REGULATORY SIGNALS GIVEN TO BROADCASTERS

The Telecom Appellate Tribunal ( TDSAT ) has, in the case of WWIL (Wire and Wireless (India) Ltd vs. M/s MSM Discovery Pvt. Ltd, judgment dated 7th January* ), finally recognised the unreasonable terms imposed by the broadcaster on the content aggregator / carrier ( technically called Muti system operator - MSO ) while arriving at an understanding for transmitting signals to telecast channels of that broadcaster.

The Tribunal has pronounced against the broadcaster’s high handed conduct, as quoted here -

“…As per the Regulation 3.1 the distributor of the TV channel is prevented to engage in any practice or activity or understanding or arrangement to give exclusivity in its contracts with any distributor of TV channels which prevents any other distributor to obtain such channels for distribution. Exclusivity has not been permitted as a feature of India's fragmented cable TV market by regulation. Exclusivity creates an inherent defect of being an agent of the broadcaster as an MSO who will not permit any other MSO to compete with it, thereby eliminating the competition at all. The learned counsel has quoted the Apex Court Case No.(2007) 4 SCC 656 Star India Private Limited vs Sea TV Network Ltd. The Apex court has approved the principle which has been enshrined in Clause 3.1 of the Interconnect Regulations.

6. Taking cognizance of this regulation and from the proceedings between the petitioner and the respondent, it is evident that imposing a minimum guaranteed sum on the petitioner by the respondent in the event of deactivation/discontinuation of signals to other MSOs exactly from the date of the event, is as good as giving exclusivity of the contract and eliminate the process of competition amongst various other TV channel distributors if any, as MSOs/LCOs in the impugned area…..”


For the broadcaster, it is a common practice in the broadcasting industry, to flex muscle on the MSOs by –

· Imposing minimum amount as guaranteed annual subscription which would be beyond the fee calculated towards actual subscriber base which the MSO has in that area of operation.

· Restrict one MSO’s area of operation while granting another MSO license to operate in the entire territory. By playing one against the other they can offer exclusive rights to the tougher one and then dictate their milking terms.

· Such arm twisting methods not only create conflict of interest amongst the MSOs, not allowing them to co-exist, more so ruin their chances of creating cartels and joining hands for mutual gains.

On the other hand the broadcaster soon buys out the larger MSO to form a vertical alliance of broadcasting and carrier services. In effect, now they can nurture their own alliance partner, not allowing any other MSO to operate, virtually making it impossible for the other MSOs to function in that territory.

Such anti-competitive practices came in the realm of negotiable commercial terms in the contract, as earlier viewed by the Telecom tribunal. Dictating unreasonable terms and creating an exclusive arrangement with a service provider, although curbed by the interconnect regulations, were more often not interfered with by the Tribunal. The tribunal would be more inclined generally to direct the parties to settle their commercial terms.

However, the latest judgment, in the case of WWIL, is a sigh of relief for the MSOs and local cable operators who were at the mercy of the broadcaster to give them signals – on the thumb rule of might is right !. Parties sometimes also use litigation as a route to avoid their obligations where an issue is a grey area and besides winning or loosing, parties like to buy time to perform and/or disrupt business activities. Such pronouncements which lay down the law clearly, enforcing Regulations, have the advantage of avoiding unnecessary litigation between parties.
* http://www.tdsat.nic.in/07.01.2009/P_No.215(C)_of_08.htm