ambit which will result in
huge market distortion and discriminatory treatment to broadcasters.
This has been highlighted in the subsequent sections.
SECTION I
IGNORES MAJORITY FEEDBACK FOR REGULATED RIO
(1) Regulated RIO is the preferred choice of majority stakeholders
We would like to bring Authoritys attention to the fact that most of the
stakeholders recommended Regulated RIO model in response to the
Consultation paper issued by TRAI which also works on the principle
of transparency and non-discrimination among stakeholders. However,
we are surprised to see that such model has not been considered and a
model has been proposed which was not a favorable model
recommended by majority of the stakeholders. No
justification/rationale has been given for rejecting the RIO model. In
fact, consequent to the judgment in the NSTPL case, the stakeholders
have already adopted the Regulated RIO model by incorporating therein
different incentives/discounting parameters applicable to all the

addressable platforms as per the directions of Honble TDSAT to ensure
transparency and non-discrimination which precisely is the objective of
the present consultation exercise initiated by TRAI. At present the
agreements between the Broadcasters and DPOs are being concluded
on the basis of the modified Regulated RIOs published by the
Broadcasters.
A perusal of various comments posted in response to the Consultation

Paper, we have observed the proposed model has been recommended
mostly due to revenue share disputes arising within the parties down
the value-chain. Certain MSOs who have not been able to collect their
share out of revenues collected by the LCOs, have favoured this model
in order to secure their share. However, as pointed out hereinabove
most of the broadcasters, DTH operators and MSOs have preferred the
Regulated RIO model which is quite apparent from the table given
below:
Illustrative break-up of stakeholders responses supporting

Regulated RIO
Broadcasters DTH MSOs

Zee, Sony, Viacom, Videocon, Dish, Siti, IMCL, Asianet,
Star, ABP Reliance, Sun Direct Ortel, NSTPL
In fact, majority of the stakeholders had asked for Regulated RIO model
as proposed by TRAI. As you will appreciate, the industry has over the
last decade already settled down to a Regulated RIO model and the
contracts are being smoothly entered into by stakeholders.
Another important issue with the integrated distribution model is that

this model will lead to hefty increase in carriage fees. With the
legitimization of carriage fee through the proposed Order/ Interconnect
Regulations, the model itself envisages charging of carriage fee both
from FTA channels as well as from Pay channels. Thus, even in digital
addressable systems where there is a sufficient capacity, the channels
would be asked to pay carriage for inclusion in the basic tier as well as
for making them available on their platforms. This will act as deterrent
for new entrants as well as for niche channels. Hence it will adversely
impact the creativity of the sector and will lead to de-growth in
investment.

Instead of ensuring an equitable distribution of revenue realized from
consumers across the value chain, the suggested model is completely
skewed in favour of DPOs and in fact would severely impact other
stakeholders including consumers as well as investment in the sector.
This has been explained in detail in Section II.
Unlike any other industry, Broadcasters generally do not have any

direct control in the delivery of the offerings to the consumer hence
there are hardly any precedents across the globe where an MRP based
model is in vogue for broadcasting.
(2) Conflict/lack of harmonization with the provisions of The

Copyright Act, 1957
(i) It is stated that the broadcasting organizations are covered by The

Copyright Act, 1957 which is a complete code in itself. Under the
said Act the broadcasting organizations enjoy a special right u/s 37
of The Indian Copyright Act which is known as Broadcast
Reproduction Right. No distribution platform can distribute the
content of a broadcasting organization without obtaining a specific
license from them. The TRAI Act on the other hand is mainly for
regulation of various carriage related services such as distribution
platforms (DTH, MSOs, HITS etc.) and the regulation of content
aspect does not fall within its domain as the same is duly governed
by the provisions of The Copyright Act. The proposed regulatory
regime the draft Tariff Order/Interconnect Regulations seek to
impose various restrictions on broadcasting organization qua
content in the form of ceiling on tariff, manner of offering,
discounting etc. which are directly in conflict with the provisions of
The Copyright Act and severely restricts their freedom and ability to
commercially exploit the same. Accordingly, as detailed in the
subsequent paragraphs the provisions including the conflicting
provision of proposed Tariff Order/Interconnect Regulation are
required to be harmonized with the provisions of The Copyright Act,
1957 as otherwise they would fall foul of a special statute governing
broadcasting organization.
(ii) The signals to TV Channels contain content which is protected under
the provision of the Copyright Act, 1957. The owners of the content
have full freedom to commercially exploit their Intellectual Property,
i.e. content.

(iii) It is the recognition of this protection/right granted under the
Copyright Act, 1957 that has led to inclusion of Rule 6(3) in the
Cable Television Network Rules 1994. The aforesaid Rule 6(3) is a
part of programming code and it clearly provides that no copyrighted
work would be broadcasted unless the cable operator has taken
license for the same under the Copyright Act from the owner of the
copyright. The said programming code is applicable not only to cable
operators but is also applicable to broadcasters, DTH operators and
HITS operators in terms of license conditions and downlinking
guidelines as applicable.
(iv) The object of the Copyright Act 1957 is to encourage creativity and
intellectual growth of the country. Under the Copyright Act 1957,
not only work itself is protected, the neighboring rights/the
underlined works in the said work are also fully protected and are
subject to commercial exploitation. As pointed out hereinabove,
Chapter VIII of the Copyright Act provides for the rights of the
broadcaster which is a special right. Any person, who during the
continuation of the Broadcasting Reproduction Rights,
distributes/retransmits without the authority of the content owner,
is deemed to infringe the Broadcast Reproduction Rights. The
broadcasters have also been provided right in terms of Section 39A
(amended by Act 27 of 2012) qua broadcast reproduction rights
while making Sections 18, 19, 30, 30A, 33, 33A, 34, 35, 36, 53, 55,
58, 63, 64, 65, 65A, 65B and 66 applicable thereto with necessary
adaptation and modifications.
(v) Under the Copyright Act, there are two modes of licensing i.e.
voluntary license and non-voluntary license (compulsory and/or
statutory). However, in the scheme of Copyright Act, a voluntary
license has primacy over non-voluntary license. Various provisions
of the Copyright Act including Section 31, 31D, 32 etc. clearly
provide that first an opportunity must be given for a voluntary
licence on mutual terms and conditions. Each of the provisions
providing for a non-voluntary license under the Copyright Act will
come into effect only after an act of refusal by the copyright owner
to license the work.
(vi) Section 19(3) provides for specifying the amount of

royalty/consideration for assignment of copyright in any work and
the revision thereof on such terms and conditions as may be
mutually agreed between the parties. It is submitted that the
provisions of Section 19 applicable to assignment of copyright are
also applicable on licenses under Section 30 of the Copyright Act. It
is submitted that even the broadcasters have to seek the content
from the content owner, and in case the content owner does not
wish to give its content, the aggrieved broadcaster has to approach
Copyright Board only after a refusal to provide content on
reasonable terms by the content owner. Similarly, Section 32(4) and

the proviso to Section 32A of the Copyright Act and Section 84 of
the Patents Act provides that no license is to be granted unless the
applicant has proved to the satisfaction of the Board that he had
approached the licensor and was denied authorisation without any
reasons. Thus, the threshold in all the regimes is that applicant
must approach the licensor first.
(vii) It is submitted that must provide clause including the non-

discriminatory provision must be construed within the compulsory
and statutory licensing regime as provided in the Copyright Act.
Hence, the existing Regulation provides for mutual negotiations,
which is similar to the provisions contained in the Copyright Act. It
is submitted that while framing Regulations, TRAI cannot by the
arbitrary exercise of its powers and in an inconsistent manner, take
away the right of mutual negotiation.
(viii) The scheme of the TRAI Regulations also has to be read in

consonance with Indian Contract Act and the Copyright Act to
provide for a voluntary licensing. It is for this reason that the
Regulations (including DAS Regulations) specifically provide for
mutual negotiations and any Tariff Order/Regulations that curb
these rights of the content owner/broadcasters will be ultra vires
the Copyright Act thereby rendering Section 37, 39A, Sec. 18, 19
etc. thereof otiose.
(ix) Taking away the right to freedom of contract will not only fall foul of
the provisions of the Copyright Act but will also be inconsistent with
the international obligations that have been provided for under
various treaties to which India is a signatory
(3) Regulatory regime regresses rather than advances
With impending completion of digitalization, the industry had hoped for

a light touch regulatory regime. However, instead, in our humble view
the Draft Tariff Order and Draft Interconnect Regulations seek to
introduce more stringent, onerous and intrusive regulatory
dispensation virtually micromanaging the activities for the entire value
chain. And the adversely impacted stakeholder will be the Broadcasters,
as the proposed Tariff Order regulates pricing, discounting, manner of
offering, bundling and legitimizing carriage fee leaving total uncertainty
in both advertisement and subscription revenues.
TRAI, by its own admission, concluded in its various prior papers that
TV Channels are an esteemed need, not essential services. However,
Tariff Order proceeds with the erroneous premise that Pay TV channels
are essential services. Further TRAI has not considered the fact that TV

consumers in India can avail the FTA services of the Public Broadcaster
DD Free Dish which provides over 100 FTA channels and currently has
more than 30 million subscribers making it the largest platform in the
country. We are of the view that there is no compelling reason to
regulate Pay and FTA channels and accordingly, only a light touch
regulation, if at all ought to have been proposed.
(4) Misplaced Monopoly content argument
In the proposed Tariff Order almost all the activities of broadcasters

inter alia including stipulation of MRP, ceiling on tariff, discounting
restriction, manner of offering, RIO stipulation etc. have been brought
under regulatory ambit. While for another set of stakeholders i.e. MSOs
& LCOs falling within and part of the same value chain, mutual
negotiations have been permitted for conclusion of contract failing
which a default mechanism of revenue sharing has been prescribed.
The justification for bringing almost all the activities of broadcasters
under severe and restrictive regulatory regime (where even the mutual
negotiations which are permitted under the existing Regulations have
been taken away) has been given by TRAI in para 31 of the draft
Explanatory Memorandum to the Tariff Order which reads as under:
The Authority noted that though there are 48 broadcasters

providing 275 pay channels at present, there is no effective competition
among them. The content of each channel is unique and a channel cannot
be substituted by another channel even by one of the same genre. The
content of a channel in some sense becomes monopolistic in nature and
more so when the channel is being viewed by a large number of
subscribers. Similarly, availability of large number of MSOs and other
distribution platforms also does not encourage competition as distributors
of television channels are primarily dependent on the broadcasters for
provisioning of channels to their customers..
In this context it is pertinent to point out that the argument of so-called

monopoly enjoyed by the broadcasters and therefore their regulation is
warranted is entirely misconceived and misplaced.
There is no channel or broadcaster that enjoys absolute monopoly in the
market and/or controls the market. It is entirely misconceived to term the
content offered by broadcasters as monopolistic. In this regard it is
pertinent to point out that the content by its very nature is unique as it
is product of creativity. Uniqueness is not equivalent to monopoly.

The prevalent market scenario is characterized by availability of various
channels in each genre. For example, in the Hindi news category itself
more than 20-25 channels are available and no single news channel
can be considered to be monopolistic. Similar is the case with General
Entertainment Channel(s), Movie Channel(s), Devotional Channel(s),
Kids Channel(s) etc. While it may be true that in many cases one
program comes only on one broadcasters network, the program itself
invariably competes with other programs coming on different
Broadcasters channels. Therefore, the channels are competing against
each other in a transparent manner and on daily basis. Same gets
reflected in the weekly reports publishing program-wise channel
performances by various industry bodies.
Kindly note that in general the IPRs of the content are available only to
a particular Broadcaster and hence only that Broadcaster makes the
program available on its network. This scenario cannot be treated as
monopoly. Similar argument can be made in case of DPOs as it can be
observed that, each DPO has its own strong presence in various parts of
the country, translating into monopolistic scenario on the ground.
In this context it is also relevant to mention that in order to address the

alleged apprehension of monopoly, dominance etc. TRAI has already
amended the Interconnect Regulations in February 2014 whereby the
multi broadcasters bouquet and other similar offerings have already
been prohibited at wholesale level.
SECTION II
DETRIMENTAL TO CONSUMER INTERESTS
(1) Consumer costs to increase else channel selection to reduce
The stipulation of rental charges for the DPOs hampers affordability.

However, under proposed regime the consumer will either end up
paying substantially more for the same set of channels that they avail
today or will end up receiving significantly lesser number of channels
for the same price. The rental for these channels alone, as per the Draft
Tariff Order, would be higher than Rs. 230. The following examples
based on the actual offerings by the DPOs fully substantiate and
reinforces the said proposition:

a) Impact evaluated on present packaging DTH
i. Present packaging of DTH with approximate consumer payout
# FTA # Pay Avg. Price /

Pack Name Price (Rs.) # Channels
Channels Channels Pay Channel
Basic Entry Pack 240.0 220 140 80 3.0
Mid-Tier Pack 320.0 245 140 105 3.1
Premium Pack 480.0 280 140 140 3.4
ii. Assuming average price per pay channel and number of channels
remaining same, consumer payout increases significantly
# FTA # Pay Avg. Price Addl. Pay Ch. Total

Rental
Pack Name Channels Channels / Pay Ch. Rental Cost Cost
Basic Entry Pack 140 80 3.0 130.0 100.0 240.0 470.0

Mid-Tier Pack 140 105 3.1 130.0 120.0 320.0 570.0
Premium Pack 140 140 3.4 130.0 160.0 480.0 770.0
iii. Otherwise, number of pay channels in the packs reduces

significantly

Pack Name Rental
Ch. Ch. / Pay Ch. Rental Cost Cost
Basic Entry Pack 64 36 3.0 130.0 0.0 110.0 240.0
Mid-Tier Pack 70 55 3.1 130.0 20.0 170.0 320.0
Premium Pack 90 85 3.4 130.0 60.0 290.0 480.0
b) Impact evaluated on present packaging MSO
i. Present packaging of MSO with approximate consumer payout
Price # # FTA # Pay Avg. Price / Pay

Pack Name
(Rs.) Channels Channels Channels Channel
Basic Entry Pack 250.0 230 110 120 2.1
Premium Pack 320.0 270 115 155 2.1
ii. Assuming average price per pay channel and number of channels
remaining same, consumer payout increases significantly

Pack Name Rental
Channels Channels / Pay Ch. Rental Cost Cost
Basic Entry Pack 110 120 2.1 130.0 120.0 250.0 500.0
Premium Pack 115 155 2.1 130.0 140.0 320.0 590.0

iii. Otherwise, number of pay channels in the packs reduces
significantly

Pack Name Rental
Ch. Ch. / Pay Ch. Rental Cost Cost
Basic Entry Pack 68 57 2.1 130.0 20.0 120.0 250.0
Premium Pack 79 71 2.1 130.0 40.0 150.0 320.0
(2) Sampling:
Consumer does not watch all programs of a particular channel. Nor

does the program preferences remain static in nature. Depending on
the program content, the consumer switches his preference and
watches different programs on different channels in the course of time.
Also, the absence of substitutes of channels available with the
consumers will limit his chances to sample new content.
The Draft Tariff Order proceeds with the assumption that the consumer
wants to access a limited number of channels which, we humbly
submit, is an erroneous assumption. Today consumer samples various
channels across genres and decides to spend significant time on the
content of his choice. Therefore, the consumer needs to access wide
variety of content to make an informed choice in order to exercise
consumer preference. This choice is critical from a consumer
perspective which we believe has been taken away in the recommended
model since the option of sampling in the true sense is not being given
to the consumers.
(3) Diversity
By imposing artificial limits on bundling discounts, the choice and

diversity available to consumers will be adversely impacted. The
consumer proposition of TV as an audio-video medium has always been
to deliver diverse content at reasonable prices through bundles. By
forcing an a-la-carte mandate and making bouquets unattractive, this
strength will be significantly diluted leading to the survival of only fewer
larger channels.

SECTION III
ADVERSE IMPACT ON BROADCASTERS REVENUES
(1) Assured higher share of revenue for DPO, at the expense of

Broadcasters who are content owners
We would like to highlight the pricing mechanics for any consumer

products:
a) Manufacturers decide the product price (MRP)
b) Distributors get a percentage of MRP as distribution fees, he does
not get a fixed revenue
c) Distributors can give discounts maximum to the extent of his
margins
d) Distributors get a reasonable margin which can vary from 15% -
20%
In the proposed Draft Tariff Order, if we compare with the above

mechanics:
a) While the manufacturer (Broadcaster) decides the MRP, the retail
price is decided by the distributor (DPO) who can give any amount
of discounts to the consumers
b) DPO gets a minimum assured revenue or Rs. 130 irrespective of
any product consumed
c) DPO is free to discount a channel, rendering MRP meaningless
d) Distributors net share is considerably high
We have illustrated ARPU distribution amongst stakeholders with the

following assumptions:
i. Average price per pay channel = Rs. 3.00 (similar to the present
scenario explained above)
ii. DPOs distribution fee at 20% of Subscription revenue
iii. On an average 90% of the total channels offered by the DPO will
attain subscriber base of 5-10% (i.e. carriage fee of 15 paisa per
subscriber) of the respective target market. The average size of
the target markets is further assumed to be 40% of the DPOs
universe
iv. MSO: LCO share assumed to be 55:45

Scenario I Scenario II
Total Channels Offered by network 300 300
# DD Channels mandatorily subscribed 26 26
# FTA Channels subscribed by customer 74 44
# Pay Channels subscribed by customer 0 30
Total Channels subscribed by customer 100 100
(A) Fixed Rental Amount (Rs.) 130.00 130.00

(B) Additional Rental Amount (Rs.) - -
(C) Retail Price Subscription (Rs.) [@ Rs. 3] - 90.00
(D = A+B+C) Consumer Payout / ARPU 130.00 220.00
Total Consumer payout (incl. service tax)* 156 264
(E) DPO's Distribution Fee (@20%) (Rs.) - 18.00

(F) Carriage (Rs.)
14.80 14.80
(90% ch., 40% subs, 15 paisa)
(G = D+E+F) DPO Share (Rs.) 144.80 162.80

MSO Share (Rs.) (@ 55%) 86.30 96.20
LCO Share (Rs.) (@ 45%) 58.50 66.60
(H = C-E - F) Broadcaster Net Share (Rs.) -14.80 57.20
Consumer ARPU 130.00 220.00
(I = G/D) DPO % Share 111% 74%
MSO % Share (@ 55%) 66% 44%
LCO % Share (@ 45%) 45% 30%
(J = H/D) Broadcaster Net % Share -11% 26%
*In addition the Entertainment Tax imposed by various State Governments is also
levied.
India being an extremely price sensitive market, most of the subscribers

are expected to choose channels in a manner which reduces the average
consumer payout. As illustrated in the table above, the net share of
Broadcasters in the already reduced ARPU will fall drastically.
It is worth noting that DPOs revenue per subscriber has been
safeguarded. There is no major incentive for the DPOs to promote
channels on its platforms and can very well promote its own platform
services which may act as a substitute for genres like movies, music
etc. It is pertinent to point out that all the DTH operators as well as
MSOs are offering substantial number of platform services which in fact
are nothing but their own channels. All new channels will be totally
unviable as they will be left completely at the mercy of the DPOs.
In the present model, DPO is assured of multiple revenue streams such

as Distribution fees, Rental fees, Carriage charges, Placement fees and

Marketing fees. Since the Draft proposes to charge rentals to the
consumer purportedly for access and ROI for capacity enhancements,
it completely obviates the need to charge carriage from the broadcasters
for the very same purposes.
In light of the above, the Broadcasters subscription and advertisement

revenues will reduce significantly leading to closure of many channels,
which in-turn will adversely impact the Television and Broadcasting
ecosystem and growth.
(2) (i) Marketing and Placement Fee
While in the Draft Interconnection Regulations, the Authority has

prescribed a formula for deriving carriage fee, placement and marketing
fee have been kept outside the ambit and left for mutual negotiation.
We would like to highlight that this defeats the purpose of achieving
transparency and results in possible discriminatory practices. DPOs
could misuse this flexibility in negotiating any amount in the name of
marketing and placement.
The whole purpose of bringing carriage fee under regulatory ambit

would get defeated as DPO would have carte blanche to demand
carriage under the guise of placement & marketing fee. This would
create a back door entry for packaging and side-deals. DPO would
charge hefty fees for desired placement/packaging of channels from the
Broadcasters and mutual negotiation would create non-transparent
and unequal interconnection arrangements between the stakeholders
and would have potential to distort the market.
In view of the above, we strongly recommend to bring placement fee and
marketing fee also under the ambit of the regulation. We propose that
placement fee and marketing fee to be subsumed in the various
discount parameters of the Broadcasters, which would be capped
at 15% and transparently disclosed in the RIO.
In the alternative, it is suggested that the LCN line-ups too be regulated
as without this the DPOs may discriminate few Broadcasters. There
should be fair rules to decide the LCN lineup. One of the parameters
that can be considered is the average comparative ratings of a channel
in last 1 year as reported by BARC. Channels having higher ratings
will be placed at the top of LCNs allocated to a particular genre of
channels. LCNs once allotted will not be changed for a period of 1
year after which a similar exercise will be carried out to determine
LCNs for next 1 year. This will encourage Broadcasters to provide
better content to the viewers while avoiding any additional payment to

the DPOs. This would also make the LCN allocation entirely merit-
based.
(ii) Clarification on Carriage Fees for HD channels:
It may be clarified by TRAI that for calculating carriage fee for HD

channel, only HD sub-base of a DPO in the target markets as declared
by the Broadcaster should be considered. As HD channels
consumption is still comparatively low considering the total C&S
subscriber base, each HD channel would invariably end up paying
carriage fee to the tune of double rate for the entire sub-base of a DPO
in the relevant target markets, regardless of the fact that the consumers
may or may not even have HD set top boxes. Therefore, it would be
imperative to consider only respective DPOs HD sub-base in the
relevant target market while calculating the carriage fee. For
clarification, HD sub-base can be considered as set of customers having
subscribed to at least one Pay/FTA HD channel. Also, we propose that
the Carriage deals and subscription deals be co-terminus.
(iii) Other issues relating to HD Channels
The current distribution models of DTH as well as MSOs are today

centered around giving a large package of channels but at significant
discount to the A-La-Carte prices. For example, For an Ultra Pack (Tata
Sky) with 250+ SD channels, the pack price is Rs 441.75, and the HD
access fees (where all channels available in SD which have HD versions
can be seen in HD) is only Rs 145.75 per month and Second STB access
fee for the whole pack is Rs 200 per month.
The subscription packs from other providers are similar in nature. It is

thus clear that HD channels (about 50 in Number) can be subscribed
to by paying only Rs 3 per channel extra per month. Now the question
is why Tata Sky would like to take this advantage away from customers?
If a tariff modelling is done where 50 HD channels are subscribed to a-

la-carte at Rs 25 per channel per month, it will cost customers Rs 1250
per month instead of Rs 145.75 charged now ( by Tata Sky). Even with
a discount of 25%, It will still cost Rs 938/-.
Hence, we are unable to agree to the TRAI prohibiting the discounting

of tariffs in bouquets or in other ways which benefits the customer. It
needs to be emphasized that tariff regulations once in force will be
applicable for extended periods, till modified, and HD channels will
increase in number. An HD access fee of say Rs 150 for all channels is

much more customer friendly than a-la-Carte pack of 50 or more HD
channels.
The TRAI is well aware that there is a very steep growth in the number
of HDTV channels coinciding with the flat panel HDTVs being sold in
millions and regional HDTV channels being launched by every major
broadcaster. Most of the HD channels have had a very low viewership
in the past but the situation is changing now towards increasing TRPs
and advertising at least in the urban markets though we see this
extending to rural markets in the future. At present DTH platforms
devote nearly 50% of their platform capacity to HD channels against 5%
TRPs enjoyed by such HD channels. This is only for brand
differentiation and investment in future which prompts the DTH
platforms to carry HD channels. Moreover 10% of top 400 channels (i.e.
40 channels) have 80% of the measured TRPs (See table).
The position with movie channels is similar:

In order to increase viewership, it is essential that there be a
discounting mechanism. Thus, the limit on discounting sought to be
introduced by TRAI is anti-consumer as is quite apparent from above.
(3) Adverse impact on Advertisement Revenue
The Authority has made a provision that the broadcasters must also file
the Advertisement revenue of each channel. If the view of the TRAI is
that channels which have to pay high carriage fees which is not made
up by subscription revenues will be able to make it up with
advertisement revenues, the same is unlikely to hold true. The pattern
of advertisement revenues is such that the top 4-5 channels have 80%
of the network advertisement revenues. The channels lower down in the
line barely have any advertisement revenue.
Majority of the Advertisement-sales deals are network deals. As the

broadcasters bouquet offerings will not likely to be taken up by the
consumers and are likely to be rendered almost illusory and redundant
(as the consumers mostly prefer multi broadcasters bouquet) in the
new environment, the Advertisement revenues of most channels that
are not flagship channels will also fall as reach of these channels will
become proportionate to consumer demand.
SECTION IV
ISSUES PERTAINING TO OPERATIONS, PROCEDURES AND

IMPLEMENTATION
(1) Issue of Credit Period needs to be addressed 60+ days available

to DPO to pay broadcasters
Chapter V of Draft Telecommunication (Broadcasting And Cable

Services) Interconnection (Addressable Systems) Regulations, 2016
allows a DPO fifteen days to submit the subscriber report after the
completion of a calendar month, in the specified format. It is worth
noting that as per proposed regulation, last subscriber counts to be
obtained on 28th of a month; as against present requirement of last day
of the month (30th or 31st, as the case may be). Therefore, invariably
DPO would get an extended timeframe of 17-18 days to provide the
subscriber reports, counting from 28th day of the previous month.

Clause 13(2) stipulates Broadcasters to generate invoice on basis of
subscriber reports submitted by a DPO and also need to give DPO at
least fifteen days for making the payment. To understand the logistics
involved in the process, 2-3 days would be required to process the
subscriber reports and generate invoices against each DPO and a
further 3-4 days for invoices to reach to DPO. Thus, on an average, 5-6
days need to be factored in the entire process. Post that, a DPO would
have minimum 15 days time to make the payment, against which the
services have been enjoyed in the preceding month. Assuming DPO
collecting payments from consumers in prepaid mode, the effective
credit period would be:
i. 30 days (of the month in which service have been provided) +

ii. 15 days (to submit reports after completion of the month) +
iii. 5 days (of logistics for invoicing and courier) +
iv. 15 days (time to make payment)
i.e. 65+ days from the date of start of providing the service and collection
of payment from the subscribers.
A robust SMS does not require 15 days for generating reports. Also,
since DPO to generate subscriber count by 28th of a month, the
regulation should stipulate making the monthly report available
allowing maximum 7 days of processing time which should be strictly
enforced. We recommend DPO to provide subscriber report in the
prescribed format latest by 5th day of the immediately succeeding
month to the Broadcasters.
Moreover, if the DPO is collecting money on a prepaid basis, there is no
reason for extending such a large credit period to DPO. In such a
scenario the Broadcasters should be allowed to raise provisional invoice
every month on the 5th day based on last months report. The invoices
can be reconciled in the following month based on the actual subscriber
report received from DPO.
DPO should be required to make payments within 15 days of receiving
the provisional/ actual invoice, as the case may be.
(2) Obligation on Broadcasters to specify arrears in the invoices and

Broadcasters rights thereto
In the Draft Interconnect Regulations, the Authority has mandated that

Broadcasters shall have no claim on any arrear amount which has not
been specified by it in the immediate next three consecutive invoices
issued after the due date for the invoice to which the arrears pertain.

While mandating this provision, we believe that the Authority has not
appreciated the fact that this would be challenging especially in view of
non-receipt of subscriber reports on time. Hence we suggest that there
should not be any such provision. Anyways there is a law of limitation
which prescribes a period of 3 years to recover the legal dues payable
by one party to the other.
(3) Maximum discount on MRP not specified for Retail Price
In the proposed model there is a discount cap (15% + 20%) at the

wholesale level (MRP).
However, the DPO has been provided freedom to declare retail prices
within the cap of MRP declared by the Broadcaster. Therefore, it is quite
likely that the DPO can provide a 40% discount on the same channels
to its consumers whereas TRAI is prohibiting the Broadcasters from
providing the same discount to the consumers. This defies economic
logic.
This will result in different retail prices for the same channel in the
same Geographical Area by different DPOs, thereby resulting in
discrimination at consumer level and defeating the purpose of MRP
stipulations.
Under the earlier regulations, pricing was on a B2B basis. Therefore, a-
la-carte prices as well as the bouquet prices of channels were from
broadcaster to the DPO. In such a situation, TRAI has made
observations that if there is a huge difference between the sum of a-la-
carte prices of individual channels and the bouquet of such channels,
then pricing is illusory.
In the new MRP model, pricing is on a B2C basis which means
Broadcasters declare MRP of the channels for the consumers and DPOs
get a distribution fees which is 20% of the MRP. In this scenario, there
is no reason for providing a restriction between the a-la-carte prices and
the bouquet prices. All consumers have complete choice of a-la-carte
channels and that too within the ceiling stipulated by TRAI for various
genres. If Broadcasters make certain bouquets where the pricing is say
at a discount of 50% to the sum of a-la-carte, it is an additional option
for the consumers and would be a very positive consumer-friendly
option.
(4) DD Freedish offerings is creating non-level playing field
While one set of DPOs (MSOs, DTH and HITS) are regulated, DD
Freedish DTH service is kept outside the ambit of the Draft Tariff Order
as it is a non-addressable platform. At present the Direct-to-Home

(DTH) services of Doordarshan is offering over 100+ channels for which
no subscription is required to pay by the consumers. In other words,
it is free. However, a consumer would need to pay an amount of
Rs.130/- for 100 FTA channels to the DPOs. This creates a non-level
playing field and likely to result in discrimination amongst the same set
of consumers.
Therefore, all platforms including DD Freedish should come under the

regulations.
(5) Implementation challenges in DAS-III and DAS-IV areas continue

to remain
The proposed regime is a paradigm shift from current market

realities. Therefore, significant time will be required for all the
stakeholders including consumers to switch over to the new
regime. Moreover, the DAS Phase-III implementation is not yet
complete and the DAS Phase-IV implementation on ground is likely to
take another six months post the sun-set date of 31st December 2016.
This entire regime is based on the assumption that Digitalization shall

be fully implemented by 1st April 2017 which is highly unlikely. Also
DAS Phase-IV is the largely fragmented and most challenging market
compared to the other phases. It is therefore suggested that any new
regulatory regime be introduced only after June 2017 with a six-month
transition time to ensure smooth switch over i.e. with effect from
1.1.2018. Various other implementation challenges of the proposed
model have been separately highlighted in Annexure - B attached
hereto.
(6) Commercial Subscriber definition
As per definition of subscribers in the Consultation on Draft Tariff

Order:
Subscriber means a person who receives television

broadcasting services, provided by a service provider, at a
place indicated by such person without further transmitting it
to any other person and each set top box located at such place,
for receiving the subscribed television broadcasting services
from the service provider, shall constitute one subscriber.
As per the present regulations (specifically, clause 2 (o) and 2(t) of The
Telecommunication (Broadcasting and Cable Services) Interconnection
(Digital Addressable Cable Television Systems) Regulations, 2012 dated

30th April 2012 and in Clause 2 (oa) of The Telecommunication
(Broadcasting And Cable) Services (Fourth) (Addressable Systems) Tariff
(Fifth Amendment) Order, 2015 dated 8th September 2015, the above
definition of subscribers was qualified to include Ordinary
Subscriber(s) and Commercial Subscriber(s) wherein, Ordinary
Subscriber meant any subscriber who receives a programming service
from the Service Provider directly and uses the same for his domestic
purposes and Commercial Subscriber meant a subscriber who causes
the signals of TV channels to be heard or seen by any person for a
specific sum of money to be paid by such person.
The above definition of Commercial Subscriber(s) is awaiting
directions/orders in Appeal No. 4 & 5 (C) of 2015 before TDSAT, Civil
Appeal No. 3728 of 2015 before Supreme Court of India. There is also a
Writ Petition No. 5161 of 2014 before Delhi High Court.
One of the stated objectives of the Draft Tariff Order is to ensure that
Subscribers have adequate choice in the broadcast TV services while
they are also protected against irrational tariff structures and price
hikes.
Viewers going to these commercial establishments (hotels, restaurants,

bars etc.) pay a heavy premium for services that are available at much
cheaper prices outside. One of the factors which influences these
viewers to pay a premium is the broadcast services available in these
places. For example, in case of sports bars, the viewer agrees to pay
more because of the sports matches being broadcast in these places. In
case of 4-star and 5-star hotels too, the viewer pays a premium for all
services available in these places.
The broadcasters should be entitled to charge differential commercial

tariff. TRAI has already recommended that the HD channels be priced
at three times the MRP of SD channels. We strongly recommend that
similar to pricing for HD channels, broadcasters be allowed to price pay
channels for commercial establishments at three times the MRPs for
Ordinary Subscribers. Since the present Tariff Order is completely
silent on the issue of Commercial subscribers, it is suggested that either
the same be incorporated in the final Tariff Order or a supplementary
consultation paper be immediately issued and the final Tariff order
should be notified only after incorporating the separate Commercial
Tariff for specified categories of Commercial establishments.

(7) Technological constraints in implementing consumer choices
Consumer choice will be illusory
We believe the proposed model envisages delivery of channels based on

choice of the consumers (both FTA and Pay) which is likely to result in
countless combination which we believe are not supported by the
technology and infrastructure of the DPOs (both MSOs and DTH).
It may not be possible to practically implement the same and the choice
mechanism so stipulated would only be illusory.
SECTION V
ISSUES NOT ADDRESSED
The Draft Tariff Order is silent on major issues affecting the current
ecosystem which hampers flow of revenues to the Broadcasters. Issues
listed below should be addressed prior to the Notification and
implementation of the Draft Tariff Order:
(1) Transparency in subscriber declarations: Stringent penalties be

stipulated for violation of various obligations including discrepancies in
subscriber declaration which should inter-alia also include suspension
/ cancellation of DPOs License in case of deliberate and willful default.
(2) Quality of Services: There is no teeth to get any of the Quality of

Service (QoS) mandates implemented on the ground as no effective
penal consequences/financial disincentives have been prescribed. The
same should be reviewed to provide for effective deterrents so as to
ensure the compliance of respective obligations by various
stakeholders.
(3) Platform Services offered by DPOs should be brought under

Regulation:
Currently the platform services offered by DPOs are not covered under
Regulation. These platform services are competing with Broadcasters
channels and in fact act as substitutes for Broadcaster channels.
Today, almost every DPO in the country provide platform services for
movies, music, other entertainment related programs which are being
promoted as alternative content. DPOs have platform services like
Active Music, Active Food, Dance Studio, Miniplex etc. for which the
price ranges from Rs. 10 per month to Rs. 55 per month. Various DPOs

offer more than 40 platform services to their customers. These platform
services are nothing but alternatives to content offered by Broadcasters.
Lack of Regulation for these platform services therefore results in non-
level playing field vis--vis Broadcasters which are forced to keep their
prices within the genre cap.
While the Authority have regulated all aspects of pricing, distribution
fee, carriage, bundling for Broadcasters channels, regulations related
pricing & revenue distribution of Platform Services have been
completely left out.
We strongly recommend that the Authority should come out with

regulations for Platform Services to ensure the level playing field.
SECTION VI
SUMMARY RECOMMENDATIONS FROM ZEEL
(1) Timelines for moving to new regime
This entire regime is based on the assumption that Digitalization shall

be fully implemented by 1st April 2017 which is highly unlikely. Also
DAS Phase-IV is the largely fragmented and most challenging market
compared to the other phases. Moreover, the new regulatory regime
proposes a paradigm shift from the existing mechanism and sufficient
time would be required by the stakeholders to switch over and conclude
contracts as per new regime. It is therefore suggested that any new
regulatory regime be introduced only after June 2017 with a six-month
transition time to ensure smooth switch over i.e. with effect from
1.1.2018.
(2) Restriction on relationship between a-la-carte and bouquet prices

should be removed
Under the earlier regulations, pricing was on a B2B basis. Therefore, a-

la-carte prices as well as the bouquet prices of channels were from
broadcaster to the DPO. In such a situation, TRAI has made
observations that if there is a huge difference between the sum of a-la-
carte prices of individual channels and the bouquet of such channels,
then pricing is illusory.
In the new MRP model, pricing is on a B2C basis which means

Broadcasters declare MRP of the channels for the consumers and DPOs

get a distribution fees which is 20% of the MRP. In this scenario, there
is no reasoning/rationale for providing a restriction vis--vis the
relationship between the a-la-carte prices and the bouquet prices. All
consumers have complete choice of a-la-carte channels. If Broadcasters
make certain bouquets where the pricing is say at a discount of 40% to
the sum of a-la-carte, it is an additional option for the consumers and
would be a very positive consumer-friendly option.
Broadcaster should have right for bundling along with the right to
decide the price. It is ultimately consumer-friendly move. E.g., a
Broadcaster has 5 channels Channel A, Channel B, Channel C,
Channel D and Channel E. Each channel is priced at Rs. 10.
Broadcaster also provides a bouquet comprising 3 popular channels
Channel A, Channel B & Channel C priced at Rs. 18. Broadcaster
should have complete freedom to create another bouquet comprising all
5 channels priced at Rs. 20.
In the above illustration, a consumer will anyway have options to select

individual channels and also bouquet comprising popular channels at
Rs. 18. Additionally, consumer will also have a 3rd option to select all 5
channels at Rs. 20. This 3rd option not only gives consumers a better
value for money offering (in the bouquet of 3 channels, price per
channel comes at Rs. 6, while in the bouquet of 5 channels, price per
channels comes down to Rs. 4) but also gives Broadcasters a chance for
sampling less popular channels. It is worth noting that, in the entire
value chain the revenue for the DPOs are always secured by way of
appropriate distribution fee. Hence it is unfathomable that the bundling
power of the broadcasters has been significantly reduced in the new
model, which does not benefit any stakeholders in the value chain.
Also cap/ceiling on a-la-carte channel MRP of various genres has been

stipulated by TRAI which in the opinion of TRAI itself would offer a
realistic option to consumers. Therefore, an argument that
Broadcasters will keep prices of their channels high is not tenable.
A-la-carte prices for the channels will always be under the prescribed
guidelines from TRAI.
We do not agree with the genre-wise cap/ceiling as proposed by the

Authority as we are in favour of forbearance for channel pricing,
nevertheless we are going ahead with our response without prejudice to
our rights and contentions.
In this context it also pertinent to point out that a consumer would

always like to opt for a multi-broadcaster bouquet which is the

exclusive prerogative of the DPO. In such a scenario the restriction of
15% discounting in a-la-carte bouquet relationship at the broadcasters
level renders the bouquet of individual broadcasters unattractive and
in fact completely illusory. Accordingly, since in the proposed model
the offerings in the form of MRP is direct to consumers, the necessary
flexibility is required in the form of freedom to discount the bouquet
price as per the business requirements of the broadcasters and ground
realities. In fact, as pointed out hereinabove this would be extremely
consumer friendly and would provide additional meaningful options to
the consumers.
Therefore, we suggest to amend the regulation to the extent of retail

price of a bouquet of pay channels shall not be less than fifty
percent of the sum of retail prices of the a-la-carte pay channels
forming part of the bouquet. Same flexibility can be given to the DPOs
also.
(3) Changes suggested in the basic Rental, Additional Rental Amount
There should be no fixed minimum rental. In this context, we would like

to draw an analogy with the Retail Industry:
a) Any store selling products of manufacturers do not charge its

consumers for coming into the store. E.g., there is no entry fee for
shopping in hyper stores likes Big Bazaar or D-Mart etc. or any local
kirana shops for purchasing.
b) Shopkeepers earn revenues only from the margins from the MRP
decided by the manufacturers.
c) There is no fixed assured revenue for retail stores, i.e. customers

having once entered the stores, are not obligated to pay any amount
if they do not wish to purchase, and pay only for the products they
purchase.
d) This acts like an incentive for the stores to attract consumers to

enter into their stores and purchase for significant amounts, so that
retail stores can conduct their business.
However, in the proposed model, customers are required to pay for

DPOs capacity (as against in retail stores, consumers do not pay for
the real estate and infrastructure of the retailers). On top of that, the
prescribed maximum amount of Rs. 130 is so high for price sensitive
consumers, that it acts as deterrent for subscription of pay channels.

Taking cue from the practices in other stabilized industries, we are of
the opinion that basic Rental amount should not be charged from the
consumers. DPOs are already eligible for carriage fees for less popular
channels and distribution fee from popular channels subscription,
hence it should meet their business requirements.
However, as the entire country is moving towards complete digitization,

we understand that there may be certain capex requirements for the
DPOs. In this context it is pertinent to point out that no new
infrastructure has been laid down by the DPOs exclusively for digital
transmission. In fact, the same cable network infrastructure (optical
fiber) which an MSO was already using the delivering the channels in
analogue regime, is being used in digital regime as well. Further the
headend and the cable infrastructure have also been depreciated
because of the usages over a period of time. Therefore, basic rental can
be prescribed as maximum of Rs. 75 for providing access to 200
channels to a consumer.
Also we believe that, additional rental amount should not be there in

vogue. The logic being, once a DPO commits certain capacity to cater to
the consumers demands, there is no difference in bandwidth cost
utilized by the consumers subscribing 200 or 300 channels. In other
words, the rental amount which is supposed to meet bandwidth costs
for DPO, does not correlate with the different consumers subscribing
different volumes/quantity of channels. As consumers viewing choice
is heterogeneous in nature, a DPO plans for increasing capacity only to
meet variety of consumers needs. Hence, additional rental amount
should be nil.
As in general any DPO would have 400-500 channel carrying capacity

and an average consumer today subscribes to 200 channels, Authority
may consider for additional rental to be levied only after 200
channels.
(4) Changes suggested in Distribution Fee
In the proposed Draft Interconnect Regulations, the Authority has

prescribed Broadcaster to offer to a distributor, a minimum of 20% of
the MRP of its pay channels or bouquets of pay channels as distribution
fee. In our view, the amount of 20% of MRP is very high and it should
be reduced to a minimum of 10%.

(5) Changes suggested in Carriage Fee, Placement Fee & Marketing Fee
We would like to highlight the fact that a channel may not be meant for
entire subscriber base for a particular state, defined as Geographical
areas in the Draft Interconnect Regulations. A channel may be targeting
only the subscribers in major towns and may not be the entire state
including rural parts. However, as per the regulations, the channel
would be required to pay maximum of 20 paisa carriage fee to the DPO
for the purpose of re-distribution in the entire state. In this light, we
propose the maximum carriage to be reduced to 10 paisa per SD
channel and 20 paisa per HD channel in the target market, with the
rate of carriage fee reducing as per stipulations given in Schedule I of
the Draft Interconnect Regulations.
In some genres, the target market is very limited (may be to a particular
city only). For example, English language channels cater to English-
speaking population only. They might have a target market of a few
metros only. It would be meaningless for them to pay carriage for
Maharashtra if they want to target only Mumbai. It is recommended
that for purpose calculating carriage fee for certain sets of channels
(e.g., English language GEC, Movies, News etc.), target market
should be allowed to be further subdivided into cities of
Geographical Areas.
To calculate carriage fee for HD channel, only HD sub-base of a DPO

in the target markets as declared by the Broadcaster should be
considered. For clarification, HD sub-base can be considered as set of
customers having subscribed to at least one Pay/FTA HD channel.
We strongly recommend to bring placement fee and marketing fee also
under the ambit of the regulation. We propose that placement fee and
marketing fee to be subsumed in the various discount parameters
of the Broadcasters, which would be capped at 15% and
transparently disclosed in the RIO.
Also, it is essential that strict provisions be made in the regulations to

prevent any commercial understanding between the Broadcasters and
the DPOs other that those stipulated in the Draft Tariff Order regarding
the subscription fee and in the Interconnect regulation regarding the
carriage fee. This will prevent the avoidable situation wherein the DPO
may force a Broadcaster to commit certain advertising/promotional
spends in exchange for better placement or carriage in the DPOs retail
packages.

It is suggested that the LCN line-ups too be regulated as without this
the DPOs may discriminate few Broadcasters. There should be fair rules
to decide the LCN lineup. One of the parameters that can be considered
is the average comparative ratings of a channel in last 1 year as reported
by BARC. Channels having higher ratings will be placed at the top
of LCNs allocated to a particular genre of channels. LCNs once
allotted will not be changed for a period of 1 year after which a
similar exercise will be carried out to determine LCNs for next 1
year.
(6) Changes suggested in regulation related to the Subscriber Reports
a) Time of generation of report should be from 7 PM to 9.30 PM as

against 7 PM to 11 PM proposed in regulation.
b) DPO should provide subscriber report in the prescribed format on
the 5th day of the immediately succeeding month to the Broadcasters
c) There should be a penal provision equivalent to 20% of monthly
License fee for each month delay in submitting subscriber report.
d) If the DPO is collecting money on a prepaid basis, Broadcasters
should be allowed to raise provisional invoice every month by 5th day
of the month based on last months report.
e) Consumer details in the SMS should incorporate pin-codes of
installation addresses. This will help in accurate capturing of
Geographical Area based details. The SMS report format for
subscription should also have Geographical Area wise subscriber
counts.
(7) Security Deposit
The Draft Interconnect Regulations have included provision of Security

Deposit in the arrangement between an MSO & LCO. However, it is
pertinent to note that similar provisions have been missing in case of
interconnect arrangements between a Broadcaster and a DPO. We
would like to stress upon inclusion of security deposit/Bank Guarantee
provision while a DPO entering into an arrangement with a Broadcaster.
Security deposit/Bank Guarantee should be equivalent of three

months subscription amount, and would be en-cashable on account of
payment default by the DPO. Such security deposit if en-cashed in part
or full, should be immediately replenished by the DPO to the original
level in order to continue to receive the Broadcasters channels.

(8) Changes suggested in Audit
a) Audit firm allocation for 1st Audit should be done by IBF or any
Broadcaster industry body and presence of Broadcaster
representative during Audit.
b) In case of any deviation found in Audit, there should be stiff penalty
to the tune of 3 times of licensee fee payable as identified during
Audit or in case hidden CAS/SMS is found then termination of
license
c) Regulation should inter-alia provide for
i. Field sample (STB & VC number) collection and use of same as
data item during Audit
ii. Transport Stream recording to identify numbers and version of
CAS
iii. Complete Data collection of CAS and SMS for Audit and not
any filtered data
1. Log of Package to channel mapping change from SMS and
CAS
2. Penalty and Blacklisting of CAS and SMS vendor in case of
under-reporting by DPO.
The detailed changes related to CAS & SMS requirement are given in
Annexure A.
(9) Modification in appointment of Compliance Officer
DPOs having average subscribers of less than 2 lakhs have been

exempted and are not required to appoint compliance officers. This will
dilute the very purpose of introducing this provision. DPOs can possibly
circumvent this provision by splitting the subscriber base among
multiple entities. While compliance is mandatory for all service
providers, the threshold of requirement to appoint a compliance officer
by a DPO should be reduced from 200,000 to 50,000 customers.
(10) RIO amendment TRAI final authority, not DPO
We observe that TRAI has created a provision enabling DPOs to raise

objections on the RIO filed by any Broadcaster. And upon receiving
objections, Broadcaster will need to modify its RIO in accordance with
the regulations and publish the same on its website.
We would like to mention that ambit of raising objections on the RIO

should lie exclusively with the Authority and no further delegation of
the same should be vested in DPO. The attention in this regard is invited

to various judgements of Honble TDSAT including the judgment in
Petition No. 44(C) of 2004 and Petition No. 40(C) of 2009 wherein it has
been clearly held that the challenge to various provisions of RIO should
either be before Honble TDSAT or TRAI. It may be pointed out that
enabling DPO to raise objection and making it obligatory on the part of
broadcaster to consider and amend RIO as per those objections would
introduce lot of complications in the process as multiple DPOs
(DTH/MSOs) keep on raising one objection or the other and the RIO will
never attain finality. In any event since the DPO can always approach
TRAI/TDSAT against any alleged unreasonable clause provision and
seek redressal thereof, the said provision in the Interconnect Regulation
is wholly unnecessary.
(11) Prescribing Genre cap/ceiling detrimental to growth of

Broadcasters
It is pertinent to point out that input cost for any content is governed
by market forces. The Authority has ignored this aspect and has come
out with a mechanism to control price downstream from Broadcaster to
DPOs putting several restrictions on the price of a particular channel
falling in a specific genre. But there are no restrictions/regulation
governing upstream whereby the cost of acquisition by the Broadcaster
is regulated.
It is a common knowledge that the acquisition cost of content has gone

up substantially in the last several years due to inflation and market
forces. For example, cost of acquisition of a movie in 2005 which was
around Rs. 1.00 crore has gone up as high as Rs. 30 - 50 crores in
2016. Likewise, cost of acquisition for sports content has also gone up
exponentially but the price cap of the genre restricts the Broadcaster
being able to monetize the same.
It is pertinent to point out that the Intellectual property/Copyright

owner under the copyright Act is permitted and free to recover the
perceived value of its content but under the TRAI Regulation/Tariff
order the Broadcaster/Content owner distributing the said content
through its channels is not allowed to charge the realistic market value
and will be bound by the restriction of the genre cap/ceiling imposed
on a particular channel prescribed by TRAI.
It is also important to take note that:

(i) Programming costs are a function of investments made by
broadcasters which varies every year owing to nature of rights and
production
(ii) Historical investments will be wrong yardstick for deciding future

prices of the channels
(iii) Providing fixed mark-up on the programming costs would essentially

control the profitability of the Broadcasters. Secondly, providing
similar mark up to different broadcasters having different content
would be like treating un-equals as equals and would in itself be
discriminatory.
In view of the above, it is recommended that there should not be any

cap/ceiling on the price of a channel in a particular genre and
forbearance should be permitted for the Broadcaster so as to price their
channels as per market dynamics.
(12) To fix Sunset date for introducing forbearance for pricing at

Wholesale and Retail level
TRAI itself in its Recommendations dated 1/10/2004 has observed
It must be emphasized that the regulation of prices as outlined

above is only intended to be temporary and till such time as there
is no effective competition. The best regulation of prices is done
through effective competition. Therefore, as soon as there is
evidence that effective competition exists in a particular area price
regulation will be withdrawn. TRAI will conduct reviews of the
extent of competition and the need for price regulation in
consultation with all stakeholders.
It is our submission that now the entire country is moving towards

addressability. The addressable systems are not only transparent but
also offer meaningful choice of channels both in the form of a-la carte
as well as bouquet to the consumers. In other words, a consumer has
been empowered to choose the channels which it wishes to watch. In
addition, the capacity constraints which were prevalent in the analogue
regime have also disappeared with the digitalization of cable networks.
In view of this position, it is suggested that TRAI should fix a definite

Sunset date for introducing forbearance for pricing at Wholesale and
Retail level. This is important since 12 Years have elapsed after TRAIs
initial recommendation made on 1/10/2004 with regards to
forbearance. It would be beneficial for the overall growth of the entire

value chain including Investors if a sunset date for forbearance is
prescribed in the final Tariff Order.
In our view the Sunset date for introducing forbearance should be One
(1) year from the date of implementation of the Final Tariff Order.
CONCLUSION
De-growth of the Television & Broadcasting ecosystem
It is to be noted that there is enough competition among the broadcasters that

should encourage forbearance on retail and wholesale prices. Cost of
producing content is increasing day-by-day and is increasing at rates more
that the inflation rates. Therefore, we strongly recommend forbearance on
pricing of channels.
Also, consumers may not get to view channels of their choice as the DPO may
not air that channel for want of sufficient subscriber base or due to not having
sufficient capacity. In most cases, the DPOs will not have sufficient capacity
to air all 850 odd channels on their platform as it will be economically
unfeasible for them.
As outlined by us, the customers will be the biggest losers as today they
receive nearly 500 channels including HD channels in prices ranging from Rs
500-700 which will be denied to them. Subscriptions for such packages may
exceed Rs 2000.
Most Channels will be impacted as while they are Pay Channels today and
do not pay any carriage fees, they will need to commence doing so in future
when the Tariff order is implemented. Moreover, the level of carriage fees is so
high that most channels specially HD channels will be unable to afford it.
Therefore, we strongly recommend to reduce the carriage fee rate.
A large number of issues have been left unaddressed. These include Platform
services, positioning of DD Freedish as it expands, Clone Channels, additional
STBs in the home, and a host of others.
If this Tariff Order is implemented in the proposed form it will result in a

massive de-growth of the entire Television and Broadcasting value chain
which will equally impact Broadcasters, DPOs and consumers. On one hand
Broadcasters would be forced to shut down several channels due to significant
reduction in advertising revenue as well as subscription revenues, on the
other hand DPOs ability to grow ARPUs will get restricted due to lack of variety
of content. It is evident that with fewer number of channels consumers would
suffer the most as they will be deprived of the variety and quality of content

available at present. We propose that the TRAI should not implement the same
without addressing the issues raised.
We apprehend that the proposed regime would result in closure of various

channels as sampling and access to variety of content will be severely
restricted which is critical for innovative content. Therefore, it is
recommended that bundling should be allowed with a higher discount of
50% on sum of ala carte rate. Similarly, distribution fee should be rationalized
to 10% of MRP and maximum rental to be charged by the DPO for a basic tier
should be reduced to Rs. 75/- for 200 channels.
The proposed regime does not address the issue of viewership and the
resultant adverse impact on advertising revenues which is also a critical
element for monetizing the investment made in creating content.
We further submit that this response is being furnished without prejudice to

our rights and contentions, with a specific request to you to give us a
convenient time and date to meet you in person and explain our point of view
expressed in our written response.
*********************

ANNEXURE A
(A) Conditional Access System (CAS) & Subscriber Management System

(SMS):
1. The distributor of television channels shall ensure that the current
version of the Conditional Access System (CAS), deployed by it, do not
have any history of hacking.
Explanation: A written declaration available with the

distributor from the CAS vendor, in this regard, shall be
construed as compliance of this requirement.
2. The SMS shall be independently capable of generating, recording, and

maintaining logs, for the period of at least immediate preceding two
consecutive years, corresponding to each command executed in the
SMS including but not limited to activation and deactivation
commands.
3. It shall not be possible to alter the data and logs recorded in the CAS
and the SMS.
4. The distributor of television channels shall validate that the CAS,

deployed by it, do not have facility to activate and deactivate a Set Top
Box (STB) directly from the CAS terminal. All activation and
deactivation of STBs shall be done with the commands of the SMS.
5. The SMS and the CAS should be integrated in such a manner that
activation and deactivation of STB happen simultaneously in both the
systems.
Explanation: Necessary and sufficient methods shall be put in

place so that each activation and deactivation of STBs is
reflected in the reports generated from the SMS and the CAS
terminals.
6. The distributor of television channels shall validate that the CAS has
the capability of upgrading set top boxes over-the-air (OTA), so that the
connected set top boxes can be upgraded in the event of hacking.
7. The fingerprinting should not get invalidated by use of any device or

software.
8. The CAS and the SMS should be able to activate or deactivate services
or STBs of at least 50% of the subscriber base of the distributor within
24 hours.

9. The STB and Viewing Card (VC) shall be paired from the SMS to ensure
security of the content.
10. The CAS and SMS should be capable of individually addressing

subscribers, for the purpose of generating the reports, on channel by
channel and STB by STB basis.
11. The SMS should be computerized and capable of recording the vital
information and data concerning the subscribers such as:
a. Unique Customer Id
b. Subscription Contract number
c. Name of the subscriber
d. Billing Address
e. Installation Address
f. Landline telephone number
g. Mobile telephone number
h. Email id
i. Channel(s), bouquet(s) and services subscribed
j. Unique STB Number
k. Unique VC Number.
12. The SMS should be capable of:
a. Viewing and printing of historical data in terms of the

activations and the deactivations of STBs.
b. Locating each and every STB and VC installed.
c. Generating historical data of changes in the subscriptions for
each subscriber and the corresponding source of requests made
by the subscriber.
13. The SMS should be capable of generating reports, at any desired time
about:
i. The total number of registered subscribers.

ii. The total number of active subscribers.
iii. The total number of temporary suspended subscribers.
iv. The total number of deactivated subscribers.
v. List of blacklisted STBs in the system.
vi. Channel(s) and bouquet(s) wise Monthly Subscription Report
in the prescribed format.
vii. The names of the channels forming part of each bouquet.
viii. The total number of active subscribers subscribing to a
particular channel or bouquet at a given time.

ix. The name of a-la carte channel(s) and bouquet(s) subscribed
by a subscriber.
x. The ageing report for subscription of a particular channel or
bouquet.
14. The CAS shall be independently capable of generating, recording, and

maintaining logs, for the period of at least immediate preceding two
consecutive years, corresponding to each command executed in the
CAS including but not limited to activation and deactivation commands
issued by the SMS.
15. It shall be possible to generate the following reports from the logs of the
CAS:
a. STB-VC Pairing / De-Pairing

b. STB Activation / De-activation
c. Channels Assignment to STB
d. Report of the activations or the deactivations of a particular
channel for a given period.
16. The SMS shall be capable of generating bills for each subscriber with
itemized details such as the number of channels subscribed, the rental
amount for the channels subscribed, the rental amount for the
customer premises equipment, charges for pay channel(s) and
bouquet(s) of pay channels along with the list and retail price of
corresponding pay channel(s) and bouquet(s) of pay channels, taxes
etc.
17. The distributor shall ensure that the CAS & SMS vendor(s) has the
technical capability in India to maintain the systems on 24x7 basis
throughout the year.
18. The distributor of television channels shall declare the details of the
CAS and the SMS deployed for distribution of channels. In case of
deployment of any additional CAS/ SMS, the same should be notified
to the broadcasters by the distributor.
19. Upon deactivation of any subscriber from the SMS, all programme/
services shall be denied to that subscriber.
20. The distributor of television channels shall preserve unedited data of

the CAS and the SMS for at least 2 years.

(B) Fingerprinting:
1. The distributor of television channels shall ensure that it has systems,
processes and controls in place to run finger printing at regular
intervals.
2. The STB should support both visible and covert types of finger printing.
3. The finger printing should not be removable by pressing any key on the
remote of STB.
4. The finger printing should be on the top most layer of the video.
5. The finger printing should be such that it can identify the unique STB
number or the unique VC number.
6. The finger printing should appear on all the screens of the STB, such
as menu, EPG, Settings, no content screen, and games etc.
7. The location, font color and background color of fingerprint should be

changeable from head end and should be random on the viewing
device.
8. The finger printing should be able to give the numbers of characters as

to identify the unique STB and/or the VC.
9. The finger printing should be possible on global as well as on the

individual STB basis.
10. The overt finger printing should be displayed by the distributor of

television channels without any alteration with regard to the time,
location, duration and frequency.
11. Scroll messaging should be only available in the lower part of the
screen.
12. The STB should have a provision that finger printing is never disabled.
(C) Set Top Box (STB):

1. All STBs should have a Conditional Access System.
2. The STB should be capable of decrypting the Conditional Access

messages inserted by the Head-end.

3. The STB should be capable of doing finger printing. The STB should
support both Entitlement Control Message (ECM) & Entitlement
Management Message (EMM) based fingerprinting.
4. The STB should be individually addressable from the Head-end.
5. The STB should be able to receive messages from the Head-end.
6. The messaging character length should be minimal 120 characters.
7. There should be provision for global messaging, group messaging and

the individual STB messaging.
8. The STB should have forced messaging capability including forced

finger printing display.
9. The STB must be compliant the applicable Bureau of Indian Standards.
10. The STBs should be addressable over the air to facilitate OTA software
upgrade.

ANNEXURE B
ECO SYSTEM ISSUES RELATED TO IMPLEMENTATION OF PROPOSED

MODEL
i. Present Scenario - Digital Systems Not In Place:
1. Broadcasters have observed multiple entries of STBs are done in name

of a particular LCO without subscriber details.
2. Pre-activated STBs are given to LCOs under single address without any
details.
3. In many cases pre-activated STBs issued to the LCOs/subscribers are

directly activated from the CAS and is not linked with the SMS.
4. MSOs install multiple CAS on the same feed at multiple locations & face
challenges in integrating the same with their SMS. The data capturing
gets compromised, huge backlogs are created which is a revenue loss
to broadcasters & ex-chequer.
5. DPOs install/change additional CAS & SMS without intimation to the

broadcasters.
6. DPOs do not disclose additional CAS installed so as to under-declare

their correct subscriber base.
7. Historical records of subscribers, packages, channels offered etc., are

not maintained by DPOs.
8. Most of cable head-ends are unable to generate subscriber reports as

per the Regulations. They are heavily dependent on SMS Vendors for
such support. The DPOs are not well versed with their own system,
thus, ascertaining the actual subscriber base of DPO along with
requisite details is a challenge.
9. EPG are poorly maintained, channels are not placed in applicable

genres on the EPG. At times, EPG does not even show the correct
channel listings.
10. Most of the times DPOs evade audits.
11. Subscriber reports are not provided to the broadcasters or such

subscriber reports are provided after a prolonged time. The subscriber
reports usually does not contain complete information, such as,
package wise, city-wise, state-wise and a-la-carte basis subscriber
base.

12. Further subscriber reports are prone to alterations / manipulations
from SMS data base, due to which subscriber base is under-declared.
13. In many instances MSOs deliberately change their SMS before an audit
is to be conducted, in order to under-declare their correct subscriber
base. Factually, the past data base in maintained under the old SMS
and the new SMS does not capture the old data. By changing SMS,
MSOs wriggle out of their Regulatory obligations in
furnishing/maintaining past records /data.
14. Transaction Logs are not maintained for each subscriber of such DPO.
ii. Contact Details Of DPOs/LCOs
1. There is no manner in which a subscriber can ascertain the

details/coordinates of the DPO/LCO in its area through which it can
obtain signals of the channels.
2. There is no consumer friendly method adopted by a distributor of TV

channels such as call centre, toll free number, dedicated e-mail, mobile
application, etc. by which a subscriber can request for obtaining signals
of channels.
iii. Availing Broadcasting Services of DPOs/LCOs and Terms &

Conditions, thereof
1. There is no standard format for Consumer Application Form devised by

a DPO for subscription of channels by subscribers. Resultantly, the
subscribers are ill informed about the channels contained in their
subscribed package, the T&C on which the STBs have been provided to
them, guarantee/warrantee for the STBs, price of channels, etc.
2. Conditions relating to return/surrender of the customer premise

equipment are not prescribed by the DPOs.
3. In most cases DPOs do not get a CAF executed by a customer.
4. Pre-activated STBs are provided to subscribers without getting the CAF

filled by the customer.
5. No set process is followed for supply and installation of CPE.
iv. Choice of Channels
1. Choice of channel to a subscriber will continue to be a myth. Most of

the MSOs/LCOs have still not introduced packaging on ground, hence

channels are made available to the subscribers on a lump-sum basis,
as in the analogue regime.
2. When a subscriber approaches a DPO for signals of channels, most

DPOs seldom informs the subscriber about the choices available to
them pertaining to subscription of channels.
3. Most DPOs do not offer channels on a-la-carte basis.
v. Billing
1. Neither invoices nor receipt of payments are being furnished to the

subscribers.
2. Itemised bills containing details of rental, charges towards package(s),

charges towards CPEs, etc. are not issued by DPOs to the subscribers.
3. As no itemized bills are provided to subscribers by LCO/MSO, the data

capturing from the ground (Customer details/ bouquet/ a-la-carte
channels subscribed) is lost. Majority of the operators do not have
updated customer details available with them and these do not reflect
in their SMS, thus broadcasters do not get correct picture of subscriber
base & what a-la-carte channels are subscribed by consumers.
vi. Customer Care / Call Centre & Complaint Redressal System
1. Most of the MSOs neither have a customer care call centre, nor do they
have any complaint redressal centre to handle customer complaints.
There is no time limit for redressal of complaints, hence, redressal of
complaints by nodal officers/appellate authorities is far from reality.
2. Majority MSOs dont even have their own websites and if they do, they
are either not updated or do not carry complete information. Hence,
consumers remain always uninformed.
3. There are no checks & balances between MSO & LCO in terms of
complaints received from the subscribers and their redressal
mechanism. No records are maintained & no periodic audits are being
held for the customer complaints by the any authority.
vii. Quality of Services:
1. Even if a subscriber calls directly to the MSO for the redressal of his
complaint, he is being directed back to the LCO who is unaccountable
for the service. Breakdown in service especially in cable, is a common
phenomenon and down-time affects revenue generation across all stake
holders.

2. No Nodal officers are available to check the existing QoS norms at
random consumer points on the ground.
3. No trained manpower is available with LCOs / MSOs. Majority of them

are semi- skilled.
viii. Discontinuation of Services
1. There is no procedure adopted by a DPO for disruption of TV services,

shifting of connections, disconnection of TV services, or any price
protection (reduction or refunds) to subscribers.
2. Due to non-implementation of inter-operability of STBs, consumers are

left with no choice but to continue with the same DPO/LCO despite
receiving continuous poor services.
**************************************

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RESPONSE OF ZEE ENTERTAINMENT ENTERPRISES LIMITED

DRAFT TELECOMMUNICATION (BROADCASTING & CABLE SERVICES)

ISSUED ON 10TH OCTOBER, 2016

DRAFT TELECOMMUNICATION (BROADCASTING AND CABLE

ISSUED ON 14TH OCTOBER, 2016

(ii) Viresh Dhaibar

2. SECTION I IGNORES MAJORITY FEEDBACK FOR 7

3. SECTION II DETRIMENTAL TO CONSUMER 13

4. SECTION III ADVERSE IMPACT ON BROADCASTERS 16

5. SECTION IV ISSUES PERTAINING TO OPERATIONS, 21

6. SECTION V ISSUES NOT ADDRESSED 26

7. SECTION VI SUMMARY RECOMMENDATIONS FROM 27

8. CONCLUSION - DE-GROWTH OF THE TELEVISION & 36

ZEEL RESPONSE TO TRAI Page 2 of 46

Zee Entertainment Enterprises Limited (ZEEL), welcomes the consultation

We appreciate the initiative of TRAIs attempt to evolve a new tariff structure

We have noted following salient features:

Broadcasters are mandated to offer all channels on a-la-carte

MRP has to be same across all platforms

MRP of a pay channel can be different in different Geographical areas

ZEEL RESPONSE TO TRAI Page 3 of 46

We would like to submit that we have carefully reviewed the consultation

POSITIVE INITIATIVES IN DRAFT TARIFF ORDER

Without prejudice to our submission that it is the Regulated RIO model

(1) Broadcasters prerogative to fix MRP

Pricing of content should always be decided by the broadcaster and

TRAI has taken the welcome step by enabling Broadcasters to prescribe

ZEEL RESPONSE TO TRAI Page 4 of 46

(2) No discrimination in pricing among various addressable platforms

Non-discriminatory pricing will enable platforms to have a level playing

(3) Pricing flexibility based on Geographical Area

TRAI has correctly observed that the popularity of different channels

In light of the above, we strongly recommend that the provisions made

(4) Forbearance on Premium channel pricing

Encouraging Premium channels will also encourage investments in the

ZEEL RESPONSE TO TRAI Page 5 of 46

(5) Introduction of Must carry provision

The consultation on Interconnect Regulations proposes must-carry

This is a welcome step aimed at removing the artificial entry barriers

However, as detailed in subsequent paragraphs the Must Carry

(6) Increased frequency of subscriber reporting 4 times a month

As correctly captured by the authority, this is aimed at preventing any

ZEEL RESPONSE TO TRAI Page 6 of 46

This will ensure conformity and proper reporting with respect to

(8) Introduction of regulation on carriage fee

Despite capacity not being a constraint in the digitized era, DPOs

While introduction of carriage fees is a very welcome move, we have

IGNORES MAJORITY FEEDBACK FOR REGULATED RIO

(1) Regulated RIO is the preferred choice of majority stakeholders

ZEEL RESPONSE TO TRAI Page 7 of 46

A perusal of various comments posted in response to the Consultation

Illustrative break-up of stakeholders responses supporting

Broadcasters DTH MSOs

Another important issue with the integrated distribution model is that

ZEEL RESPONSE TO TRAI Page 8 of 46

Unlike any other industry, Broadcasters generally do not have any

(2) Conflict/lack of harmonization with the provisions of The

(i) It is stated that the broadcasting organizations are covered by The

ZEEL RESPONSE TO TRAI Page 9 of 46