Don't want broadcaster-driven audit: DPOs, DTH players tell TRAI

DPOs and DTH operators have urged TRAI that if a broadcaster is unsatisfied with the annual audit conducted by DPOs, any subsequent audit should be carried out exclusively by TRAI-empanelled auditors, not by the broadcasters themselves.

The cable industry has called on the Telecom Regulatory Authority of India (TRAI) to take action against distribution platform operators (DPOs) that fail to conduct their audits in accordance with regulations. However, they argue that broadcasters should also share in this responsibility. They propose that broadcasters supplying signals to non-compliant DPOs should face penalties of up to Rs 10 lakh.

The DPOs said so while responding to TRAI on its consultation paper on audit-related provisions of the Interconnection Regulations, 2017, and the Digital Addressable Systems Audit Manual.

The authority had asked stakeholders about keeping or removing Clause 15(1) of the Interconnection Regulation 2017 which pertains to the audit requirements for Distribution Platform Operators (DPOs).

It mandates that DPOs conduct an annual audit of their systems by TRAI empanelled auditors. The goal of this provision is to ensure transparency and accountability in the operations of DPOs, allowing for oversight and compliance with regulatory standards.

DPOs and DTH operators asserted that Clause 15(1) of the Interconnection Regulation 2017 is well balanced and must be retained.

They said that broadcasters should be restricted from challenging completed audits by TRAI empanelled auditors without valid justification and further, ensuring that disputes are resolved without disrupting services.

Dish TV

DISH TV stated that clause 15(1) of the Interconnection Regulation is “finely balanced” and serves the interests of both broadcasters and DPOs.

The company emphasized that the Ministry of Information and Broadcasting (MIB) has previously taken action against non-compliant DPOs, reinforcing the need for audits to continue if they wish to operate.

Regarding the exemption of small DPOs from annual audits under Regulation 15(1), Dish TV argued that regulatory provisions should apply equally to all operators, without differentiation. The objective of the new regulatory regime is to ensure parity and non-discrimination among similarly placed DPOs, and selective application of audit compliance would undermine this goal. Dish TV insisted that both large and small operators should adhere to the same audit requirements.

The company also opposed the proposal to shorten the audit period from 12 months to 9 months, which would allow broadcasters only 3 months to complete their audits in cases of unsatisfactory reports. Dish TV argued that if broadcasters are dissatisfied, a fresh audit should be conducted solely by TRAI-empanelled auditors. The current annual audits by these auditors already ensure transparency, and allowing multiple broadcasters to initiate further audits could lead to confusion and inefficiency.

Dish TV called for a provision mandating that if one broadcaster initiates a subsequent audit after receiving an audit report, no other broadcaster should be allowed to do the same in that calendar year. This would help maintain order in the auditing process.

Furthermore, Dish TV highlighted the need for a level playing field among all operators in both licensing and regulatory frameworks. The company pointed out that DTH operators have invested significant amounts in license fees, while other operators have not faced equivalent financial burdens. They expressed gratitude to TRAI for its recommendations on licensing and policy matters for DTH services, hoping these would be translated into MIB regulations.

In its submission to TRAI, Dish TV noted the numerous challenges DTH operators currently face, particularly from competing distribution platforms like DD Direct and Over-The-Top (OTT) services. They criticized the lack of a regulatory mechanism to address the direct distribution of content by broadcasters to subscribers, which poses a threat to the survival of traditional distribution platforms.

Overall, Dish TV's stance underscores its commitment to fair regulatory practices that support both DPOs and broadcasters while addressing the challenges posed by emerging competition from OTT platforms.

All India Digital Cable Federation (AIDCF)

The body told TRAI that cable TV industry is on the verge of extinction and is fighting for its survival, as it is currently facing several regulatory challenges, including issues related to un-regulated Free Dish services and Over-The-Top (OTT) applications, which requires urgent attention to ensure a fair and transparent regulatory level playing field.

“Addressing these issues on priority is the most essential requirement of today’s time, if the Cable TV Industry needs to be saved from being annihilated. “We, therefore, would request Honourable Authority to kindly look into the current issues of the Cable TV Industry like equal regulatory framework for Free dish and OTT applications, forbearance in the tariff regulations, which needs to be taken on priority to save Cable TV Industry from annihilation,” it said.

Highlighting that the Cable TV industry (including MSOs and LCOs) have already lost around 50% of its subscriber base in last 5 years and nearly 3 lakh people have become unemployed, AIDCF said that the 10 lakh people presently employed, will go jobless in next 3-5 years, if the current regulatory imbalance regarding Free Dish and OTT applications is not resolved at the earliest.

On the issue of Clause 15 (1), AIDCF said that despite regulation 15(1) being mandated to all the DPOs, the Authority has not elaborated on what steps it has taken for compliance in the last five years and whether they were effective or not.

It emphasized that there is no flaw in Regulation 15 (1) and it should definitely be retained “as it is”.

“However, the efficacy & intention behind its implementation needs to be reviewed in a serious manner, which will help in ensuring its compliance,” it said.

It also requested TRAI to share the list of DPOs who have not complied with Regulation 15(1).

“Also, it shall be mandated to the Broadcasters, to not to provide signals to those DPOs, who are not declared non-complied with Regulation 15 (1) by Authority and the same shall be strictly adhered to.

“Moreover, if any broadcaster is found providing signals to DPOs, who are non-complied, then the broadcasters should be held responsible for non-compliance of the audit. We have not come across a single instance, wherein Broadcasters under Regulation 15(2) have disconnected the TV signals of the DPOs who have not complied with Regulation 15(1),” it said.

“The financial disincentive (up to Rs. 10 lakhs) should also be imposed on the Broadcasters, if they are found providing signals to the non-compliant DPOs, as they should be considered as promoting noncompliance of TRAI Regulations,” it said.

Tata Play

The DTH player told TRAI that Regulation 15 (1) should be retained in its present form to the effect that the DPOs cause yearly audits of their SMS, CAS and other related systems in compliance with the Interconnection Regulations.

Just like other DTH players, Tata Play too opposed the proposal of broadcasters conducting further audits in case of any issue.

“TRAI is the regulatory authority for DPOs and hence, only TRAI mandated audits as provided in Regulation 15 (1) should be conducted. Broadcasters should not be given the right to audit DPOs.

“The provision for broadcaster-initiated audit on DPOs should be deleted because through the year the Broadcasters do not object to the reports submitted to them, however, towards the end of the year, when there is no concurrence on commercial terms, they bring up the need to audit, with obtuse questions to victimise the DPOs with their threat,” it said.

It further said that this “unbound power” given to the broadcasters needs to be removed to bring a balance in the ecosystem. 

“TRAI mandated audit is done by empanelled auditors. This should bring finality. Broadcaster audit is not at all required. If the audit has been conducted once in a calendar year, then a Broadcaster audit only causes pressure on resources and finances of the DPO despite TRAI and Audit requirements being adhered to by the DPO,” it said.

It also called for removal of the provision for financial penalties of upto Rs 2 lakh on DPOs under Regulation 15 (1A).

“DPO businesses are already suffering due to the regulatory landscape being tilted towards the OTT platforms and broadcasters. DTH platforms are under extreme financial stress due to the exorbitant License Fee being charged where no concession is allowed despite several valid representations being made to the government.

“Despite providing the same service of delivering content to end consumers, DTH platforms are the only entity that is burdened with License Fee,” it said.

It also asserted that small DPOs should be liable for compliance in the same manner as other DPOs since the TRAI regulations cannot be made selectively applicable.

The TRAI should publish a report stating each year how many DPOs performed yearly audits along with audit firms’ names. This would bring about transparency in the process, it said.

Bharati Telemedia Ltd (Airtel)

It said that Regulation 15(1) mandates an annual audit of DPOs by TRAI-empanelled auditors for maintaining compliance and accuracy in reporting.

Under the present regulation, audits can be caused by two means i.e., an annual audit by DPOs [Regulation 15(1)], or alternatively, by the broadcasters if they are not satisfied with the audit reports [Regulation 15(2)].

“In our opinion, there is no rationale for giving two options for audits. They only add cost to compliance and allow broadcasters to seek additional audits over and above the regulator’s own defined audit process.

“Note that DPOs are regulated under the TRAI Act and comply with its audit requirements in accordance with the regulations issued by the TRAI from time to time, and there is no justification to give a similar parallel power to broadcasters who are an equal partner in the bus

To ease the cost of compliance, it is recommended that financial disincentives for non-compliance should not be increased, it said.

“To support the growth of the sector, given that any change in RIO with respect to pricing of channels by broadcasters affects the whole ecosystem including DPOs and their customers, TRAI should fix a minimum validity period for the agreement between a DPO and Broadcaster and discourage broadcasters from making frequent changes,” it said.