Cable TV monopoly under spotlight again as TRAI floats fresh consultation paper

The paper has been issued after the regulatory body received a reference from MIB to look at the issue from a fresh perspective considering the changes in the market

e4m by Javed Farooqui
Updated: Oct 26, 2021 8:55 AM  | 5 min read

The consultation paper has been issued after the regulatory body received a reference from MIB to look at the issue from a fresh perspective considering the changes in the market

The Telecom Regulatory Authority of India (TRAI) has issued a fresh consultation paper on the issue of market dominance and monopoly in the cable TV market. The regulator has issued the consultation paper after receiving a reference from the Ministry of Information and Broadcasting (MIB) to look at the issue from a fresh perspective considering the changes in the market.

In the consultation paper, the TRAI has sought stakeholders' views on whether there is a need to recommend cross-holding restrictions amongst various categories of distribution platform operators (DPOs)/ service providers. The regulator stated that there cannot be a common entity controlling a DTH operator and an MSO/HITS operator. However, MSO and HITS operators can have common control.

The authority had earlier recommended that any entity controlling a DPO or the DPO itself should not “control” any DPO of the other category. However, MSOs and HITS operators can have cross-holding/control amongst them, subject to market share restrictions, as specified from time to time.

TRAI had issued recommendations to the MIB on 'Market Structure/Competition in cable TV services' in 2013. However, the ministry didn't take any action on the recommendations for the last eight years. In February, the MIB had written to the then TRAI Secretary SK Gupta asking the regulator to provide a fresh set of recommendations while looking at the subsequent developments in the media & entertainment (M&E) sector.

The TV broadcasting sector encompasses 357 broadcasters as on 31st August 2021. Further, there are 1733 registered MSOs as on 1st September 2021, approximately 1,55,303 cable operators as on March 20217, 1 HITS operator, 4 pay DTH operators and few IPTV operators, in addition to the public service broadcaster –Doordarshan–providing a free-to-air DTH service in India.

According to TRAI, the level of competition in the MSOs’ business is not uniform across the country. Certain states (Delhi, Karnataka, Rajasthan, West Bengal, and Maharashtra) have many MSOs providing their services. Whereas in certain other states like Tamil Nadu, Punjab, Odisha, Kerala, Uttar Pradesh, and Andhra Pradesh, the cable-TV market is dominated by one or two MSOs.

The TRAI noted that the convergence of technologies, broadband, and telecom service providers are also providing alternatives to broadcasting services, thereby providing consumers another avenue/ option.

Because of the market structure and non-availability of multiple cable services in one area, MSOs may have control over certain areas and form a monopoly, TRAI said in the consultation paper. Further, it added that Telecom Service Providers (TSPs) can also acquire ownership of LCOs and may abuse the pre-existing dominant position in the market. In this scenario, there may be a need to review regulations/rules to oversee any distortion of the market by LCOs who have market power.

In the consultation paper, the TRAI noted that the MSOs faced serious competitive pressure due to discriminatory pricing and discounting strategies adapted by the broadcasters before the new tariff regime came into force. The regulator further stated that it was very hard for small and medium-sized MSOs to negotiate competitive deals with broadcasters.

The TRAI added that the new regulatory framework has, to a certain extent, curbed the tendency of MSOs to form monopolies or abuse their dominance by putting an end to the earlier practice of discriminatory pricing by broadcasters. “Such discriminatory pricing almost always worked to the disadvantage of small MSOs,” it pointed out.

On the issue of defining the target market, the authority wondered if the concept of pre-defined relevant geographic market only needs to be applied, or it has to be assessed on a case-to-case basis.

In terms of quantifying competition, the TRAI has sought opinions of the stakeholders on any other new/alternative tool of measurement of market concentration of an entity. In its earlier recommendations, the regulator had noted that Herfindahl-Hirschman Index (HHI) is commonly used for measuring the level of competition or market concentration in a relevant market.

There can be cases where a large Broadband/ Telecom Service Provider acquires MSO or multiple LCOs to gain access/ control over local distribution.

The regulator has sought views on the threshold value of market share, while noting that a large Broadband/ Telecom Service Provider may acquire an MSO or multiple LCOs to gain access/ control over local distribution. In its previous recommendation, the authority decided to restrict the building up of market share up to 50% for ensuring that a minimum of three MSOs of comparable size operate in a relevant market.

In case an MSO controls 50% market share in the relevant market, the TRAI has asked stakeholders to provide comments as to what measures/methodology should be adopted to regulate in order to bring the market share/HHI below the threshold level market share/HHI below the threshold level.

MIB in its back reference dated 19th February 2021 had mentioned that if an MSO controls 50% market share then it shall take remedial measures within 12 months from issue of guidelines to limit its control in MSOs/LCOs in such a way that HHI reduces to less than or equal to 2500 and asked TRAI to suggest modalities for implementing the same and its effects in respect of ownership.



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