Concerns On TRAI New Tariff Order (NTO)

Concerns On TRAI New Tariff Order (NTO)

1. This refers to a writeup by Gargi Sarkar on post New Tariff era, LCO concerns and OTT.

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2. Cable TV Networks Regulation Act 1995 was amended in 2011 mandating addressability (a facility to enable or disable viewing of encrypted content selectively and remotely from the Headend) apparently to empower the subscriber by way of exercising choice on what to watch and pay only for what is selected when presented an itemized bill. This amendment was popularly known as DAS (Digital Addressable System).

3. This provision was applicable to DPOs (Distribution Platform Operators), i.e. Cable TV service providers (comprising of HSP and Cable Operator together), HITS in the ground based distribution of content like CATV and DTH (Direct to Home) operators (operating without an intermediary like a cable operator).

4. DAS implementation was supervised by Ministry of Information and Broadcasting (MIB) and TRAI (Telecom Regulatory Authority of India). It involved :-

(a) Registration of HSP with the MIB to install and operate a DAS Headend, involving content turnaround, encoding, encryption, multiplexing, subscription authorization management messaging, modulation, combining, equalization and level correction and driving the distribution platform. HSP’s technical activities cease at the exit of the headend from whereupon the aggregated transport stream, for CATV, uses HFC (Hybrid Fibre Coaxial Cable) wireline medium to terminate into the STB (Set Top Box) in the subscriber premises. The network capacity, connoting number of video programs aggregated in the transport stream enveloped in 106 RF channels(7 or 8 MHz wide in frequency band 47-862 MHz) in use in CATV networks.

(b) Registration of CO (Cable Operator) with Deptt of Posts for installation and operation of wireline network to receive the transport stream from the HSP in proximity of their area of operation and drop the same into the Subscriber premises. Cable Operators were not expected to make any changes whatsoever in the transport stream from the Headend.

5. In the implementation, it was assumed that all rules, regulations and notifications promulgated would be read by all entities in the chain and faithfully implemented. It was not realised that the more  literate entities were only Broadcasters, National level HSPs, HITS & DTH operators. Those in governance, when addressing Cable Operators seem to think that every Cable Operator also operates a headend,  whereas the service has two  entities i.e. HSP and CO in DPO. COs have comparitively lower level of literacy, technical knowledge and documentary management. Yet they are in the immediate contact with subscribers for providing service, awareness generation and adherence to rules and regulations.

6. On the ground, content was to be provided through an ICO (Inter Connect Offer) i.e. a B2B agreement between Broadcaster and HSP to incorporate rates chargeable from subscribers, i.e. MRP (Maximum Retail Price). Out of this MRP, the HSPs were to pay 80% to the Broadcasters and 20% was to be shared between HSP and CO through an ICO i.e. B2B agreement between HSP and CO. Each STB was to be reckoned as a subscriber in the DAS for billing.

7. In addition, HSP was expected to promulgate content and service charges  through a rate card to be presented to the Subscriber to select the programs and apply for the same through  Subscriber Application Form (SAF), also a B2C agreement between HSP and Subscriber. This form was to be got submitted to the HSP to create Subscriber ID, allocate a particular STB (identified by unique serial number), programmed to enable  viewing of program choice in the SAF initially which could be altered later through customer care desks to be established by HSP.

8. All this did not happen. HSPs issued STBs in bulk to Cable Operators without programming and pairing. COs installed these in subscriber premises. Subscribers paid the price for STBs without any receipts and transfer of lien on ownership.

9. Cable Operators fire-walled DAS implementation, as intended in the statute , without enabling and assisting, operation of SMS (Subscriber Management System) in the headend to generate itemized billing. Thus DAS only benefitted enhancement of program volumes through compression from 106 to 1000 or more depending upon compression ratio and QAM ( 64,128 or 256). The STBs functioned only as D2A (Digital to Analog) converters. Extra STBs where provided in subscriber premises were not treated individually for billing. Cable Operators also evolved a fixed monthly charge (basis not known) collected from Subscriber without any bill or receipt. A portion of this was remitted to HSPs, who when unable to bill subscribers through SMS, billed Cable Operators for the amounts being received by them, contrary to Cable Act and rules wherein no provision exists for HSPs to bill Cable Operators. Thus COs habituated subscribers to receive several programs through their STBs, without discriminating between PAY and FTV (Free to Viewer) programs whether in ‘a-la-carte’ or bouquet modes.

10. Cable Operators (CO), disturbed over New Tariff order (NTO) by TRAI, resulting in higher payment demand from subscribers got habituated to watching all content(without understanding difference between PAY and FREE to WATCH types) wirecasted from Headend against a fixed monthly subscription, since required to charge more from them, passed the blame for subscriber ire upon TRAI. They did NOT tell the subscribers that earlier practice adopted by them was contrary to the Act, Rules and Regulations, now being enforced.

10. In the mean time, MIB stated in the parliament that DAS implementation was complete and hence  video  content delivery millions of subscribers had been digitized with transparency in connectivity for Broadcasters and Revenue Authorities. But the tax plough did not rise by the reported completion proportion.

11. Content delivery, in Cable TV DPO, therefore, involved a headend program capacity installation (number of programs) integrated into an aggregated program transport stream and its transmission over HFC, partly erected by HSP and partly by CO, in their area of operation. This led to the concept of levy of NCF (Network Capacity Fee) by TRAI in the NTO.

12. The new entrant, in billing, was NCF (Network Capacity Fee) to be paid by the subscriber based upon number of programs selected for viewing during the billing cycle at a first basic rate of 100 programs (numbers) in SD format providing that any HD program choice will be equated as equivalent to two SD programs in the count. Number of programs, in excess of 100, were to be charged ate separately prescribed rate. In the NCF, number of programs is to be charged and not group i.e. if bouquet is selected containing 9 programs, the count will be 9 and not one; and so on.

12. TRAI, apparently, was under an impression that Cable Operators were forcing subscribers to contribute to all programs. They, perhaps, did not realise that all programs were visible because STBs had not been programmed to enable fewer programs.

13. Further, it was felt that no subscriber watches more than 20 – 25 PAY content and 50 FTVs in a day. Hence NTO catered for 100 programs in mandatory NCF.

14. This NCF became a windfall for DTH, because they were operating without a network like CATV.

15. The New Tariff Order (NTO) envisages implementation of DAS as legislated, empowering subscribers to select what they want to watch and be billed as under :-

(a) NCF

(b) STB provisioning(outright sale, leasing or hire-purchase), if any.

(c) PAY content charges; a-la-carte and bouquets separately.

(d) Other charges if any.

(e) CGST

(f) SGST

(g) Total payable by a date.

16. Cable Operators in immediate contact with subscribers, (since Broadcasters and HSPs are not in contact with subscribers) had not conveyed to the subscribers that in their practice DAS, as legislated, had been violated. Subscribers, under NTO now, if watching all 300 to 400 programs, would have to pay more. Hence subscribers are airing wrongful grievance against NTO. They need to be appraised of the violation of statute to understand why the bills for watching all programs will escalate.

17. Hence:-

(a) NTO is not implemented as intended. Due to lack of appraisal about factual position at subscriber level, it is viewed as derogatory.

(b) Subscribers will have to pay more if they watch all programs arriving at their TV set as before, unless they get their STBs programmed for lower number of programs through the Cable Operators.

(c) Transparency in connectivity is not visible because SMS is not functioning sincerely and faithfully as yet.

(d) The conflict prevailing between Cable Operators and HSPs over subscription sharing percentages has nothing to do with the spirit of the NTO. It is a matter of mutual settlement between the two provided it is recorded in the ICO. It is provided that in case agreement cannot be reached, a percentage has been suggested by the TRAI for adoption.

(e) NCF, as an entity in the service, in CATV, refers to a Distribution Platform operation comprising of HSP and CO, as partners, By business principles, sharing percentage has to be in proportion of investments in the headend by HSP and in network partly (over 70% in wireline running to Cable Operators proximity) and Cable Operator in terms of hardware deployed in their area of wireline network operation. Depending upon number of COs drawing content from headend (varying from 20 to 100) the aggregated value of investments could compute the share. The element of cost of  personalized service could be added to the appropriation for Cable Operators. Demand of 100% NCF to COs does not seem justified.

(f) Regarding pricing of PAY content, Its basis has not been revealed to MIB or TRAI till date. TRAI cannot question the price demanded by Broadcasters or intervene in the matter. Regarding 80:20 sharing percentage between Broadcaster and HSP, Cable Operators are not a party to the B2B ICO between them. HSPs and Cable Operators form a part of B2B ICO between them. That share is to be arrived at by mutual agreement and recorded in the ICO.

(g) Regarding ownership of STB, it must be realised that Cable Operators charged a one time price to supply the STB to the subscriber without a bill or receipt rendering credibility to the transaction for consideration of lien. If the plea of that amount being ‘activation charges’ by HSPs, as contended by Cable Operators is accepted, where is the custodial agreement for the box with the subscriber. In present state, it is subscriber who appears aggrieved.

(h) So far, Cable Operators operating a uni-directional, multi-program, multi-channel(RF) video delivery system, had virtual monopoly in residential wireline video networking with very high penetration. With technological advances and DIGITAL INDIA mindset, TELCOs are venturing into this segment where they had presence in wireline networking without video. They now want to layer Broadband on to their services and also provide video. With wi-fi, they can provide access to subscribers to watch video on various other devices in their own time, place and device. OTT, too, is possible as part of Internet delivery but will mostly be time deferred (not real time) to be billed as volume of data. That will apply for viewing FTA as well as PAY content over OTT.  Such OTT, through internet service provider under license from DoT, does not fall under MIB.

(i) Cable Operators need to upgrade to bi-directionality to provide 3Play on their networks with HSPs integrating broadband. If this is not done and TELCOs continue with FTTH, subscriber may opt for better organized service provider and resort to ‘cord cutting’ like in US.

Some More Aspects On CATV Distribution Platforms

Cable Operators (CO), disturbed over New Tariff order(NTO) by TRAI, resulting in higher payment demand from subscribers got habituated to watching all content(without understanding difference between PAY and FREE to WATCH types) wirecasted from Headend against a fixed monthly subscription, since required to charge more from them, passed the blame for subscriber ire upon TRAI. They did not tell the subscribers that earlier practice adopted by them was contrary to the Act, Rules and Regulations, now being enforced.

In frustration they reacted demanding :-

(a) Share in advertising income of PAY broadcasters because part of subscription collected by COs was being remitted to  them by the HSP. They seemed to overlook basic implication in business that contribution is shared in proportion of investments by partners. DPOs are in no way involved in seeking advertisements for Broadcasters. The format for TV content broadcasting in India is 7.5 minutes of inserted advertisements in every 30 minutes of content display slot. DPOs, unless so agreed in the ICOs, cannot rip the advertisements from the content ( some Cable Operators contend that subscriber pays for content and not for advertisement which should hence be got removed ).

(b) Demanding payment by broadcasters to use CATV networks erected by them, not realising that subscriber was levied NCF for this facility under new NTO to be reflected in the itemized bill.

(c) Share in Carriage and Placement fee charged by HSPs from Broadcasters. It may be noted that Cable Act does not provide for (i) charging carriage and placement fee, (ii) bundling of programs (since only ‘a-la-carte was envisaged, (iii) billing of Cable Operators by HSPs rather than Subscribers where in upon acceptance of such practices and legalising them through regulations may not be maintainable unless Act itself is got amended.
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Writer: Lt. Col. (Retired) Vinod Chandra Khare

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