Broadcasters Opposed Channel Licence Auction As It May Increase Financial Burden

Channel Licence Auction

Stakeholders across the spectrum have vehemently opposed the auction of TV channel licence as it is technically not feasible and will lead to a bidding war for procuring licences which will increase the financial burden on TV broadcasters. Star India submitted that the successful broadcasting of TV Channels requires coordinated use of the up-linking Space Spectrum, Satellite Transponder Capacity and Downlinking Space Spectrum, which cannot be auctioned together as they are not controlled by the same entity or even the Central Government.

Opposed the auction

The introduction of an auction route for channels would necessarily require the auction of the spectrum bundled with the satellite transponder allocation, complexity of process would not justify the negligible revenue that may be anticipated from such auction. Leading the opposition charge is the broadcasting sector’s domestic industry body Indian Broadcasting Foundation (IBF). Decrying having similar regulatory approach of auction for radio and satellite TV broadcasting as “completely undesirable,” IBF said auctions would not only breach certain privileges granted under Fundamental Rights by the Indian Constitution but would also go against the ethos of international commitments made by India to organisations such as the ITU.

“Costs are likely to increase manifold [if the government went ahead with auctioning of satellite TV channels] because of lack of supply of ISRO launched geo-stationary satellites. This would squeeze out smaller operators resulting in artificial entry barriers. In fact, the auction of TV licenses will also have a cascading effect on larger corporations, which may also have to rationalise the number of channels that they run as the cost of operating all the channels will spiral, making the business unviable,” IBF highlighted the economic downside of the proposal in its response to a TRAI consultation paper exploring the feasibility—or the non-feasibility—of auction of satellite TV channels and other related issues. Weighing in with the IBF argument against auctioning of satellite TV channels, Star India, probably India’s biggest broadcasting company in terms of revenue, said successful broadcasting of channels required coordinated use of the uplinking space spectrum, satellite transponder capacity and downlinking space spectrum, which cannot be “auctioned together” as they are not controlled by the same entity or even the Indian government.

Many TV channels targeting India’s 183 million TV universe uplink to ITU-coordinated foreign satellites owing to Indian space agency ISRO’s inability to keep pace with the growing demand for satellite transponder capacity, apart from other commercial considerations. “The introduction of an auction route for channels would necessarily require the auction of the spectrum bundled with the satellite transponder allocation [and] complexity of [the] process would not justify the negligible revenue that may be anticipated [by the government/Ministry of Information and Broadcasting] from such auction,” Star India said in its submission to TRAI, adding to artificially limit a commodity, satellite spectrum that is not scarce, would be a “brazen attempt at maximising revenue” by the government that would ultimately harm the media and entertainment industry of the country.

Viacom18 noted that the operation of satellite broadcasting cannot be compared with the operations of FM radio channels as the spectrum for the latter is rare as against satellite spectrum which is in abundance. The broadcaster also argued that unlike FM radio, in TV broadcasting multiple channels can run of the same frequency. It also urged the government to launch more satellites to fulfil the needs of the broadcasting sector. Sony Pictures Networks India noted that the proposal for auctioning of satellite TV channels as a complete package by way of uplinking from Indian soil to Indian satellite and downlinking in India would be backsliding proposal resulting in economic losses due to the scarcity of satellite transponders and other factors. It also stated that the auction of individual legs of satellite television broadcasting i.e. uplinking space spectrum, satellite transponder capacity and downlinking space spectrum may not be technically feasible since uplink and downlink frequencies are tightly linked and require coordinated use for the successful broadcasting of satellite television channels.

ZEEL said that any attempt on the part of government to impose revenue based license fee on satellite TV channels and/or to earn revenue through auctioning of television/satellite spectrum would amount to curtailing/abridging the important right of Freedom of Speech and Expression as available to the TV channel Broadcasters under Article 19(1) (a) and would directly affect the economic viability of the TV channels. Direct to home (DTH) operator Bharti Telemedia submitted that auctioning a resource by restricting its supply, would not be a right approach as it would lead to increase in the costs incurred by operators, as they would be forced to bid aggressively.

Multi system operator (MSO) IndusInd Media and Communications Ltd (IMCL) said that there should not be an auction process. It further stated that the granting of license need to be a quick and easy process to discourage reselling of licenses. It also argued that it is not possible to auction uplink spectrum like in the case of FM where it is reusable as per the number of satellites available. A fixed spectrum fee is recommended which is already being paid to WPC. Siti Networks also argued that auction of satellite TV channel as a complete package should not be allowed. In case of satellite TV channels even there are different genre and auction of each genre across geographies will not only be a tedious process would derail the whole broadcasting sector, it added.

According to the Subhash Chandra family-controlled Zee, TRAI was “erroneously” attempting to treat broadcasters such as Zee, Star India, Sony, Viacom18, BBC and Discovery as entities subject to the Indian Telegraph Act “Under the uplinking and downlinking guidelines notified by MIB, an up-linking/downlinking ‘permission’ is granted to a TV channel by MIB and not any ‘licence’ [is given] as sought to be suggested by TRAI in the present CP [consultation paper]. Permission is granted under the executive instructions/guidelines notified by MIB and not under any statute. These executive instructions/guidelines do not have any statutory basis/source. Thus, any attempt to levy revenue-based licence fee on broadcasters on the premise that they are licence[s] under the Indian Telegraph Act would not only be fallacious, but also without any legal sanction,” Zee noted while punching legal holes in the government thinking.

While Sony Pictures Networks India opined imposition of additional fees for satellite spectrum usage and mandating use of Indian satellites would have “unforeseen outcomes” owing to “economic pressures,” Times Network said the auction model may be suitable for the digital terrestrial TV transmission (DTT) when introduced but not for satellite TV. Viacom18, operating over a dozen TV channels and also a studio business, felt that the operation of satellites for broadcasting cannot be compared with operations of FM radio channels simply because spectrum for the latter (radio FM) is limited and rare as against satellite spectrum that is in abundance and would continue to increase over a period of time with the increase in the number of satellites.

Comparatively, smaller broadcasters operating on tight budget and limited distribution budgets such as Odisha TV Network said it was “not in favour of auctions.” Global companies such as BBC Global News submitted that TV channels were inherently different from FM radio broadcasting and such a move could “adversely impact small broadcasters” like BBC as it would amount to an anti-competitive move favouring some big players. Channels like News24, too, echoed similar sentiments.

Distribution platform IMCL was of the opinion it was not possible to auction uplink spectrum “like in the case of FM [radio].” DTH player Dish TV added that “discrimination and/or restrictions in the licencing conditions” should be done away with and there should be no differentiation between usage of Indian and foreign satellites. Players should be given the right to choose as to what was best for their services, it added. Similar comments came from other DPOs like DEN.

Some other industry organisations such as Broadband India Forum and Hong Kong-headquartered CASBAA, too, stated that auctioning of satellite TV channels was not feasible. CASBAA, while supporting an open policy regarding satellite capacity usage for downlink and uplink, said restricting the use of foreign satellites just so an auction can be conducted would be a “most undesirable” outcome. “The Indian broadcasting sector has flourished in no small part because of the ample and competitive supply of satellite capacity–both foreign and domestic–made available for broadcasting purposes under the existing policy guidelines. Indeed, investments in foreign satellite capacity over India have contributed mightily to the growth in this sector to date. An attempt to restrict use of foreign satellites now would cause immeasurable harm to this currently ‘vibrant’ sector,” the Asian pay TV and satellite industry organisation said. Similar sentiments were expressed by other international organisations such as GVF, ASPCC and ESOA.

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