2014: TRAI gave recommendations for cross-media ownership, DTH guidelines, Spectrum pricing

NEW DELHI :  It was a busy year for Telecom Regulatory Authority of India in 2014 giving its recommendations on crucial issues like cross-media ownership, DTH licensing guidelines and platform services channels besides pricing of Spectrum for the proposed auction in the 900 and 1,800 megahertz bands.    In its recommendations on content aggregators, TRAI disallowed bundling of channels from more than one broadcaster, causing a setback for distribution joint ventures (JVs) like MediaPro, MSM Discovery, Zee-Turner and IndiaCast UTV.    The recommendations came after TRAI was flooded with complaints about the content aggregators in doing content deals with distribution platforms particularly cable TV.    The most impacted by the TRAI recommendations were MediaPro, the JV between Star DEN and Zee Turner; the JV between IndiaCast, the content monetisation arm of TV18 and Disney UTV and Zee Turner.
Another major recommendation by TRAI was making vertical integration a possibility by allowing broadcasters to own distribution platforms.
This came with a caveat as TRAI recommended that broadcasters can own only one distribution platform either direct-to-home (DTH) or cable.
This recommendation of the TRAI came as a setback for media companies like Essel Group and Sun Group which have a presence in cable as well as DTH.
In order to guard a non-vertically distribution platform from discrimination, the authority has disallowed vertically integrated broadcasters to do fixed-fee deals. They can only do content deals based on charge per subscriber (CPS) basis. The vertically integrated will have to do CPS deals on non-discriminatory basis. However, the regulator has provided for a slab system which would accommodate distribution platforms of various sizes.
Recommendations related to ‘Issues related to Cross Media ownership’ was another major reform measure suggested by the TRAI.    In its recommendations on cross-media ownership, the authority suggested radical measures like restricting corporate entry in media, ban of private treaties, formation of news media regulator, ban on entry of government and religious bodies in media, and a news media regulator for television and print.    TRAI had also recommended that a media company which has a 32 per cent market share in both print and television will have to dilute its control in one of the two segments.    Its recommendations on platform services (PS), TRAI outlined the registration mechanism for PS and the content that can be offered. The authority allowed MSOs to run local ‘affairs’ cable channels without capping their foreign direct investment (FDI). It also capped the number of PS that a distribution platform can offer at 15 and 5 for addressable and non-addressable areas. The regulator asked the government to bring ground-based local cable channels under regulatory framework. These recommendations are awaiting government approval.
TRAI also released a set of recommendations for the next stage of growth of the FM Radio.
The recommendations included opening up space for more channel launches, extending the period of permission and fixing a cut-off date. The regulator recommended that the FM channels operating with channel spacing of 400 KHz should be radiated from effectively co-located sites and transmitted with equal power. It also recommended a relook into the issue of high reserve prices.    TRAI worked out a migration fee formula to solve the raising concerns of the radio broadcasters. The migration fee formula worked out by TRAI ensured that auctions should not be held under scarcity, thus determining a fair fee for the FM radio broadcasters.
TRAI also gave its recommendations on reserve price for the 2G Spectrum for the next round of auctions, expected in February next year.
In its recommendations, issued on October 14, the Telecom regulator recommended a hike of around 10 per cent in the price of 2G spectrum in the 1800 MHz band, in 20 circles, at Rs 2,138 crore per MHz, during the next round of auctions.
TRAI said a ten per cent increase in the reserve price had been recommended due to the increase in data usage by consumers.    The regulator has also recommended that the DoT take a fresh look at the proposed implementation of the extended GSM (E-GSM)s band.
TRAI has also suggested a price of Rs 3,004 crore per MHz for the 900 MHz band, in which the mobile signal covered is about twice that of the 1800 MHz band.
It also recommended that a dialogue be held between the Finance, IT and Defence ministries to ensure additional spectrum for commercial use.
“The Authority is also of the view that the auction should be carried out only after a clear roadmap is available for vacating spectrum in 2100 MHz band from Defence and in 900 MHz band from BSNL,” TRAI said.
In fact, TRAI recommended that the next round of auction should be conducted only when there is enough spectrum.    To make fresh spectrum available for mobile services, the Telecom Regulatory Authority of India had suggested that the Government should ask defence forces to vacate spectrum in the 2,100 MHz band. In addition, it had proposed that BSNL should be asked to surrender 1.2 MHz spectrum in the 900 MHz band.    TRAI highlighted that supply side issues will affect not only the proposed auction of spectrum arising from expiry of licences in 2015-16, but will also continue to have a negative impact on all subsequent auctions of spectrum becoming available from future expiry of licences.
It also warned against the dangers of going ahead with the forthcoming auction without resolving the spectrum constraints.    An internal committee of the Department of Telecom , however, rejected TRAI’s recommendation to conduct the next round of auction only when there is enough spectrum.
The committee has said that there is no visibility of when additional spectrum will be vacated by the defence and hence there is no point in stalling the sale of what’s already available.    It said that while the defence will take time to vacate spectrum, asking BSNL to surrender airwaves may have legal implications.
The committee said that the proposed auction scheduled for early next year should not be linked to the availability of fresh bands.
In a meeting to deliberate on the issue, the telecom commission (TC) asked the department of telecommunications (DoT) to re-examine its stand on not taking back 900 MHz band of spectrum from state-run Bharat Sanchar Nigam (BSNL), which expires in 2015-16.
The commission also asked DoT to submit recommendations on this issue in the next meeting. However, it has made it clear that any decision concerning BSNL’s 900 MHz will have no bearing on the forthcoming February 2015 auction. At least 184 MHz of 900 MHz band of spectrum has been put up for auction.    BSNL is considering seeking government grant in return for relinquishing a slice of the premium 900 MHz spectrum which the telecom regulator wants to free up for the next round of airwave auctions.
BSNL is willing to give up 900 MHz band of airwaves, but it wants the government to compensate it with nearly Rs 2,000-crore to meet additional capex and network re-engineering costs as a pre-condition to heeding the Telecom Regulatory Authority of India’s (Trai) call and relinquishing 1.2 MHz of efficient 900 MHz spectrum in some 18 circles (barring Punjab) where its licences expire in 2015-16.
The Telecom commission also asked DoT to examine Trai’s recommendation on liberal use of 800 MHz band of airwaves used by CDMA operators as an extended GSM (e-GSM) band.    The Telecom commission recommended a base price of R3,693 crore per MHz for 900 MHz frequency band, which is about 23 per cent more than Rs 3,004 crore per MHz proposed by TRAI.    Similarly, for 1800 MHz, the commission recommended Rs 2,191 crore against Rs 2,138 crore recommended by TRAI.    The commission has also finalised a base price of Rs 3,646 crore per MHz for CDMA band, nearly 17 per cent higher than Rs 3,104 crore suggested by TRAI.
The auction is to be conducted for airwaves in 900 MHz held by existing telecom operators Airtel, Vodafone, Idea Cellular and Reliance Communications through their licences that are expiring in 2015-16.
The base prices recommended now would be placed before telecom minister Ravi Shankar Prasad for final approval and then to the Cabinet for final approval.
(AGENCIES)

Follow our WhatsApp channel