Violation of rule or shift of subscribers: What’s behind TRAI-broadcasters fight over OTT?

TRAI has asked broadcasters to come clean on the issue of providing linear channels to their in-house and third-party OTT platforms, saying it violates clause 5.6 of the downlinking guidelines

e4m by Javed Farooqui
Updated: Jan 18, 2022 9:10 AM  | 7 min read
OTT

The Telecom Regulatory Authority of India (TRAI) and TV broadcasters are once again on a collision course. This time the issue is the delivery of linear channels on over the top (OTT) and whether the broadcasters have violated Clause 5.6 of the government's downlinking guidelines. The two sides are already engaged in a long-drawn legal tussle over New Tariff Order (NTO) 2.0 which has put further restrictions on channel bundling.

The first salvo on the OTT issue was fired by TRAI in April 2021 when it asked broadcasters like Star India, Zee Entertainment, Sony Pictures Networks India, Viacom18, and Sun TV Network to come clean on the issue of providing linear channels to their in-house and third-party OTT platforms. Without disclosing the identity of the complainants, the TRAI had said it has received complaints that this act of the broadcasters violates clause 5.6 of the downlinking guidelines.

In their response, the broadcasters have submitted that they have the right to monetise content through multiple platforms under Section 37 of the Copyright Act which is also known as Broadcast Reproduction Right. They further argued that the OTT platforms are not subject to any licencing conditions under the law. The OTT platforms, it was argued, are beyond the scope of the TRAI Act, Interconnection Regulations, and Downlinking guidelines.

TMT Law Practice Managing Partner Abhishek Malhotra, who is representing Sun and Sony in the case, said that TRAI is overreaching its jurisdiction. "In our appeal, we have very clearly said that they don't have the jurisdiction. They have been saying that. It is overreaching their jurisdiction. OTT is a different mechanism of delivering content," he noted. However, a TRAI official requesting anonymity said that the broadcasters should not have any fear if they are not violating any law. "We have merely asked the broadcasters to provide the architecture and if that violates the provisions of the law. What is the harm in sharing this information if they are not violating any law?" the official questioned.

On the issue of jurisdiction, the official said that TRAI believes it has the power to regulate OTT, however, it is not exercising that power 'for the time being'. "We believe that we have the powers to look into OTT. However, we have consciously decided not to regulate it for the time being," the official averred.

It is pertinent to note that the regulator had recently told the Tamil Nadu Digital Cable TV Operators Association that the tariff orders issued by it do not apply to OTT platforms since the MIB doesn't grant any permission/licence to OTT platforms. The association had issued a legal notice to the regulator to issue directions to the pay channel broadcasters against inflating the prices of TV channels.

Experts believe that the genesis of the problem lies in the migration of subscribers from linear to OTT services. The distribution platform operators (DPOs) have been asking TRAI to ensure parity between OTT and traditional distribution services like cable TV, direct to home (DTH), and headend in the sky (HITS).

"TRAI must look at the issue of OTT regulation dispassionately and not merely based on complaints by DPOs. If TRAI examines the complaints on merits, it will expose the vested interests of the DPOs. Subscribers are migrating to OTT platforms due to the convenience of viewing and the differentiated content that they offer. Instead of seeking regulation for OTT, the DPOs must relook at their business models and bat for light-touch regulation of their verticals," an industry watcher said.

He further stated that OTT is in a growth stage, therefore, TRAI should not regulate it for the sake of regulation. "Rather, the regulator should unshackle linear broadcasting from price ceilings and regulatory burdens. That is the only way linear broadcasters can compete with OTT platforms. This will also give consumers the freedom and choice to opt for what they want - linear broadcasting or OTT or both. DPOs like Tata Sky have started aggregating OTT services, why are other DPOs not taking advantage of technology and the resultant new business models," he added.

The industry watcher also alleged that the regulator has two different yardsticks for telecom and broadcasting. "TRAI believes in net neutrality but not in network neutrality. In 2017, TRAI had said that voice OTT platforms must not be regulated since these are delivered through IP-based networks. Then shouldn't the same logic be applied to video OTT services? Doesn’t TRAI seeking information from broadcasters creates suspicion that TRAI is once again up to some tricks to trip an emerging sector which has created a meaningful platform for the creative industry as well as offer differentiated content to subscribers at an affordable price," he stated.

A veteran executive, who has vast experience in the cable distribution industry, said that the DPOs feel that they are over-regulated while OTT is virtually unregulated. "TRAI has said that they will not regulate OTT, then how can they regulate what is offered on these platforms. DPOs are over-regulated while OTT pricing is unregulated, so this tussle will go on. When DTH launched, cable guys had a problem with DTH operators. It's a very complicated business and each segment within broadcasting has its challenges," he averred.

The faceoff on the issue started in April 2021 when TRAI questioned broadcasters on providing linear channels to their in-house and third-party OTT platforms, saying that it has received complaints that this act of the broadcasters violates clause 5.6 of the downlinking guidelines.

Clause 5.6 of the downlinking guidelines states that the applicant company (broadcasters) will have to provide Satellite TV Channel signal reception decoders only to licenced platforms like multi-system operators (MSOs), direct to home (DTH), Internet Protocol Television (IPTV) or headend in the sky (HITS) service providers.

In their response, the broadcasters submitted that they have the right to monetise content through multiple platforms under Section 37 of the Copyright Act and that the OTT platforms are not subject to any licencing conditions under the law. They also claimed that the TRAI has no jurisdiction over OTT platforms.

Subsequently, TRAI issued another letter in July 2021 wherein it requested the broadcasters to provide detailed architecture indicating which media (satellite, fibre, or any other media) is being used to deliver linear channel content to OTT platforms. The broadcasters turned down TRAI's request by contending that OTT is regulated by the Ministry of Information and Broadcasting (MIB) on the content side and the Ministry of Electronics and Information Technology (MeitY) on the technical aspect.

Things came to a head when TRAI issued an order dated November 25, 2021 asking broadcasters to provide information about the streaming of linear channels on OTT platforms or face action under the provisions of the TRAI Act. This prompted a section of broadcasters like Star, Sony, and Sun to challenge TRAI's order before the Telecom Disputes Settlement and Appellate Tribunal (TDSAT).

TDSAT while admitting the petitions granted three weeks to TRAI to file a reply/short reply on the jurisdictional issue raised by the broadcasters based on contents of the New Tariff Order and Recommendations of TRAI dated 14.9.2020 on Regulatory Framework for OTT Communication Services.

While the matter is still sub judice, the tribunal has found merit in the argument that OTT services are beyond the extant laws and regulations presently. "On the basis of TRAI's stand in the two documents indicated above, there appears some merit at this stage in the submission that OTT services are beyond the extant laws and Regulations presently, which are the words used by TRAI itself in the recommendations of 14.9.2014. Hence, till the next date, no coercive action shall be taken against the appellant on the basis of the impugned letter of TRAI dated 25.11.2021," the TDSAT order reads.

 

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