To streamline the cable TV sector, the Telecom Regulatory Authority of India (TRAI) has recommended restrictions on the multi-system operators (MSOs) on the issue of market share to check them from dominating the market. The regulator has said the MSOs should not be allowed to hold over 50 per cent market share.
The TRAI said to ensure that at least three MSOs of comparable size operated 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 Herfindahl–Hirschman Index (HHI) should be no more than 2,500,” the regulator said.
The TRAI has made this suggestion to the Information and Broadcasting Ministry as in some States cable TV distribution was virtually monopolised by single players. The TRAI has also approved the HHI for measuring the level of competition or market concentration in a State.
The regulator has also stated that rules should be amended to ensure that any merger or acquisition involving the MSOs or Local Cable Operators (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.
Noting that virtual monopolisation of the market was not a pan-Indian problem, TRAI Chairman Rahul Khullar said in certain States it attained a serious dimension. “There are complaints that a particular channel was not shown if it did not toe a particular line….The issue was a complex one and involved a web of power, money and politics,” he told journalists.
The TRAI recommendations say that proposals of mergers and acquisitions of the MSOs and the LCOs shall be approved, provided that after the merger, market share of the entity did 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,” it added.
Recommends restrictions on MSOs on market share issue