Indian TV industry: In urgent need of rewiring

Guest Column: Citing facts from Koan Advisory's latest report, communication expert Farah Bookwala Vhora writes how regulatory burden is weighing down India’s Rs 79,000-cr broadcasting industry

e4m by Farah Bookwala Vhora
Updated: Aug 25, 2020 7:54 PM  | 10 min read

Few TV viewers have been able to stay away from the microscopic news investigation into the tragic death of 34-year-old actor Sushant Singh Rajput. My household is no exception. Monitoring day-to-day developments has become a regular feature in our house, only to end with the comment of how news channels have “sensationalised” the very unfortunate event. This triggers the question: Why is Indian TV driven by such sensationalism, propelled by unmasked voyeurism and profiteering? Despite its rich heritage, why is TV content in India – both fiction and non-fiction – so regressive and insipid today? The answer lies in how the industry has been regulated and its impact on the quality of content and service.

Overregulation and its unintended consequences

Titled 'Indian TV at crossroads', the latest report by Koan Advisory, which has been accessed exclusively by this writer, details how 16 years of economic overregulation and price controls by the TRAI has led to unintended consequences including the sector’s inability to play to market forces of demand and supply, excessive dependence on advertising revenues which has in turn driven formulaic, TRP-driven content, eroded the pay TV ecosystem, pushed up costs for TV subscribers, and rendered the sector unfit for fresh investments.

In 2004, the telecom regulator TRAI’s mandate was expanded to include the broadcasting sector, which back then, was informal and highly unorganised. At the time, consumers had little choice over what they watched or the quality of service they received. The TRAI’s mandate was to regulate the sector with an aim to provide greater choice, bring transparency and make TV services more affordable.

Today, after 16 years of sectoral regulation, the broadcasting industry has achieved digitisation but legacy problems continue to haunt the sector, argues the report. In the absence of a holistic sectoral policy, the Cable Television Network (Regulation) Act, 1995 (CTN Act) continues to serve as the statutory instrument to regulate the sector. The current regulatory framework is a cumbersome myriad of the onerous Act and out-dated rules and guidelines, all of which have been born out of court orders and directions designed to control and restrict economic activity.

“Technological improvement has not helped improve sectoral outcomes to the extent envisaged. Cable consumers still find it difficult to choose channels, opaque business practices persist and the cost of TV subscriptions for consumers increase after every regulatory amendment,” the report reads.

Let us take the case of the latest regulatory amendment. According to reports by EY, KPMG and industry sources, the implementation of the New Tariff Order (NTO) in March 2019 pushed up TV bills by an average 25%, causing 26 million pay TV subscribers to pull the plug on their TV sets, resulting in an estimated revenue loss of Rs 85 billion to the sector. Numerous media reports have highlighted how consumers have been frustrated at the complexity of choosing channels, paying more than they did earlier and the poor quality of content on offer, prompting many to migrate to OTT platforms.

While TRAI’s mandate is to regulate three aspects: tariffs, quality of services (QoS) provided to consumers and interconnection between broadcasters and distributors, it has focussed heavily on regulating prices. Since 2004, tariff orders have been issued and amended 36 times, while only 21 interconnection regulations and 13 QoS regulations have been implemented.

“In fact, we can trace every problematic outcome in the sector to a common cause: price regulation, which has created a dissonance between business interest and consumer interest. Ideally, regulated prices should motivate businesses to act in a manner that improves consumer welfare or leads to other socially desirable outcomes. However, price regulation in the TV sector has distorted incentives to invest in quality upgradation for both broadcasters and DPOs,” says the report.

An example is the price ceiling on channels for inclusion in bouquets. The NTO set a price cap of Rs 19 on channels that want to be part of a bouquet. This cap was subsequently lowered to Rs.12 under the amendments to the NTO introduced in January. This price control mechanism is aimed at disincentivizing the formation of bouquets by broadcasters by lowering their revenue potential.

Such restrictions on the pricing and bundling of TV channels have led to subscription revenues being curtailed, which in turn has increased the dependence of broadcasters on advertising revenues, explains Shivangi Mittal, associate, Koan Advisory who co-authored the report with legal analyst Varun Ramdas. In 2019, 68% of broadcaster revenues came from advertising alone.

“As a result, formula-driven, sensationalised, compromised content dominates Indian TV channels,” says Mittal.

What must be noted is that price regulations levied on the broadcasting sector are unique to India. “India is perhaps the only country in the world where broadcasting or content creators are regulated to achieve economic objectives. Most democracies restrict regulation to the bare minimum, required to (i) engender competition among content distributors and (ii) to prevent discriminatory business practices in the commercial relationships between content creators and distributors,” reads the report.

“These restrictions are exceptional even in the Indian context, where only markets for utilities or essential commodities are regulated, and broadcasting has not been classified as either,” says Ramdas, pointing to the fact that the OECD Services Trade Restrictiveness Index has ranked India’s regulatory transparency in broadcasting as the worst among 11 developing countries.

Ineffectual regulation has also resulted in the sector being trapped in a vicious cycle of drafting regulations, litigating upon them and amending them, says the report. Of the 70 regulations issued since 2004, more than 70% of QoS Regulations and Tariff Orders and 13 out of 21 Interconnection Regulations were challenged in tribunals and courts, it highlights.

The irregular playing field caused by such regulation has also led to conflict among industry stakeholders. Disputes in the broadcasting sector have consistently outnumbered telecom disputes and litigation has increased since 2004. Every time major regulatory interventions took place, as in 2004, 2011 and 2017, cases spiked. “Ineffective regulation thus merits a closer inspection of interventions and their impact,” says the report.

Improving regulatory design alone, however, is not enough. There is a larger issue that impedes the broadcasting sector – one of lack of “institutional specialisation”. Unlike most broadcasting regulators around the world, TRAI does not address copyright issues, directly or indirectly. This is an anomaly as economic principles governing a creative sector such as broadcasting must be intertwined with Copyright laws that ensure protection of content creators and balance incentives for production and distribution.

There is also no requirement for copyright expertise in appointments to TRAI or the TDSAT, which was set up as an independent adjudicatory body following an amendment to the TRAI Act in 2000. In addition, there is no provision to harmonize copyright laws with broadcasting laws in India. “In the absence of such expertise, the regulator’s approach is largely prescriptive and stands at odds to the enabling, facilitatory approach urgently required by the sector,” says Ramdas.

Such prescriptive regulation aims at prescribing market outcomes instead of guiding the market towards those outcomes, states the report. For example, the TRAI has prescribed TV channel prices instead of addressing broadcaster’s dependence on ad revenues. Similarly, rather than foster competition among cable operators, the regulator has prescribed detailed Quality of Service (QoS) standards, which are not effectively enforced.

Holistic, Targetted Reforms: Need of the hour

The report recommends a three-tier reform mechanism that aims at deregulating the TV sector and prioritizing improvement in quality of service and content on an immediate basis.

The first step it recommends is the development of a holistic policy document that details the objectives and roadmap for the next 10-15 years for the broadcasting sector. To be sure, the MIB began the stakeholder consultation process for the development of the National Broadcast Policy (NBP) in 2019 but little is known on where the process has reached.

“A (sectoral) policy can bring cohesion to the efforts of various agencies (that regulate the sector). It could additionally seek to reorient regulatory approach towards consumer welfare, by outlining a roadmap towards sectoral development. It could accelerate a phased implementation of new and efficient technologies; efforts towards enhancing sectoral hygiene and transparency, and towards levelling the playing field between different infrastructure operators. Above all, it could provide impetus to quality content and QoS. The stability and certainty offered by a unifying policy has generated investments in other sectors like telecom and is sure to do so for broadcasting,” recommends the report.

The second step recommended by the report is to create a modern legal framework that separates the regulation of content (broadcast production) from carriage (broadcast distribution). The new framework should remove the multiplicity of regulations that govern different distribution platforms such as DTH, IPTV and HITs and instead brings the licensing and regulation of all distribution platforms under a unified, light-touch framework. It should also be harmonised with the Copyright Act, 1957, to ensure that the application of the Copyright Act is not barred by provisions of the CTN Act or Rules in anyway, which is currently the case.

The report presents two alternatives that may be considered: One, the CTN Act should be amended to address quality of content concerns (production) and quality of service (distribution) concerns separately. Or the CTN Act should be replaced by a new sector-specific legislation that regulates all aspects of the sector. In both cases, the role of TRAI in broadcasting regulation would be restricted. As recognised by the MIB too, the sector requires an independent, dedicated regulator as envisaged by the Broadcasting Bill, 1997 and the Broadcasting Services Regulation Bill, 2007.

The report also places sufficient thrust on the need to improve quality of service and content. “If global best practices of separating carriage regulation from content regulation are followed, they can reverse TRAI’s missteps. Continual sectoral development calls for an approach that nudges broadcasters to generate better content and prods service providers to improve QoS,” it says.

Given that TRAI has not succeeded in enforcing quality at the last-mile level or regulate on copyright issues, the report recommends that the MIB create an audit body to monitor implementation of QoS and interconnection regulations at the last-mile. Alternatively, a co-regulatory or self-regulatory body formed by industry participants, can maintain oversight. Both these options can be exercised in the event the existing CTN Act is retained. If the CTN Act is replaced by a sector-specific legislation, then an autonomous body set up within the aegis of that legislation should audit and enforce last-mile regulation too, says the report.

The report may have laid out the holistic reform methodology that can get the sector out of the woods and on to the path of growth again. What will matter most, however, will be the government’s intention and commitment to help the sector choose the right path at the crossroads.

(The author, Farah Bookwala Vhora, is a communication expert.)

Disclaimer: The views expressed here are solely those of the author and do not in any way represent the views of

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