The Indian cable TV industry has undergone significant transformation since the notification of Telecommunication (Broadcasting and Cable Services) Interconnection Regulations by the Telecom Regulatory Authority of India (TRAI) in 2004.  The guidelines laid the foundation for increasing transparency in operations involving broadcasters and cable operators. However, cable operators continued to under-report subscriber numbers and revenues. This along with a significant increase in the number of TV channels and capacity constraints of analog transmission systems to transmit these channels made digitisation important to ensure sustainable growth of the cable industry.

After several deliberations, in August 2010, TRAI made its recommendations on the implementation of Digital Addressable Cable TV systems. The objective was to drive cable TV digitisation across the country, especially in non-conditional access system areas and improve the quality of cable TV services. In November 2011, the government approved the Cable Television Networks (Regulation) Amendment Bill, 2011, which made it mandatory for cable operators and multi-system operators (MSOs) to shift from analog to digital transmission systems and transmit TV signals in the encrypted format through a digital addressable system. Delhi, Mumbai, Kolkata and Chennai were to witness the transition in the first phase. The remaining areas would be covered under the next three phases and the last phase would be completed by end-2014.

In April 2012, TRAI issued the Telecommunication (Broadcasting and Cable Services) Interconnection (Digital Addressable Cable Television Systems) Regulations, 2012. The guidelines provided clarity on issues including carriage fee and tariffs, among others. One of the key regulations is that local cable operators (LCOs) and MSOs are mandated to offer a basic service tier, which includes the provision of a minimum of 100 free-to-air (FTA) channels with at least five channels from each genre – news and current affairs, infotainment, sports, kids, music, lifestyle, movies, and general entertainment – at a maximum retail price of Rs 100. Further, all channels (pay and FTA) are to be offered on an à la carte basis as well. If the customer selects pay channels with or without FTA channels, cable operators and MSOs can charge a minimum subscription fee of Rs 150. Any additional fee associated with other subscribed channels will have to be borne by the customer.

MSOs were also directed to ensure that their transmission system carries a minimum of 500 channels by January 2013, while LCOs were to ensure this by April 2013. The regulations also had a “must carry” clause, which ensures that MSOs provide non-discriminatory access to broadcasters if the latter pays a carriage fee fixed by the former. They also have a “must provide” clause to ensure that MSOs do not seek a particular channel from the broadcasters and simultaneously charge a carriage fee from the latter. TRAI also recommended that revenue sharing between the MSO and the LSO should be in the ratio of 55:45 and 65:35 for FTA and pay channels respectively if the negotiations between the two entities do not materialise.

TRAI mandated MSOs to set up a customer complaint redressal centre with a toll-free consumer care number and a web-based complaint monitoring system, and publish a consumers’ charter for digital addressable cable TV systems, which provide details of services. Complaints have to be responded to within eight hours and customers have to be issued a notice at least 15 days prior to disconnection of services. Also, MSOs and LCOs will have to offer three schemes for set-top boxes (STBs) to customers – outright purchase, hire purchase and rental. Also, a minimum warranty of one year would have to be provided under the outright purchase scheme. The security deposit for the STB will have to be returned within seven days of the surrender of the box.

Following consultation with industry stakeholders for amending the 2012 regulations related to cable TV digitisation, TRAI issued the Telecommunication (Broadcasting and Cable Services) Interconnection (Digital Addressable Cable Television Systems) (Second Amendment) Regulations, 2013 in September 2013. The regulator retained the “must provide” and “must carry” clauses and withdrew the channel carrying capacity requirement for MSOs and LCOs. Further, MSOs will not be allowed to charge a placement fee from broadcasters. TRAI has also mandated MSOs to ensure that an à la carte tariff for a pay channel is not more than double the price at which it was offered by the broadcaster – the wholesale price. Also, the tariff should not be more than three times its price in the bouquet. The twin conditions will need to be brought into effect from January 1, 2014. Further, customers will be allowed to either opt for channels on an à la carte basis or as a bouquet or a combination of both.

While TRAI has taken several steps to strengthen the regulatory framework for the cable TV industry, the absence of a licensing policy for MSOs and LCOs as well as accountability of their business practices are major challenges. These issues will need to be addressed if TRAI and the government intend to encourage competition in the market as well as protect consumer interest.