Industry leaders call for strengthening TRAI’s audit regulations amid infra sharing talks

In an open house discussion on TRAI’s consultation paper regarding the audit provisions of the Telecommunication (Broadcasting and Cable) Services Interconnection Regulations, key stakeholders voiced strong opinions on the future of audit processes and infrastructure sharing.

Amid ongoing concerns over delayed audits and incomplete reports from Digital Platform Operators (DPOs), there was a consensus on the need for reforms that could balance compliance and the evolving dynamics of the broadcasting sector.

A key issue under consideration is Clause 15(1) of the Interconnection Regulations, 2017, which pertains to the audit requirements for Distribution Platform Operators (DPOs). According to this provision, DPOs must conduct an annual audit of their systems, with the audits being performed by TRAI-empanelled auditors.

Radhakrishnan Nair, Secretary of the Indian Broadcasting and Digital Foundation (IBDF), underscored the importance of stringent audit mechanisms to ensure transparency and accuracy in subscriber data reporting.

Nair raised concerns about incomplete or delayed audits by DPOs, which he argued significantly impact revenue generation and system integrity.

The discussion also touched on the potential risks of infrastructure sharing, with Nair warning that sharing critical systems could compromise content security and lead to financial losses. While other stakeholders like Ajay Singh of Hathway Digital supported the current audit structure, arguing that it has reduced legal disputes, all parties agreed on the necessity of ensuring consistent regulatory standards across the sector.

“DPOs often fail to conduct audits, submit incomplete or inaccurate reports, or delay the process, hindering broadcasters' ability to verify subscriber numbers and the integrity of the system used. This lack of transparency negatively impacts broadcasters' revenue as well as the public sector. To address this, broadcasters should have the primary right to audit DPOs,” Nair said during the OHD being held virtually, adding that this will ensure timely and accurate verification of subscriber numbers, data, and system integrity.

“This would also relieve small DPOs of the financial burden of conducting audits,” he said.

Opposing this, Ajay Singh, non-executive director of Hathway Digital Ltd said clause 15(1) of Interconnection Regulation is working “very fine” and must be “retained.”

“There were a lot of issues between the broadcaster and the DPOs relating to this audit which always went to the courts. If you look at the number of cases that have come down after 15.1 came into existence, it is for all to see that there are very rare cases which go to TDSAT these days about the misinterpretation of fact in the audit reports. As far as the contention that the DPOs do not conduct their audit.

“So, a very simple question to all the broadcasters here, then why do they provide signals to them? Please do not provide signals to those DPOs because the law is very clear that you need to do an audit and if they are not doing it, please do not provide signals to them. So, as far as 15.1 is concerned, sir, it is working very fine. That has to be retained,” Singh said.

The OHD was attended by TRAI Chairman A K Lahoti; Principal Advisor to TRAI, Abhay Shankar Verma and saw participation from multiple stakeholders.

Representing the cable industry, Manoj Chhangani, Secretary General of AIDCF (All India Digital Cable Federation), said that Clause 15.1 should be retained as it is without any amendment.

He, however, suggested that the efficacy of Clause 15.1 needs to be improved.

“A broadcaster has to share the list of MSOs who have not done their audits in a timely manner. Broadcasters should be strictly prohibited from providing any TV signal to the MSOs who are not doing the audits. TRAI should monthly share a report of the non-compliant MSOs on their websites. Regarding small DPOs, we would like to mention that the law should be the same for all and there should not be any regulatory disparity,” Chhangani said.

The objective behind this regulation is to ensure transparency and accountability within the DPOs’ operations, allowing for regulatory oversight and compliance with the stipulated standards.

This consultation paper was initially issued on August 9, 2024, and stakeholders were invited to submit their responses until September 6. Subsequently, counter-comments were accepted until September 20. The OHD today will focus on the review of stakeholder feedback and potential revisions to the existing audit regulations.