To curb dominance of a single player in the cable sector, broadcasting regulator TRAI has recommended restrictions on the market share that a single Multi System Operator can hold.
As per recommendations made by the broadcasting sector regulator, rules should be amended to ensure that market share of Multi System Operators (MSOs) is restricted up to 50 per cent.
TRAI made the recommendations after I&B Ministry sought its advice saying that the cable TV distribution had been virtually monopolised by a single entity in some states.
In its recommendations, TRAI approved the Herfindahl-Hirschman Index (HHI) for measuring the level of competition or market concentration in a state.
The regulator said that to ensure that at least three MSOs of comparable size operate in a market, it would be desirable to restrict the building up of market share up to 50 per cent.
“The Authority recommends that the threshold value for any individual or ‘group’ entity contribution to the market HHI should be no more than 2,500,” TRAI said.
TRAI has also said that rules should be amended to ensure that any merger or acquisition involving MSOs or LCOs should require its prior approval of the regulator. The decision on any proposal, complete in all aspects, shall be conveyed within 90 working days, it said.
TRAI Chairman Rahul Khullar told reporters that virtual monopolisation of the market was not a pan-Indian problem but in certain states it had a serious dimension.
He said there were complaints that a particular channel was not shown if it did not toe a particular line. He said the issue was a complex one and involved a web of “power, money and politics”.
In its recommendations, TRAI said proposals of mergers and acquisitions of MSOs and LCOs shall be approved, provided that after the merger, market share of the entity does not exceed 50 per cent and certain other conditions.
“A time of 12 months is given to group(s), contributing more than 2,500 to market HHI of a relevant market, to limit its ‘control’ in various MSOs or LCOs in such a way that the contribution of market HHI of that ‘group’ reduces to less than or equal to 2500,” the TRAI recommended.
An official said that a single entity, if it is covering over 50 per cent of the market, it will not be allowed to merge with or acquire another MSO or LCO in that particular market.
TRAI has also said that if an entity controls many MSOs and LCOs simultaneously in a relevant market, these shall be treated as inter-connected entities.
TRAI said that it had been observed that certain markets like Delhi, Karnataka, Rajasthan, West Bengal and Maharashtra have a large number of MSOs while other markets like Tamil Nadu, Punjab, Odisha, Kerala, Uttar Pradesh and Andhra Pradesh are characterised by dominance of a single MSO.
It also noted that a case of denial of market access was brought to the notice of Competition Commission of India (CCI) in 2011, when a broadcaster alleged that a group of MSOs, controlled by the same entity, operating in Punjab had acquired substantial market share in cable TV distribution and denied market access to its channel.
It said Tamil Nadu government had incorporated Tamil Nadu Arasu Cable TV Corporation Ltd in September, 2011 and had been expanding by taking over Headends from private MSOs.
“Interestingly, channels of the SUN group, an integrated player providing both broadcasting and distribution services, were not available on the TACTV network for quite some time,” TRAI observed.