After cross-media ownership, regulator moves to act against dominant MSOs that block content selectively

Even as it contemplates restrictions on cross-media ownership to ensure ‘plurality of viewpoints,’ Telecom Regulatory Authority of India (TRAI) has initiated a process to tackle “unhealthy market dominance in distribution platforms of the broadcasting space.”

Last December, the Ministry of Information and Broadcasting asked TRAI whether “in order to ensure fair competition, improved quality of service, and equity,” restrictions ought to be imposed on Multi-System Operators (MSOs) and Local Cable Operators (LCOs). At present, there are no restrictions on MSOs and LCOs, either in operation or in market share.

According to data at the end of 2012, cable TV subscribers account for 9.4 crore of a total of 15.5 crore television households, while the rest are Direct-to-Home. There are approximately 6,000 MSOs and 60,000 cable operators. With digitisation, MSOs have become the key link in the distribution of free-to-air as well as pay channels.

This week, TRAI issued a consultation paper, which points to the dominance of a single MSO in certain markets like Tamil Nadu, Punjab, Orissa, Kerala, Uttar Pradesh and Punjab. In some cities, an MSO controls as much as 80 per cent of the digital television market.

Blocking content

TRAI found that MSOs have “misused their market power” to stymie the emergence of newer players. Large MSOs can secure content at lower prices and charge broadcasters a higher carriage and placement fee. They can then offer local cable operators a better revenue share to lure them from the smaller MSOs. MSOs have also sought to expand their influence and size, buying out smaller MSOs and cable operators.

The paper says that once an MSO has such dominance, they can make it difficult for broadcasters to have access to distribution networks. “Blocking content selectively can also become an obstacle to promoting plurality of viewpoints.” In 2011, the Competition Commission of India imposed a penalty on an MSO in Punjab for abusing its dominance to deny a broadcaster market access.

TRAI has invited suggestions on possible methods to measure market dominance; whether restrictions to reduce concentration ought to be based on geography or market share; whether it should be applied retrospectively and the time frame for existing distributors to abide by the restrictions; and the monitoring and disclosure arrangement.

The industry analysts see TRAI’s latest effort in conjunction with its efforts to restrict cross-media ownership. While some feel this is a way of exercising greater ‘state control’ and will stifle sectoral growth, others have reckoned that this is necessary and timely to check monopolistic practices and ‘vested political and corporate interests’ driving the industry.

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