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Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) Regulations, 2017

(Regulation No. 1 of 2017)

Last Updated 25th November, 2022 [act3524]

(a) issued, in exercise of the powers conferred upon the Central Government under clause (d) of sub-section (1) of section 11 and proviso to clause (k) of sub-section (1) of section 2 of the said Act, and

(b) published under notification No. S.O.44 (E) and 45 (E) dated the 9th January, 2004 in the Gazette of India, Extraordinary, Part II, Section 3, -

CHAPTER - I

Preliminary

(a) "Act" means the Telecom Regulatory Authority of India Act, 1997 (24 of 1997);

(b) "active subscriber" for the purpose of these regulations, means a subscriber who has been authorized to receive signals of television channels as per the subscriber management system and whose set top box has not been denied signals;

(c) "addressable system" means an electronic device (which includes hardware and its associated software) or more than one electronic device put in an integrated system through which transmission of programmes including re-transmission of signals of television channels can be done in encrypted form, which can be decoded by the device or devices at the premises of the subscriber within the limits of the authorization made, on the choice and request of such subscriber, by the distributor of television channels;

(d) "a-la-carte" or "a-la-carte channel" with reference to offering of a television channel means offering the channel individually on a standalone basis;

(e) "Authority" means the Telecom Regulatory Authority of India established under sub-section (1) of section 3 of the Telecom Regulatory Authority of India Act, 1997 (24 of 1997);

(f) "average active subscriber base" means the number arrived by averaging the active subscriber base count in the manner specified in the Schedule VII;

(g) "bouquet" or "bouquet of channels" means an assortment of distinct channels offered together as a group or as a bundle and all its grammatical variations and cognate expressions shall be construed accordingly;

(h) "broadcaster" means a person or a group of persons, or body corporate, or any organization or body who, after having obtained, in its name, downlinking permission for its channels, from the Central Government, is providing programming services;

(i) "broadcaster's share of maximum retail price" with reference to a pay channel or a bouquet of pay channels means any fee payable by a distributor of television channels to a broadcaster for signals of pay channel or bouquet of pay channels, as the case may be, and for which due authorization has been obtained by such distributor from that broadcaster;

(j) "broadcasting services" means the dissemination of any form of communication like signs, signals, writing, pictures, images and sounds of all kinds by transmission of electro-magnetic waves through space or through cables intended to be received by the general public either directly or indirectly and all its grammatical variations and cognate expressions shall be construed accordingly;

(k) "cable service" or "cable TV service" means the transmission of programmes including retransmission of signals of television channels through cables;

(l) "cable television network" or "cable TV network" means any system consisting of a set of closed transmission paths and associated signal generation, control and distribution equipment, designed to provide cable service for reception by multiple subscribers;

(m) "carriage fee" means any fee payable by a broadcaster to a distributor of television channels only for the purpose of carrying its channels through the distributor's network, without, specifying the placement of such channels onto a specific position in the electronic programme guide or, seeking assignment of a particular number to such channels;

(n) "compliance officer" means any person designated so, who is capable of appreciating requirements for regulatory compliance under these regulations, by a service provider;

(o) "direct to home operator" or "DTH operator" means any person who has been granted licence by the Central Government to provide direct to home (DTH) service;

(p) "direct to home service" or "DTH service" means re-transmission of signals of television channels, by using a satellite system, directly to subscriber's premises without passing through an intermediary such as local cable operator or any other distributor of television channels;

(q) "distribution fee" means any fee payable by a broadcaster to a distributor of television channels for the purpose of distribution of pay channel or bouquet of pay channels, as the case may be, to subscribers and it does not include carriage fee;

(r) "distribution platform" means distribution network of a DTH operator, multi- system operator, HITS operator or IPTV operator;

(s) "distributor of television channels" or "distributor" means any DTH operator, multi-system operator, HITS operator or IPTV operator;

(t) "electronic programme guide" or "EPG" means a program guide maintained by the distributors of television channels that lists television channels and programmes, and scheduling and programming information therein and includes any enhanced guide that allows subscribers to navigate and select such available channels and programmes;

(u) "free-to-air channel" or "free-to-air television channel" means a channel which is declared as such by the broadcaster and for which no fee is to be paid by the distributor of television channels to the broadcaster for signals of such channel;

(v) "head end in the sky operator" or "HITS operator" means any person permitted by the Central Government to provide head end in the sky (HITS) service;

(w) "head end in the sky service" or "HITS service" means transmission of programmes including retransmission of signals of television channels -

(i) to intermediaries like local cable operators or multi-system operators by using a satellite system and not directly to subscribers; and

(ii) to the subscribers by using satellite system and its own cable networks;

(x) "interconnection" means commercial and technical arrangements under which service providers connect their equipments and networks to provide broadcasting services to the subscribers;

(y) "interconnection agreement" with all its grammatical variations and cognate expressions means agreements on interconnection providing technical and commercial terms and conditions for distribution of signals of television channel;

(z) "internet protocol television operator" or "IPTV operator" means a person permitted by the Central Government to provide IPTV service;

(aa) "internet protocol television service" or "IPTV service" means delivery of multi channel television programmes in addressable mode by using Internet Protocol over a closed network of one or more service providers;

(bb) "local cable operator" or "LCO" means a person registered under rule 5 of the Cable Television Networks Rules, 1994;

(cc) "maximum retail price" or "MRP" for the purpose of these regulations, means the maximum price, excluding taxes, payable by a subscriber for a-la-carte pay channel or bouquet of pay channels, as the case may be;

(dd) "multi-system operator" or "MSO" means a cable operator who has been granted registration under rule 11 of the Cable Television Networks Rules, 1994 and who receives a programming service from a broadcaster and re-transmits the same or transmits his own programming service for simultaneous reception either by multiple subscribers directly or through one or more local cable operators;

(ee) "network capacity fee" means the amount, excluding taxes, payable by a subscriber to the distributor of television channels for distribution network capacity subscribed by that subscriber to receive the signals of subscribed television channels and it does not include subscription fee for pay channel or bouquet of pay channels, as the case may be;

(ff) "pay broadcaster" means a broadcaster which has declared its one or more channels as pay channel to the Authority under the provisions of applicable regulations or tariff order, as the case may be;

(gg) "pay channel" means a channel which is declared as such by the broadcaster and for which a share of maximum retail price is to be paid to the broadcaster by the distributor of television channels and for which due authorization needs to be obtained from the broadcaster for distribution of such channel to subscribers;

(hh) "programme" means any television broadcast and includes-

(i) exhibition of films, features, dramas, advertisements and serials;

(ii) any audio or visual or audio-visual live performance or presentation,

(ii) "QoS Regulations" means the Telecommunication (Broadcasting and Cable) Services Standards of Quality of Service and Consumer Protection (Addressable Systems) Regulations, 2017;

(jj) "reference interconnection offer" or "RIO" means a document published by a service provider specifying terms and conditions on which the other service provider may seek interconnection with such service provider;

(kk) "service provider" means the Government as a service provider and includes a licensee as well as any broadcaster, distributor of television channels or local cable operator;

(ll) "set top box" or "STB" means a device, which is connected to or is part of a television receiver and which enables a subscriber to view subscribed channels;

(mm) "subscriber" for the purpose of these regulations, means a person who receives broadcasting services, from a distributor of television channels, at a place indicated by such person without further transmitting it to any other person and who does not cause the signals of television channels to be heard or seen by any person for a specific sum of money to be paid by such person, and each set top box located at such place, for receiving the subscribed broadcasting services, shall constitute one subscriber;

(nn) "subscriber management system" means a system or device which stores the subscriber records and details with respect to name, address and other information regarding the hardware being utilized by the subscriber, channels or bouquets of channels subscribed by the subscriber, price of such channels or bouquets of channels as defined in the system, the activation or deactivation dates and time for any channel or bouquets of channels, a log of all actions performed on a subscriber's record, invoices raised on each subscriber and the amounts paid or discount allowed to the subscriber for each billing period;

(oo) "tariff order" means the Telecommunication (Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff Order, 2017;

(pp) "television channel" means a channel, which has been granted permission for downlinking by the Central Government under the policy guidelines issued or amended by it from time to time and reference to the term 'channel' shall be construed as a reference to "television channel".

CHAPTER II

Interconnection

(a) target markets as declared under sub-regulation (3) of this regulation;

(b) the total channel carrying capacity of its distribution network in terms of number of standard definition channels;

(c) list of channels available on the network;

(d) number of channels for which signals of television channels have been requested by the distributor from broadcasters and the interconnection agreements signed;

(e) spare channel capacity available on the network for the purpose of carrying signals of television channels; and

(f) list of channels, in chronological order, for which requests have been received from broadcasters for distribution of their channels, the interconnection agreements have been signed and are pending for distribution due to non-availability of the spare channel capacity:

CHAPTER III

Reference Interconnection Offer

(a) any 'free-to-air channel'; and

(b) High definition (HD) and Standard Definition (SD) variants of the same channel.

(a) within sixty days of commencement of these regulations; and

(b) before launching of a pay channel.

(a) within sixty days of commencement of these regulations; and

(b) before starting a new distribution network:

CHAPTER IV

Interconnection Agreement

(a) the date of expiry of its existing interconnection agreement; and

(b) the date of disconnection of signals of television channels in the event of its failure to enter into new interconnection agreement.

(a) the date of expiry of its existing interconnection agreement; and

(b) the date of disconnection of signals of television channels in the event of its failure to enter into new interconnection agreement.

(a) the registered area of operation of the multi-system operator as mentioned in the registration granted by the Central Government;

(b) the names of specific areas for which distribution of signals of television channels has been agreed, initially, at the time of signing of the interconnection agreement; and

(c) the names of the corresponding states/ union territories in which such agreed areas as referred in clause (b) of this sub-regulation are located.

(a) the registered area of operation of the multi-system operator; and

(b) the states or union territories in which the multi-system operator has been permitted to distribute the signals of television channels under the interconnection agreement.

(a) the date of expiry of its existing interconnection agreement; and

(b) the date of disconnection of signals of television channels in the event of its failure to enter into new interconnection agreement.

CHAPTER V

Subscription Report and Audit

CHAPTER VI

Miscellaneous

(a) generating awareness for ensuring compliance with the provisions of these regulations;

(b) reporting to the Authority, with respect to compliance with these regulations and directions of the Authority issued under these regulations; and

(c) ensuring that proper procedures have been established and are being followed for compliance of these regulations.

Note. - The Explanatory Memorandum explains the objects and reasons of the Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) Regulations, 2017.

Schedule I

(Refer sub-regulation (2) of the regulation 8)

Calculation of the carriage fee amount

Note. - (1) For the purpose of calculation of carriage fee amount for a high definition channel, the average active subscriber base of the distributor in that month in the target market shall be of subscribers capable of receiving high definition television channels.

(2) The average active subscriber base of the distributor in a month shall be calculated in the manner as prescribed in the Schedule VII.

(3) The monthly subscription for a channel shall be calculated in the manner as prescribed in the Schedule VII.

(4) The Illustration-I (for standard definition channel) and Illustration-II (for high definition channels) given below explains the calculation of carriage fee amount:-

Illustration-I

Illustration-II

Schedule II

(Refer sub-regulation (4) of the regulation 10)

Application form for request of signals of television channels

1. Name of the distributor of television channels:

2. The names of Owners/Directors/Partners of the distributor:

3. Registered Office address:

4. Address for communication:

5. Name of the contact person/ Authorized Representative:

6. Telephone:

7. Email address:

8. Copy of certificate of registration/ permission/ license (Attach a Copy):

9. Details of Head-end, Conditional Access Systems (CAS) and Subscriber Management Systems (SMS) deployed by the distributor:

10. Details of the areas, corresponding States/ UTs and details of the Head-end from which the signals of television channels shall be distributed in such areas:

11. Area wise present subscriber base of the distributor:

12. List of channels and bouquets for which signals of television channels are requested:

13. Service Tax registration number:

14. Entertainment Tax Number:

15. PAN No. (Attach a copy):

16. Are the CAS/ SMS in compliance with the regulations: YES / NO

17. Copy of the report of the Auditor in compliance of the Schedule III of the Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable System) Regulations 2017, if available:

__________
(Signature)
Date and Place

__________
(Signature)
Date and Place

[Schedule III]

(Refer sub-regulation (6) of the regulation 10 and regulation 15)

Scope and Scheduling of Audit

Addressable Systems Requirements

1. The distributor of television channels shall ensure that the current version of the CAS, in use, do not have any history of hacking.

2. The SMS shall be independently capable of generating, recording, and maintaining logs, for the period of at least immediate preceding two consecutive years, corresponding to each command executed in the SMS including but not limited to activation and deactivation commands.

3. It shall not be possible to alter the data and logs recorded in the CAS and the SMS.

4. The distributor of television channels shall validate that the CAS, in use, do not have facility to activate and deactivate a Set Top Box (STB) directly from the CAS terminal. All activation and deactivation of STBs shall be done with the commands of the SMS.

5. The SMS and the CAS should be integrated in such a manner that activation and deactivation of STB happen simultaneously in both the systems.

6. The distributor of television channels shall validate that the CAS has the capability of upgrading STBs over-theair (OTA), so that the connected STBs can be upgraded.

7. The fingerprinting should not get invalidated by use of any device or software.

8. The CAS and the SMS should be able to activate or

[Schedule VIII]

(Refer sub-regulation (8) of regulation 4)

Calculating the discontinuation threshold for a television channel

(a) In case the declared target market of the concerned distributor is 'All India', the 'discontinuation multiplier' shall be calculated as per the following table (until more recent Census data is available):

(b) In case a distributor declares multiple states as target market under the provisions of the regulations, the discontinuation multiplier shall be calculated in proportion to the speaking strength of the language of that television channel in all the states constituting the target market.

(c) In case a distributor declares a State or a Union Territory as the target market under the provisions of the regulations, the discontinuation multiplier shall be calculated in proportion to the speaking strength of the language of the television channel in that state or Union Territory. (Refer Census Data of India, Statement 3: Distribution of 10,000 persons by language - India, States and Union Territories-2011;

Illustration-I

Illustration-II Target Market: Combination of State(s) & Union Territory(ies): - Let us assume that the distributor has declared Gujarat, Daman & Diu and Dadra & Nagar Haveli as its target market and its monthly average active subscriber base is 2,00,000 in the target market in each of the immediately preceding six consecutive months. The subscriber base is sub-divided as 1,50,000 in Gujarat, 40,000 in Daman & Diu and 10,000 in Dadra & Nagar Haveli. Now, for a distributor, to check whether it has flexibility to continue or discontinue a television channel based on the 'discontinuation threshold', one has to look at the language(s) declared by the broadcaster for a given television channel in respective target market [state(s) and/or Union Territories]. Assuming in this case a broadcaster of a television channel that has declared Gujarati as its language.

= 5% of (85.97% of its subscriber base in Gujarat) + 5% of (50.83% of its subscriber base in Daman & Diu) + 5% of (21.48% of its subscriber base in Dadra & Nagar Haveli)

= 5% X (85.97% X 1,50,000) + 5% X (50.83% X 40,000) + 5% X (21.48% X 10,000)

= 6448 + 1017 + 107

= 7572

Illustration-III

= 5% of (57.11% of its subscriber base) + 5% of (10.62% of its subscriber base)

= 5% X [ (57.11+10.62) % of 1,00,00,000]

= 3,38,650

1. The TRAI Act entrusts Telecom Regulatory Authority of India, amongst others, with the functions to ensure technical compatibility and effective interconnection between different service providers, fix the terms and conditions of interconnectivity between the service providers, and regulate arrangement amongst service providers for sharing their revenue derived from providing telecommunication services. In exercise of the powers conferred by the proviso to clause (k) of sub-section (1) of section (2) of the Act, in the year 2004, the Central Government notified the broadcasting services and cable services to be telecommunication services. The interconnection between broadcasting service providers is a technocommercial arrangement by which service providers connect their equipments and networks to deliver broadcasting services to subscribers.

2. To discharge the above mentioned functions, the Authority, from time to time, notifies regulatory framework for interconnection between service providers for broadcasting services. Under the notified framework service providers finalize their commercial and technical terms to arrive at an agreement and share revenues as per the agreement.

3. The first interconnection regulations for broadcasting services, namely the Telecommunication (Broadcasting and Cable Services) Interconnection Regulation, 2004 (13 of 2004), were notified by the Authority on 10.12.2004 (hereinafter referred to as the Interconnection Regulations, 2004). These were initially notified to regulate interconnection arrangements between service providers for distribution of TV channels in analog mode, in vogue at that point of time. From time to time, need arose to clarify, as well as to expand the scope of the Interconnection Regulations, 2004 to include addressable systems such as Direct to Home (DTH), Head-end In the Sky (HITS), and Internet Protocol Television (IPTV). The basic features of the Interconnection Regulations, 2004, inter alia, encompass the provisions for providing signals of a TV channel on non-discriminatory terms to distributors of TV channels, publishing Reference Interconnection Offer (RIO) for interconnection to ensure level playing field, entering in to written interconnection agreement, disconnection of signals of TV channel, and ascertaining the subscriber base.

4. The evolution of technology paved the way for digitization and addressability of the cable services. For implementation of digitization with addressability in the cable TV sector, the Parliament amended the Cable Television Networks (Regulation) Act 1995 on 30th December, 2011. Subsequently, the Cable Television Networks (Amendment) Rules, 2012 were notified by the Central Government on 28th April, 2012. The Authority notified the Telecommunication (Broadcasting and Cable Services) Interconnection (Digital Addressable Cable Television Systems) Regulations, 2012 (9 of 2012) on 30th April, 2012 (hereinafter referred as the Interconnection Regulations, 2012). These regulations were specifically applicable for cable services provided through Digital Addressable Cable Television Systems (DAS). The Interconnection Regulations, 2004, continued for non-addressable cable TV systems and also for other addressable systems such as DTH, HITS and IPTV. The basic features of the Interconnection Regulations, 2012 were similar to the basic features of the Interconnection Regulations, 2004, mentioned in Para 3 above.

5. As per the roadmap notified by the Central Government, after 31st March, 2017, the provisioning of cable services shall be permitted through Digital Addressable Systems only. Till now, digitization of the cable services has been completed in most of the urban areas. With the implementation of digitization and addressability in the cable TV sector, majority of subscribers receive broadcasting services through addressable systems.

6. Broadcasting services provided through addressable systems have numerous advantages over those provided through analog non-addressable systems. The digital addressable systems are efficient in provisioning of services and enable choice to the subscribers. The subscribers gets better signal quality, enhanced viewing experience, choice of more channels and can pay only for those channels/ services which they subscribes. For service providers, the addressable systems enable transparent business transactions based on verifiable parameters and improve transparency. It allows the collection of tax revenue, by the Government, commensurate to the actual market size.

7. The full benefits of digitisation can be accrued to various stakeholders in the value chain only when the business transactions are transparent and based on objective, measurable and computable parameters. The effective competition and level playing field in the market place is possible when the interconnection is based on transparent and non-discriminatory principles. TRAI is conscious of the fact that, while the interconnection regulatory framework should uphold necessary discipline in the sector to ensure transparent and non-discriminatory practices, it should also provide required freedom to service providers in the value chain to innovate. It should be able to provide a level playing field to all the service providers, effective choice to consumers, and orderly growth of the sector.

8. The regulatory framework ought to evolve with the time to keep pace with the developments in the sector. Accordingly, the Authority decided to review, in a complete and holistic manner, the regulatory framework for broadcasting services delivered through addressable systems which include Tariff orders, and Interconnection and Quality of Service (QoS) Regulations.

9. In line with the established practice, for reviewing the regulatory framework for broadcasting services, the Authority issued series of consultation papers on Tariff, Interconnection and QoS issues. The consultation paper on "Tariff Issues related to TV services" was issued on 29th January, 2016, "Interconnection framework for Broadcasting TV Services distributed through Addressable Systems" was issued on 4th May, 2016, and "Issues related to Quality of Services in Digital Addressable Systems and Consumer Protection" was issued on 18th May, 2016.

10. For consultation on "Interconnection framework for Broadcasting TV Services distributed through Addressable Systems" (the CP), initially one month time was given to the stakeholders to submit their comments. On requests of the stakeholders, the last date for submission of comments was extended by a week time i.e. up to 10th June, 2016. The last date for submitting counter comments was 17th June, 2016. In response to this consultation paper, a total of 28 comments and 1 counter comment were received from stakeholders. Subsequently, an Open House Discussion (OHD) program to discuss issues relating to interconnection with stakeholders was held on 13th July, 2016 at Delhi, which was attended by a large number of stakeholders.

11. After detailed analysis of the comments, counter-comments, and the views expressed by the stakeholders during the OHD, and internal examination of the issues relating to interconnection based on the information available with the Authority, draft Interconnection Regulations, 2016 namely the draft Telecommunication (Broadcasting and Cable Services) Interconnection (Addressable Systems) Regulations, 2016 were framed and the same were uploaded on TRAI website along with explanatory memorandum detailing objects and reasons of the draft Interconnection Regulations, 2016 for consultation with the stakeholders. The stakeholders were requested to provide their comments/ views on the draft, specifically on specific values suggested in the draft. A time up to 28th October, 2016 was provided to the stakeholders for comments, which was, on the request of the stakeholders, extended up to 15th November, 2016, by the Authority. The stakeholders were also requested to provide their inputs on completeness and consistency of the regulations within and with other draft regulations/ tariff orders. To better understand the views/ comments, the stakeholders were requested to provide their inputs with adequate justification. In response, a total 45 comments were received and these written comments were uploaded on TRAI website. After taking into consideration the comments received from the stakeholders and in-house analysis, the Authority finalized the Telecommunication (Broadcasting and cable) Services Interconnection (Addressable Systems) Regulations, 2017. The subsequent paragraphs explain the objects and reasons of the Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) Regulation, 2017.

12. In response to the draft Interconnection Regulations 2016, some of the broadcasters stated that provisions of 'non-exclusivity', and 'must provide' are in conflict with certain provisions of the Copyright Act 1957. They have argued that the Copyright Act 1957 allows content owners and broadcasting organisations to exclusively license or assign their works and grant broadcast reproduction rights, whereas, the provisions of the draft regulations require the broadcasters to compulsory provide their channels to distributors of television channels on non-exclusive basis. They have further stated that the draft Interconnection Regulations 2016, denies the broadcaster the right to negotiate with the distributors.

13. The Authority is of the view that a TV channel is a distinct and different 'product' and is comprised of a collection of different individual programmes such as movies, sports, dramas, soap operas, music, etc. Some of these programmes are either created by the broadcasters themselves or they are acquired through license/ assignment from various content producers or production houses. Therefore, a TV channel is a mixture of different individual copyrightable works either owned or acquired through license/ assignment from different copyright owners/ authors by a broadcaster. The provisions of Interconnection Regulations, 2017 do not in any manner regulate as to how or at what price/royalty a broadcaster can acquire content form the content owners. These regulations do not in any manner regulate the process of acquiring the license by the broadcasters from the content owners for its TV channel and they also do not regulate copyrighted work underlying the TV channels. These regulations however govern the manner of offering of TV channels to the DPOs for further re-transmission to the subscribers on non-discriminatory basis. Therefore the contention of the broadcaster that the provisions of regulations are in conflict with the Copyright Act is not tenable.

14. The argument of the broadcasters that compulsory providing of TV signals to DPOs on non-exclusive basis and mandating agreement on the basis of RIO conflict with the provisions of Copyright Act is not in conformance with the well-settled position of law. This issue has been settled by Hon'ble TDSAT in the case of M/s Noida Software Technology Park Ltd. Vs. M/s Media Pro Enterprise India Pvt. Ltd. & Ors., in Petition No. 295 (C) of 2014, judgement dated 07.12.2015. A Statutory Appeal carried from the Hon'ble TDSAT judgment in Noida Software Technology Park vs. Media Pro Enterprises India Pvt. Ltd. was dismissed by the Hon'ble Supreme Court vide order dated 26.02.2016 in Civil Appeal No. 1446 of 2016.

15. The arguments of the broadcasters that signing of interconnection agreement on the basis of RIO takes away their right of mutual negotiation for licensing their BRR under Copyright Act is also not tenable. On this issue, it is important to note that the rule 9 read with rule 10 of the Cable Television Networks Rules, 1994 mandates TRAI to specify Standard Interconnection Agreements (SIA) to be entered for interconnection between broadcaster and MSOs. However, in terms of these regulations, TRAI has in fact refrained from prescribing any specific RIO or SIA for broadcasters giving them full freedom to innovate and market their offerings. These Regulations give freedom to broadcasters to devise and design their RIOs as per their own choice subject to compliance with the provisions of the regulations/ Tariff Order. The Hon'ble TDSAT in the case of Star Sports India Pvt. Ltd. Vs. Hathway Cable & Datacom Ltd. in Petition No. 47(C) of 2014, judgement dated 25.09.2014 has given its approval to the concept of RIO as a measure of ensuring a level playing field. If anything in these Regulations, the TRAI has reduced the extent of regulatory intervention.

16. In the above referred judgements, Hon'ble TDSAT has exhaustively dealt with the issues of copyright and interconnection regulations and conclusively determined that the provisions relating to nonexclusivity, non-discrimination, reference interconnection offer etc. do no conflict with the provisions of Copyright Act.

17. The Interconnection Regulations, 2004 and the Interconnection Regulations, 2012 prohibited exclusive arrangements, which prevent other service providers to get signals of TV channels or access to distribution networks, between service providers. They also made it obligatory on part of broadcasters to provide signals of TV channels to DPOs, on receipt of request for the same, on non-discriminatory basis which is commonly referred as 'must provide' principle and which in essence mandate a broadcaster to must make available its TV channels to DPOs and through them to viewers on an equal basis within a given territory. The principle of non-exclusivity and must provisioning of signals have to be examined primarily from the consumer's perspective. While at this juncture, although large number of broadcasters are present across popular genres, the competition is far from fair due to monopolistic nature of TV channels. TV channels within the same genre are differentiated from one another by their branding and composition of programs. They are not substitutes in the perception of consumers. As in a monopoly, firms in monopolistic competition are price setters, rather than price takers. If a TV channel, in demand in a particular market, is not available on any one TV distribution network and another popular channel in that market is not available on a competing distribution network then in such market the consumers may have to subscribe for services of more than one operator to view their favourite channels. Moreover, it is impractical for a consumer to obtain broadcasting/ cable services from multiple DPOs. In broadcasting and cable TV sector, to some extent, vertical integration still exists between broadcasters and DPOs. Any kind of exclusive agreements, whereby signals of popular TV channels can be denied to a competitor so as to promote the broadcaster's integrated distribution network will affect fair competition and choice to the consumers. Similarly, entering into any understanding or arrangement by a DPO with a broadcaster or LCO which prevents other broadcasters or other LCOs to access the network of the DPO for re-transmission or to obtain signals of TV channels may be prejudicial to the competition.

18. TRAI, being a sectoral regulator of broadcasting services and cable services, has been entrusted with the task of ensuring a level playing field and fair competition in the sector and also ensuring that the interests of consumers and service providers are protected. Therefore, TRAI has power to look at all issues affecting competition in the market and to craft remedies for the same on ex-ante basis. The Authority is of the view that any kind of exclusivity in distribution of TV channels is prejudicial for competition and hence should not be permitted and mandatory provisioning of signal is a meaningful step towards achieving the goal of fair competition and the interest of consumer. Accordingly in the draft Interconnection Regulations, 2016, necessary provisions for non-exclusivity and must provide were made. After analysis of the comments received in response to the draft Interconnection Regulations, 2016, it appears that these principles have been widely accepted and therefore these principles have been retained in these regulations. Must Carry

19. The provisions relating to 'must carry' existed in the Interconnection Regulations, 2012, which was applicable for cable TV services provided through DAS. The 'must carry' provisions in the Interconnection Regulations, 2012, enabled broadcasters of Hindi, English and Regional channels to access the network of an MSO for re-transmission to the subscribers. However, in the Interconnection Regulations, 2004, which regulated non-addressable cable TV systems and the other addressable systems like DTH, HITS and IPTV, there was no 'must carry' provision. In the CP, it was proposed to make a uniform "must carry" provision for all addressable systems.

20. A service provider in the value chain may act as a seeker or as a provider. For example, when a distributor seeks signals of TV channels from a broadcaster, it acts as a seeker and the broadcaster in such case becomes a provider of the signals of TV channel. Whereas, when a broadcaster approaches a distributor for accessing its network for re-transmission of its channel(s) then it acts as a seeker and the distributor becomes the provider. The 'must provide' provision helps DPOs in making available TV channels to its subscribers on the basis of demand in a market. Similarly, 'must carry' provision removes entry barrier for a television channel to enter into a target market, as a broadcaster can distribute its channel(s) through the DPOs available in that target market.

21. In response to the CP, majority of the broadcasters stated that 'must carry' provision should be applicable for all types of networks. Whereas, one broadcaster and some DPOs stated that 'must carry' provision should not be made applicable to DTH and HITS networks as there are transponder capacity constraints. After analysis of the comments received in response to the CP, 'must carry' provision, wherein spare capacity of a DPO to be allocated on first come first served basis, was proposed in the draft Interconnection Regulations, 2016 for all types of addressable systems.

22. In response to the draft Interconnection Regulations, 2016, a broadcaster suggested that to ensure proper implementation of this clause, a real time monitoring of requests is required. It was suggested that the requests from broadcasters for re-transmission of their channels should be received by DPOs through websites only. Another broadcaster opined that DPOs should publish and update complete details of their network's channel carrying capacity and pending channel list in chronological order, within 7 days of any change in place of 30 days as proposed in the draft Interconnection Regulations 2016. Some broadcasters and an association stated that non stipulation of minimum channel carrying capacity for DPOs and the proposed provision of must carry on first come first serve basis may dilute the 'must carry' principle as deserving channels may be deprived access merely due to timing of request. They further commented that regional channels should be carried by regional MSOs. Many broadcasters also suggested that DPOs should continue to carry all the channels/ bouquets, which are available on their platform during the last calendar quarter from the effective date of the proposed regulation, for at least next 60 days to provide level playing field to all broadcasters.

23. DTH operators commented that satellite bandwidth is a scarce resource, which makes it not only cost prohibitive for DTH operators to add requisite transponders but is also difficult to obtain because of the long waiting time involved (usually 1-2 years) for various clearances. Therefore, they opined that flexibility be given to them to use this bandwidth economically and efficiently to meet the demands and preferences of their retail customers.

24. DTH operators also commented that 'first come first served' should not be implemented in situations where there is a gap between demand and supply and/or the resource to be provided is scarce. The principle of 'first come first served' might end up creating disputes between broadcasters and DPOs since it would be hard to determine the priority level of broadcasters' requests for the carriage of a channel. It would also lead to administrative issues (documentation, etc.) which would be difficult for private entities to manage. DTH operators further commented that due to these challenges the capacity of this media can never match that of the cable operators therefore it is their right as business entity to be able to sell the satellite space at the best possible business proposition.

25. Some DTH operators stated that the obligation of must carry will force DTH to carry even those channels which have very less demand or no demand which will be highly detrimental to the DTH platforms as well as to the customer. This will impact the customer base of DTH operators who would tend to move to other Digital platforms. Unlike a DAS operator which may have region based offerings, DTH operation is a PAN India operation where a DTH operator has to be selective in the choice of the channels to be placed on its platform.

26. One of the MSOs have suggested to have a proviso to regulation dealing with the 'must carry issue' that in case the number of channels in genre be filled to the extent of 10% of available capacity, then the distributor should be at liberty to deny carriage of a channel on the "first come first serve basis".

27. As per the downlinking guidelines of the Ministry of Information and Broadcasting (MIB), a broadcaster can distribute its TV channel through distributors of TV channels only. Therefore, it becomes essential that a broadcaster desirous of re-transmission of its TV channels to subscribers in a market should be able to access the network of distributors of TV channels in that market. The 'must carry' principle removes the entry barrier for channels and ensures that the network is accessible for distribution of channel. Denial of access to that particular market by a DPO may cause jeopardy to that broadcaster as it cannot reach end consumers in that particular market through any other alternate means.

28. On the other hand, a DPO plans the capacity of its distribution networks on the basis of demand in the market and availability of network resources. There is a distinct possibility that at a given time when a broadcaster approaches a distributor for re-transmission of its channels, spare capacity in the distribution network may not be available. To address the issues relating to capacity constraints and requirement of non-discriminatory access to distribution networks, a balanced approach need to be adopted. Accordingly, the following provisions have been made in these regulations:-

i. DPOs have been mandated to declare its target market and publish total channel carrying capacity and spare channel capacity along with other details specified in the regulation on its website, as the capacity varies from network to network,

ii. Any change in the information published by the DPOs on its website is required to be updated within seven days from the date of occurrence of such change so that the broadcasters can take informed decision before making request for carrying the channels,

iii. An interconnection agreement has to be in place for getting access to the network,

iv. DPOs are also required to maintain and publish on its website the list of channels, in chronological order, for which requests have been received from broadcasters for re-transmission of their channels, the interconnection agreements have been signed and are pending for retransmission due to non-availability of the spare channel capacity. This will not only improve the transparency but also act as a deterrent for non-serious players seeking access.

v. DPO is required to allocate every alternate spare channel capacity on its network, in sequential manner, from the list for re-transmission of the television channels. This will address the issue of non-discrimination and would also enable carry those TV channels which are in demand in the market and requests have been made by the DPO for distribution after entering into interconnection agreement.

29. Thus, the Authority has decided that 'must carry' provision should be uniformly applicable to all types of DPOs subject to availability of spare capacity. In this way, while the DPOs have the freedom to plan their networks, the broadcasters would be able to get access to the distribution networks on nondiscriminatory basis.

30. In deference to the long standing demand of broadcasters to mandate 'must carry' obligation on the DPO as a reciprocal obligation to the 'must provide' mandate on the broadcasters, in these regulations the TRAI has made applicable such provisions for all category of DPOs. The provisions relating to 'must carry' make it obligatory on part of DPOs to carry signals of TV channels of broadcasters, on receipt of written request for the same, on non-discriminatory basis.

31. On the suggestion of some stakeholders regarding setting up of a minimum channel carrying capacity by DPO, the Authority noted that India is a pluralistic country with diverse requirements therefore; the choice of the customer may be varied depending on different demographics. The DPOs create network capacities depending upon the requirement of that market in which they are operating. Therefore, mandating a minimum capacity for networks may serve purpose for one region but that may not be suitable for other region. On the contrary mandating minimum channel carrying capacity for a distribution network may increase the cost to the consumers. The market forces would play an important and significant role in the matter of carrying capacity of the DPO. Therefore, the Authority is of the view that the channel carrying capacity of a DPO should be left to market forces and therefore, the same has not been regulated.

32. The Authority noted that, generally, the channels available on a distribution platform are a mix of channels obtained through 'must provide', 'must carry' and free to air channels distributed by a DPO as per demand in the market. So it is necessary that the available capacity of a distribution network is best utilised to meet the demand of the consumers in a particular market. Therefore, these regulations provide full right to the DPO on the used capacity of its network. However, on spare channel capacity, it has been made obligatory to allocate every alternate channel capacity in sequential manner from the pending list. For such channels the DPOs will get the carriage fee till the average channel subscriber base reaches 20%. Thus the above mechanism in no way restricts the business plans of DPOs and protects its right on its capacity to carry channels while addressing broadcasters concern also.

33. The MSOs suggestion that a proviso in the regulation dealing with the 'must carry' that in case the number of channels in genre be filled to the extent of 10% of available capacity, then the distributor should be at liberty to deny carriage of a channel on the "first come first serve basis" cannot be accepted as DPOs are allocating only the alternate spare capacity that too with carriage fee. Further, the subscriber demand will play a role in continuance of such channel and a provision has already been made for discontinuation of channel if it fails to acquire a minimum percentage of subscriber base during predefined time period.

34. In order to protect DPOs from carrying a non-popular channel under 'must carry' it was proposed in the draft Interconnection regulations, 2016, that DPO can discontinue carrying of a television channel in case the monthly subscription, for that particular television channel is less than 5% of the monthly average active subscriber base of that distributor in the target market specified in the interconnection agreement, in each of the immediately preceding six consecutive months. On this issue, most of the broadcasters opined that such provision may give unilateral power to DPOs to discriminate and will be against the principle of network neutrality and will enable operator to act as gate keepers for channels. A broadcaster suggested that a provision may be made for DTH and HITS operators to discontinue a channel if the subscription, in the preceding six months is less than or equal to a given minimum of 10 % of the total active subscriber base of that operator averaged over that period. Many broadcasters stated that, since HD penetration is very low, it is likely that HD Channels in many case would not qualify the criterion of 5% and will be liable to be disconnected by DPO. Therefore, they demanded protection for HD channels in this regard. Some other broadcaster said that, similar is the case for English genre channels as there is very less population demanding for English language channels. On the contrary, some DPOs quoted that it should be permitted to discontinue the channel if subscription percentage remains below 5% on the average subscriber base of the past 3 months instead of 6 months, and after such disconnection the permissible period of denial to carry the same channel again should be increased from 1 year to 3 years.

35. The Authority noted that such provision existed in the Interconnections, 2012 which was applicable for DAS. The Authority is of the view that such provision would ensure that non-popular channels do not occupy the space on a distribution network. Therefore the provision has been retained with slight modification. In case of failure to maintain the required subscription levels, a DPO, in its discretion, could refuse to grant further access to the network for a period of further one year.

36. One of the unique features of digital networks is that it supports re-transmission of High Definition (HD) Channels. The picture quality and viewing experience in HD channels are far better than those of SD channels prevalent in the market. Generally, the bit-rate of HD channel is approximately two times of the bit rate of corresponding SD channels. Therefore, the Authority has mandated that in case one HD channel is discontinued or added by DPO then for the purpose of calculation of spare capacity, one HD channels shall be counted equivalent to two SD channels.

37. The Authority noted that at present there are only 17% of DTH subscribers are having HD set-top boxes and in case of MSO's subscribers, this figure is very low. Therefore, in such a situation, the likelihood of subscription of HD channels falling below 5% of total subscriber base of a DPO is very high. Therefore, the Authority is of the view that such channels needs different treatment and it has been decided that for the purpose of calculation of monthly subscription for HD TV channels, only the subscribers capable of receiving HD TV channels shall be considered.

38. However, the Authority has not agreed with the suggestion of some stakeholder regarding the protection to English language channels as it would be unfair to grant protection to channels on the language or genre basis and also it would be impossible to segregate the subscribers on the basis of their choice of language of channels.

39. On the suggestion of stakeholders in response to the CP regarding setting up of web-based interconnection request management systems, the Authority has constituted a task force to deliberate the issue of developing such a system.

40. The Interconnection Regulations, 2004 contained provisions relating to provisioning of signals of TV channels to seeker in a time bound manner. It was provided that a service provider should either provide the signals in the stipulated time of 60 days from the date of the request and, in case the service provider turns down the request, the reasons for such a refusal must be recorded in writing and conveyed to the seeker within 60 days from the date of the request so that the affected party can take corrective actions or agitate before appropriate forum, as the case may be. Time bound interconnection between service providers is essential for fair competition in the market and meeting the demand of the consumers in time. However, in the past, on many occasions, the Authority noted that even though providers (broadcasters or DPOs) did respond to the requests within the stipulated time, the negotiations to enter into mutually agreed written interconnection agreement were prolonged defeating the very purpose of the regulations. In many cases, due to prolonged negotiations, the time period of 60 days was not adhered to by either party. In the CP the issues relating to timely provisioning of signals / access to distribution network were discussed. To ensure the compliance of these regulations in letter and spirit, it was proposed in the CP that the 60 days period may be further sub-divided into sub-activities and RIO may contain necessary and sufficient conditions, so that a seeker can sign the same and send that to the provider for further necessary action, in case of any delay.

41. In response to the CP, most of the broadcasters and some DPOs supported the existing time line of 60 days for providing signals of TV channels/ access to the network, without any sub-division and suggested that financial disincentives may be levied on service provider in case of any default. Another broadcaster commented that 60 days period is not sufficient for a broadcaster to complete all the procedures for providing signals of TV channels and therefore it should be increased. Some DPOs stated that 60 days may be sub-divided into 2 periods i.e. 30 days each, the first for raising objections, technical audit etc. and the second for curing the defects. A cable operator commented that only 30 days are sufficient for providing signal of TV channels.

42. The Authority noted that the service providers are required to carry out certain activities before providing signals of TV channels/ access to the network such as commercial discussions for entering into written interconnection agreements, assessment of addressable systems, provisioning of Integrated Receiver Decoders (IRDs) and other technical infrastructure. To ensure timely provisioning of signals/ access to the network, it is necessary that discussions for signing of interconnection agreements are completed in time bound manner. Delays in signing of interconnection agreements results in delay in providing signals of TV channels/ access to the network. Many times it has been observed that either for want of certain additional information, or on some technical or commercial grounds, the refusal to enter into agreement was conveyed by provider to seeker at the far end of the permissible period. Therefore, the permitted 60 days time cannot be used for signing or refusal of interconnection agreement only. The time period for signing of agreement and remaining other activities to be carried out for providing signals of TV channels/ access to the network need to be divided so that the delays are eliminated. Therefore, the Authority was of the view that the seeker and provider should conclude all the commercial discussions by entering into the written interconnection agreement within 30 days from the date of receipt of request from a service provider and make necessary arrangements for provisioning of signals of TV channels/ access to the network within next 30 days from the date of signing of the interconnection agreement. Accordingly in the draft Interconnection Regulations, 2016, necessary provisions for dividing the 60 days period into two separate periods of 30 days each, for signing of agreement and provisioning of signals/ access to the network, were made. After analysis of the comments received in response to the draft Interconnection Regulations, 2016, it appears that the stakeholders do not have any specific comment other than what were already articulated in response to the CP and therefore, the provisions relating to time limit for provisioning of signals/ access to network as proposed in the draft Interconnection Regulations, 2016 have been retained in these regulations.

43. On the aspect of levy of financial disincentives on the service providers for delay, the Authority noted that generally the delays in providing signals / access to distribution networks were either due to delay in signing of agreements or disputes of varied nature between the service providers. Now separation of time periods for signing of interconnection agreements and remaining technical activities, and the requirement for signing of agreements on the basis of reference interconnect offer should be able to address the issue relating to delays in signing of interconnection agreement to a large extent. Disputes can be appropriately resolved by the service providers either through mutual discussions or the same can be decided by the dispute resolution forums. Therefore, the Authority is of the view that prescription of financial disincentives at this stage is not necessary.

44. In the Interconnection Regulations, 2004 and the Interconnection Regulations, 2012, one of the parameters permitted for denial of signals/ access to the network was default in payment. In the draft Interconnection Regulations, 2016 also, after detailed analysis of the comments received in response to the CP, the Authority proposed to continue with such provision which makes the principles of "must provide" and "must carry" non-applicable in cases where the seeker is in default of payment and continues to be in default.

45. In response to the draft Interconnection Regulations, 2016, some broadcasters stated that while considering default by a DPO (seeker), as a reasonable parameter for denial of interconnection request, default by the DPO with that broadcaster along with all other broadcasters operating in the sector should be taken into account. Another broadcaster commented that reasons for denial should also include previous outstanding with any broadcaster/ proven track record of non-payment, criminal record of DPO/ criminal proceedings pending against DPOs and DPOs not complying with technical specifications.

46. For any industry, the revenue flow across the value chain is of utmost necessity for the growth of the industry. It is right that a habitual defaulter service provider should face some additional conditions before provisioning of signals/ access to distribution networks. However, for doing so in nondiscriminatory manner, the industry needs to evolve an index to measure the level of default of a service provider, which does not exist today. Whenever, such mechanism is evolved by the industry, this could be another reason for imposing some additional conditions. The existing provisions relating to the default are inclusive and not exhaustive. The service providers are free to impose any other reasonable condition in non-discriminatory manner and seekers are free to respond to them. Therefore, the Authority, has retained the provision which makes principles of "must provide" and "must carry" non applicable to the cases where the seeker is in default of payment and continues to be in default.

47. For ease of subscription and management, in addition to offering the channels on a-la-carte basis, distributors offer bouquets of channels as per the demand of subscribers. However, in the past, it was noted that, there has been direct or indirect influence by broadcasters on distributors for packaging of their channels in specific bouquets offered by them. Generally the price difference between a-la-carte and bouquet offerings was kept very high. Such practices led to offering of some non-popular channels along with few popular channels as part of bouquets. This practice led to compromise of consumer choice as the subscribers were swayed to subscribe such bouquets in place of a-la-carte channels due to wide difference between the bouquet price and the sum of a-la-carte prices of constituent channels. In order to address the issue, in the draft Interconnection Regulations 2016, it was proposed that the broadcaster shall not include any clause in the interconnection agreement which, directly or indirectly, affects the decisions of a DPO to package channels in a bouquet offered to the subscribers.

48. In response to the draft Interconnection Regulations, 2016, some broadcasters opined that complete restriction on broadcasters to ask for specific packaging should not be permitted as this affects the revenue stream of a broadcaster. Broadcasters also stated that niche channels would suffer due to this and it would affect the reach of channels in terms of geographic distribution and therefore it may limit the production of good quality content in the industry. A news broadcaster commented that DPOs should be encouraged to create "genre wise packs" rather than a mix/ match of channels. Further, for packages covering wide genres, DPOs should not be allowed to disadvantage a channel with other channels in the competing genre.

49. Some DPOs have suggested that a provision should be added in the regulations which prevent broadcaster to impose any condition on a distributor to mandatorily offer all bouquets formed by such broadcasters. They have argued that if no such provision is added then the broadcasters would try and push their bouquets instead of subscribers choosing bouquets as per their wishes and tastes.

50. In order to address the issue, the Authority, in the Telecommunication (Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff Order, 2017 has brought in a new framework, wherein a broadcaster has freedom to offer its pay channels in form of bouquet(s). Similarly, a distributor has also been given freedom to form its own bouquet(s) by including a-la-carte pay channels or bouquet(s) of pay channels of different broadcasters.

51. The arguments of the stakeholders that the proposed restrictions on packaging may limit the production of good quality content and affects the revenue stream of a broadcaster are untenable as subscription of channels/ bouquets by consumers as per their choice should encourage the broadcasters to offer good quality channels to meet their demand. For improving the reach of channels in terms of geographical distribution, the Authority has already increased the scope of "must carry" provisions in these regulations. However, the reach of channels in terms of subscription must be left to choice of consumers as this is one of the primary reasons for implementation of addressability in the distribution system.

52. Since the freedom for forming the bouquets has been given to both the stakeholders, therefore, it is expected that they will form the bouquets on the basis of consumers demand. Any kind of direct or indirect influence on DPOs for deciding composition of bouquet, other than the choice of consumers, affect the orderly growth of the sector. In order to ensure that choice of the consumers remain only guiding factor for determining the composition of bouquets, it is necessary to ensure that no broadcaster interferes with bouquet formation at the level of distributor.

53. For distribution of pay channels by DPOs on a-la-carte basis or for distribution of bouquets of pay channels, formed by broadcasters, it necessary that the interconnection agreement is in place. If a DPO enters into an interconnection agreement with the broadcaster for offering of broadcaster's bouquet and it forms its own bouquet(s) by including only some pay channels of the broadcaster's bouquet then the revenue settlement between the broadcaster and DPO should be according to the interconnection agreement signed for those particular channels on a-la-carte basis. Further to ensure that choice of a-lacarte selection remain available to customers in all circumstances, in these regulations the broadcasters and DPOs have been mandated to enter into interconnection agreement on a-la-carte basis for all pay channels before distribution.

54. On the concerns of DPOs regarding imposition of any condition to mandatorily offer all bouquets formed by such broadcasters, the Authority is the view that if all the constituent channels of the bouquet formed by the broadcaster are not available on the platform of the DPO then by default, the DPO will not be under obligation to carry such bouquet of broadcaster. Accordingly, necessary provisions have been made in these regulations that a broadcaster cannot provide any pre-condition as well as any clause in the interconnection agreement which directly or indirectly affect the packaging of the channels in a bouquet.

55. In case of DAS and HITS services, the last mile connectivity is mostly provided by LCOs. As per Cable TV Act and rules made there under, LCOs are registered in the head post offices of the areas of their operation. The Interconnection regulations, 2004 and the Interconnection regulations, 2012 contained provisions relating to time bound provisioning of signals of TV channel to LCOs within 60 days from the date of request.

56. In these regulations, to ensure the timely signing of interconnection agreement and provisioning of signals, the time period of 60 days has been divided in two parts. It has been mandated that the DPOs should enter into an interconnection agreement within 30 days from the date of receipt of request and thereafter provide the signals of TV channels to the LCO within next 30 days.

57. To ensure the proper revenue flow in the value chain, it is essential that the invoices are raised in time and due payments are also settled in time. Arrears, if any, need to be reflected in the subsequent invoices to ensure transparency in the business transactions. Many times, during the interactions with the stakeholders, it was reported that either in the absence of regular invoices or due to non-intimation of arrears in the subsequent invoices, the LCOs are suddenly confronted with demand for payment of huge amounts as arrears for last many months. Many a time LCOs have no information as to how such huge pending dues have been shown against them, especially when they were making regular payments and the arrears were not reflected in the invoices issued in the immediate past. Often it leads to disputes.

58. The issue can be tackled by ensuring that the invoices are issued on a monthly basis clearly showing the current dues as well as the arrears, if any. This will also ensure the transparency in the business transactions and revenue flow in the value chain. It is necessary to curb the practice of bad debts in the sector as it ultimately affects the price to subscribers. The latest invoices should clearly show the level of arrears outstanding against the LCO. The LCO should not be considered in default of payment to a distributor of TV channels if it produces the copy of immediately preceding six consecutive month's invoices with corresponding payment receipts, as a proof of having paid its dues. Such stipulation will protect the LCOs from unexpected and unforeseen arrears being suddenly thrust upon them. Accordingly, suitable provisions have been made in this regard.

59. There may be different types of minimum guarantee. For example, a service provider may insist on other service provider to pay a fixed amount irrespective of number of subscribers actually subscribing a channel or number of subscribers in the network. There may be a situation, where a service provider might ask the other service provider to ensure a minimum number of subscribers before providing signals or stipulate a condition that only the service provider having a stipulated number of subscriber base can seek signals. There may be another possibility that the service provider might insist for a guarantee for a minimum percentage of subscription of its channels for providing signals of TV channels. A situation may also arise where a DPO before providing access to its network may put a condition that it will carry the requested channel only if the broadcaster enters into agreement for carriage of additional channel(s) or the DPO prescribes a certain minimum period for carriage of the requested channels.

60. The Interconnection Regulations, 2004 provide that in addressable systems, no service provider shall stipulate, insist or provide for any clause in an interconnection agreement with a distributor which would require such distributor to pay a minimum guarantee amount as subscription fee for the services provided. Similarly, the Interconnection Regulations 2012 provided that no service provider shall demand from any other service provider a minimum guarantee amount as subscription fee for the channels provided by such service provider. In a competitive market, insistence on any kind of minimum guarantee by either party is considered as an entry barrier and restricts the choice of consumers. The issue of minimum guarantee was discussed in the CP.

61. In response to the CP, most of the broadcasters and DPOs opined that conditions such as minimum guaranteed number of subscribers or any fixed amount as a subscription fee should not be allowed. Broadcasters were also of the view that subscriber numbers and the rate of channels should be the core parameter for calculation however, discounts based on network size, LCN (logical channel numbers), parity etc. within the allowed caps should be considered for calculation, and minimum guarantee as a pre-condition should not be allowed. DPOs also favoured the prohibition of a minimum subscription guarantee.

62. Any kind of minimum guarantee between the interconnecting parties is reminiscent of the analogue era, in which the numbers of subscribers were either not verifiable or it was difficult to ascertain as to how many subscribers are subscribing the channels. Therefore, in order to protect their revenue, service providers used to charge a fixed amount from the other service provider or used to bill for a minimum number of subscribers irrespective of whether the other service provider has been able to get that many subscribers or not. With the advent of digitisation and addressability in the sector, every subscriber accessing a particular channel can be counted and the same can be easily verified. The malaise of underreporting of subscribers was a main cause of revenue loss and disputes in the sector and the same has been cured by addressable systems. Despite that, the Authority has observed that the minimum guarantees in some or other form are still continuing in the sector. Stipulation of any minimum guarantee for number of subscribers or stipulation of any fixed fee/ fixed amount is not only anti-competitive but it also creates entry barriers for new service providers. It also defeats the purpose of implementing digitisation and addressability in the sector. This is against the objective of providing choice to the consumers and making services more affordable. Therefore, as far as the issue of minimum guarantee amount or fixed fee is concerned, the Authority is of the view that service provider neither can insist for payment of a fixed amount nor can provide such clause for payment of such fee in the interconnection agreement. Accordingly the necessary provisions have been made in these regulations. The Subscriber Management Systems (SMS) of addressable systems provides for a transparent mechanism to count the number of subscribers availing broadcasting services and therefore a provision has been made that the 'broadcaster's share of maximum retail price' payable by a DPO shall be calculated on the basis of number of subscribers.

63. As far as the issue of prescription of guarantee of a minimum number of subscribers or subscriber base is concerned, the Authority is of the view that for ensuring competitiveness in the market and to remove entry barrier for new entrants, no service provider should be allowed to stipulate a pre condition for guarantee of minimum subscriber base or minimum subscription percentage of its channel(s). However, the Authority is also conscious of the fact that many service providers, in order to promote their channels, may like to provide discounts, within the prescribed limits in non-discriminatory manner, to other service providers on their fulfilling of certain target of the subscriber base or subscription percentage of its channel(s). In such a situation, to ensure the orderly growth of the sector, the Authority is of the view that it would be unfair to prohibit offering of such discounts. However in no case, such prescription should transcend to the denial of signals or discontinuation of signals or a pre-condition for giving the channel.

64. As far as, the issue of prescribing of minimum guarantee for period or minimum guarantee for number of channel(s), as a pre-condition for providing access to the network, by a DPO, is concerned, the Authority is of the view that such pre-condition would create an entry barrier for broadcasters and therefore the same has also not been allowed and such pre-condition has been qualified as unreasonable term. However, the DPO would be free to offer discounts, with in prescribed limits, on the carriage fee for offering access for carrying of additional channels or for entering into longer duration agreements.

65. Publication of RIO by service providers is one of the most effective ways of meeting non-discrimination and level playing field requirements. It also provides enough flexibility to service providers for offering their services as per their business plans. In the CP, the issue of allowing interconnection agreements based on mutually agreed terms, which do not form part of RIO published by a broadcaster or a DPO, was deliberated. It was also discussed whether the RIO should be the only basis for signing of interconnection agreement and the RIO should include all the terms and conditions including rates and discounts, to ensure non-discrimination and level playing field.

66. After considering the comments of the stakeholders in response to the CP, to effectively ensure the nondiscrimination on ground, in the draft Interconnection Regulations, 2016, it was proposed that an interconnection agreement, either for providing signals of TV channels or for access to the network for re-transmission of channels, should be entered into in accordance with the RIO.

67. In response to the draft Interconnection Regulations, 2016, some broadcasters and one broadcasters association stated that interconnection agreement to be based only on RIO takes away broadcasters' ability to negotiate the terms of trade while the Copyright Act permits mutual negotiations by Broadcast Organisations.

68. The RIO published by a service provider is an offer on the basis of which a service provider wants to provide the signals of TV channels or access to the network to the seeker on non-discriminatory basis. However, in the past, the flexibility provided in the Interconnection Regulations, 2004 and the Interconnection Regulations, 2012, for signing of written interconnection agreement on mutual agreed terms, was many times misinterpreted by service providers to transcend beyond the regulatory framework and discriminate among similarly placed seekers. This was giving rise to number of disputes between service providers. In a regulated sector, to ensure level playing field, it is essential that all service providers conducts their business transactions as per the notified regulations and orders.

69. The argument, that the signing of interconnection agreement only on the basis of RIO, takes away the rights of broadcasters under the Copyright Act which gives them freedom for mutual negotiation for licensing their work, is misplaced. Here it is important to note that these regulations in no way regulate the licensing or assignment of copyright 'work' as defined in the Copyright Act. These regulations regulate the distribution of channels to the subscribers and signing of interconnection agreements for that purpose. It is further important to note that these regulations give complete freedom to broadcasters to devise and design their RIOs as per their own choice subject to compliance with applicable regulations. The regulations provide enough scope for mutual discussions on the basis of declared parameters. The RIO framework provides a common and transparent basis for all agreements to be entered for provisions of signals or access to the network. For ensuring the orderly growth of the sector, it is essential that the regulatory framework provides for an easy entry as well as exit options for service providers. For a new entrant in the sector, before committing the requisite investments, it is of paramount importance that he is reasonably assured of getting forward and backward linkages. In case of broadcasting and cable TV sector, for a new broadcaster it is essential to have reasonable assurance of accessing the networks at declared terms and conditions. Similarly, for a new distributor it is essential to have reasonable assurance of getting signals of TV channels at declared terms and conditions. Mutual agreements, beyond the declared RIO defeat this vital requirement for orderly growth of the sector.

70. It also helps to ensure that new entrant operators can be confident of getting terms which will not be less favourable to those applied to others. The RIO must define the parameters for arriving at an agreement on acceptable terms and such parameters should be objective, measurable and computable. Therefore, the Authority is of the view that all the interconnection agreements should be signed in accordance with RIO.

71. As per the Interconnection Regulations, 2004 and the Interconnection Regulations, 2012, the service providers were required to publish their RIOs on their websites. Further, these regulations also created an obligation on the service provider to file a copy of RIO with the Authority. If any stakeholder felt that the terms and conditions of an RIO contravene the provisions of the regulatory framework then that stakeholder was at liberty to raise his objection with the provider publishing the RIO or at an appropriate forum. On many occasions it was observed that such objections were often raised after long time from the date of publication of RIO. This resulted in delay in initiation of corrective action, if any, by the provider. Further, an amendment to the RIO at a belated stage necessitated amendments in agreements with multiple seekers already executed on the basis of that RIO. The issue was deliberated in the CP wherein a consultative approach was suggested to address these issues. After considering the comments of the stakeholders in response to the CP, in the draft Interconnection Regulations, 2016, it was proposed that the service provider shall publish finalise its RIO after considering the comments of stakeholders in the value chain. Such provision would ensure that the final RIO is compliant to the regulatory framework and lead to reduction in disputes. Even after this exercise, an aggrieved stakeholder can approach an appropriate forum for settling their disputes on RIO.

72. In response some broadcasters commented that enabling DPO to raise objection and making it obligatory on the part of broadcaster to consider and amend RIO as per those objections would introduce lot of complications in the process as multiple DPOs (DTH/MSOs) keep on raising one objection or the other and the RIO will never attain finality. One broadcaster stated that such a right should not be given to DPOs and only TRAI should hold the right and solely be responsible to intervene in the RIO being drafted and published by the broadcaster. One DPO suggested that the broadcaster should be made to mandatorily report its RIO or amended RIO to TRAI to verify the compliance of the same with the regulatory requirement. Another broadcaster stated that if the RIO is not in compliance with the regulations then any stakeholders can approach regulator or Hon'ble TDSAT. Majority of DPOs stated that it should be mandated that all draft RIOs be first submitted to TRAI to go through them and published after its approval. If the same are non-compliant, the Regulator can take appropriate action. Further they stated that the DPOs should also be allowed to challenge the same, if some clauses are contrary to the Regulatory Framework.

73. After considering the comments of various stakeholders on this issue and on giving cautious consideration to the provisions in relation to finalization of the RIO by broadcasters and distributors, the Authority observed that the proposed process for finalisation of RIO may lead to delays and repetitive work. Also, it was not able to guarantee the non-occurrence of the disputes after publication of final RIO by a service provider. This extra burden can be easily avoided by ensuring that the service provider publishes its RIO in compliance of the regulatory framework at the initial stage itself. Further, permitting a draft Reference Interconnect Offer which is not in conformity with the Interconnect Regulations would be antithetic to the very purpose of regulating interconnection between broadcasters and DPOs. Therefore the Authority is of the view that the broadcaster and the DPO shall take utmost care at the time of publication of RIO at initial stage itself for offering of their channels or networks, as the case may be, so that it fully conforms to the provisions of the regulations and Tariff Order. All the necessary terms and conditions shall form part of the RIO so that the RIO when signed by the other party becomes a complete interconnection agreement. For this reason provisions relating to this aspect have been modified. In these regulations, it has been mandated that copy of RIO shall be submitted to the Authority for record. Needless to mention that, the stakeholders would have freedom to raise their objections on the RIO terms which are not in conformance with the regulatory framework at appropriate forum.

74. In the draft Interconnection Regulations, 2016, comments were solicited from the stakeholders on the values/ rates specified for distribution fee and discounts offered by broadcasters on their pay channels and bouquet of pay channels. The distribution fee was proposed at the minimum rate of 20% of the MRP of a pay channel or bouquet of pay channels, as the case may be. Further, the Authority proposed that a broadcaster may offer discounts on the MRP of a channel or bouquet to a DPO, to the extent that the sum of distribution fee and discounts do not exceed 35% of the MRP of such channel or bouquet. Similarly it was also proposed that a DPO may offer up to 35% discounts on the rate of carriage fee declared by such DPO. It is important to note that the proposed limit of 35% on the sum of distribution fee and discounts as aforesaid is only in relation to commercial terms between the broadcaster and the DPO and does not apply to the discounts that maybe provided by the DPO to the subscriber. Basic purpose of putting a cap on discounts on business to business transactions is to persuade service providers to declare realistic prices for their products/ services and ensure level playing field.

75. On this issue, a broadcaster commented that distribution fee should be 10% of the MRP and placement fee and marketing fee to be subsumed in the various discount parameters of broadcasters, with a capping of 15% and transparently disclosed in the RIO. While another broadcaster opined that the distribution fee should be reduced to 15% and discount on MRP be increased to 20% without altering the cap of 35%. On the other hand, most of the DPOs have suggested that instead of 20%, the distribution fee should be 55% as it was in CAS regime. One of the DTH operators has stated that the distribution fee of 20% will substantially squeeze the revenue generation capacity of the distributors and they will have to depend on the pricing strategy of broadcasters for their income. Further, they have also stated that the DTH operators incur a cost of around 4 to 5 % as collection cost. According to DTH operators, the collection costs are not borne by the MSOs. Accordingly, the distribution margin for the MSO would continue to be 20% however for DTH owing to the licence fee @ of 10% of gross revenue and collection cost, additional margin in the range of 5 to 6% should be provided.

76. In this regulatory framework, the price of network capacity has been separated from the price of channels. As per the Tariff Order, for recovering the cost of distribution of channels which includes subscriber management, the distributors are permitted to charge the network capacity fee. Therefore the contention of DPOs that they would depend on pricing strategy of broadcasters for their income is not tenable. The distribution fee is for the purpose of managing the distribution of pay channel(s) or bouquet(s) of pay channels only. Keeping in view the facts that the DTH operators are required to pay the license fee to the Government, the expenses of the distributors involved in the collection and accounting of the payments, sharing of the distribution fee amount between MSOs and LCOs etc., the Authority has provided for minimum 20% of the MRP as distribution fee. The DPOs suggestion that instead of 20%, the distribution fee should be 55% as it was in CAS regime, is not tenable because at that point of time there was no separate network capacity fee payable by subscribers. This regulatory framework is not directly comparable to the earlier regulatory frameworks wherein the price of distribution and channel was combined.

77. In a business, the discounts on MRP of a product/ service provide flexibility to the suppliers to increase its sales by improving efficiency in the value chain. On the other hand very high level of discounts may become a source for discrimination and source of exploiting consumers. It was observed in the past that many times service providers, in their RIOs, declare very high rates for their products or services and then they offer deep discounts on such rates. Unreasonable amounts of discounts lead to illusionary/ perverse pricing and non-level playing field. The Authority felt it necessary to put a reasonable cap on discounts as absence of such prescription would hamper the commercial interests of various stakeholders and would be detrimental to choice of the subscribers. Therefore, there is a need to regulate such discounts so as to provide the same on transparent, measurable and non-discriminatory terms. Further, the Authority has agreed with the views of some broadcasters that maximum amount of discounts on prices declared in the RIO should be capped. This will help in declaring the optimum price for their services i.e. the price at which their gross revenues are maximised. This will also reduce the possibility of discrimination between the similarly placed service providers. The cap on discounts suggested by various stakeholders varies from 33% to 50%. Therefore, the Authority is of the view that the sum of distribution fee and discounts offered to DPO shall be restricted to 35% of the MRP. Similarly maximum discount on the rate of carriage fee offered by DPOs to broadcasters shall also be limited to 35%. Further, in the regulations, it has provided that any such discounts must be offered in the RIO on the basis of fair, transparent and non-discriminatory terms and the parameters of discounts shall be measurable and computable.

78. In the interest of public good, a provision has been made in these regulations which allow DPOs to offer discounts exceeding 35% of the rate of carriage fee to certain TV channels specified by the Authority through directions.

79. Charges paid by a broadcaster to a DPO for carrying its TV channel(s) over the DPO's network are commonly termed, by industry, as Carriage fee. The trend of carriage fee, started in analog era, was perhaps due to bandwidth constraints of transmission medium in cable TV systems. An analog cable TV system can generally carry around 80-100 channels while the number of channels available for broadcast are more than the network capacity. Though, in the addressable system, the channel carrying capacity has increased but at the same time, the number of permitted private satellite TV channels has also sharply increased. In order to increase the network capacity further, a DPO is required to upgrade its network infrastructure which entails additional cost for the DPO. In order to meet a part of such costs, carriage fee transactions took place between the broadcasters and DPOs.

80. The issue relating to carriage fee was deliberated in the consultation paper on tariff for TV services. In response to the consultation paper, majority of broadcasters were against the practice of carriage fee payments stating that capacity constraints in digitised networks are no longer a concern. They argued that with address ability there has been a steady increase in the subscription revenues and therefore the dependence of the DPOs on carriage fee should diminish. Another suggestion from the broadcasters was that the Authority must fix the carriage fee of a DPO based on the infrastructure cost incurred by that DPO with a cap on the annual carriage fee at 50 paisa to one rupee per channel per set-top-box.

81. On the contrary, the DPOs did not favour any regulation of the carriage fee and had proposed that carriage fee be decided based on mutual negotiations. They had stated that capacity of the distribution networks remains constrained even after the digitisation process and that carriage fee incentivise a DPO to add channel capacity and upgrade its network. One DPO has suggested that carriage fee be initially limited between Rs. 2 to Rs. 5 per channel per subscriber per month and be gradually reduced with an increase in the number of subscribers.

82. In the draft Interconnection Regulations, 2016, it was proposed that a maximum rate which a DPO may charge from a broadcaster for carrying of channel would be Rs. 0.20 per subscriber per month for SD channel (Re. 0.40 per subscriber per month for HD channel) calculated on the average active subscriber base of the target market and it would gradually reduce with the increase in the monthly subscription of the channel and it would become nil, if that particular channel achieves 20% penetration in that market and continues so.

83. In response to the draft Interconnection Regulations, 2016, most of the broadcasters have commented that there is no rationale for carriage fee, as in terms of Tariff order, network capacity fee is charged from consumers by DPOs. It was stated by a broadcaster that carriage fee must be co-related with the actual number of subscribers subscribing that channel and not on the subscriber base. While another broadcaster suggested that the carriage fee should be capped at 10 Paisa per subscriber per month. Some broadcasters commented that for calculating carriage fee for certain sets of channels (e.g., English language GEC, Movies, News etc.), the target markets in terms of states should be allowed to be further subdivided into cities.

84. News broadcasters and their association commented that no carriage and placement/ marketing fee should be charged from the news broadcasters. Another news broadcaster also commented that in addition to capping of carriage fee, Placement Fee shall also be regulated and capped. A broadcaster suggested that to calculate carriage fee for HD channels, only HD subscriber base of a DPO in the target markets as declared by a broadcaster should be considered.

85. Most of the broadcasters have expressed their concern with the manner of calculation of carriage fee prescribed in the Schedule-I of the draft Interconnection Regulations 2016. Their apprehension was that with such type of calculations, the DPOs will not allow channels to reach beyond 20% subscriber base for their own carriage benefits as DPOs would never prefer a model where channels reach to a target of 20 % subscriber base in return of no carriage fees paid to them. Some news broadcasters stated that for free to air News Channels, all charges i.e. Carriage Fee/Marketing Fee/Placement Fee put together should be capped at Rs. 0.20/- per month per STB. However, an individual stated that the rate of carriage fee at Rs. 0.20 will effectively reduce the carriage fee component drastically, bringing great relief to the broadcasters.

86. Most of the DPOs have suggested that there should not be a slab system in the calculation of carriage fee; this takes away the right of DPOs to package. One DPO has stated that carriage fee transaction is of Business to Business (B2B) nature therefore regulating it is not in the interest of subscribers. Most of the DPOs have suggested increasing the carriage fee cap from 20 paisa to 80 paisa and from 40 paisa to Rs.1.20 paisa for SD and HD channels respectively.

87. In this regulatory framework, as per the Tariff Order, for recovering the cost of distribution of channels the distributors are permitted to charge the network capacity fee. This amount would vary based on the number of channels subscribed by individual subscriber. Therefore, it is expected that a DPO would seek signals of channels which are in demand in a particular market. For such channels, a DPO cannot demand for a carriage fee as it would be able to recover retransmission expenses from the network capacity fee charged from the subscribers. However, for carrying channels, which have been requested by a broadcaster, a DPO may not be able to recover fully the retransmission expenses from the network capacity fee charged from the subscribers till the channel is subscribed by sufficiently large number of subscribers. In order to fill the gap between the retransmission expenses incurred by a DPO on carrying a particular channel on its platform and network capacity fee amount charged from subscribers it would be reasonable to permit a DPO to charge carriage fee to that extent from the broadcaster of that channel.

88. The Authority agrees with the views of some broadcasters that a cap on carriage fee rate is necessary to effectively implement the principles of 'must carry'. In the past, on many occasions, the carriage fee data was sought from broadcasters. But the broadcasters have failed to give segregated data for carriage fee. Instead they had provided a mixed data which included carriage fee, placement, marketing fee, technical fee, bandwidth support and other fee making it impossible to clearly distinguish the data pertains to carriage fee paid to cover the cost of re-transmission of channels on the platform of DPOs.

89. Since the segregated data for carriage fee alone was not available, the Authority has taken into account various sources, which are relevant, to arrive at a cap for carriage fee. In case of free to view DTH service operated by Doordarshan, for acquiring capacity for carrying one channel on the DTH platform, the reserve price was kept at Rs. 4.30 Crores, as per the RFP published in 2016. As per the industry estimates, there are 20 to 30 million consumers availing DD free dish service. Which indicates that the per channel cost of carrying a channel is Rs. 2.15 per year, considering 20 million subscribers, equating to around Rs. 0.18 paisa per subscriber per month. Further, the mixed data relating to carriage fee and others available with the Authority and in public domain have also been analysed. This analysis also supports the proposed cap for carriage fee. The Authority is conscious of the fact that the rate of carriage fee varies with the changes in the input cost incurred for erection, operation and maintenance of the distribution networks and number of subscribers. Therefore the cap on carriage fee should be reviewed on periodic basis say in every 2 to 3 years period. In case of some material changes in the input costs, the review can be initiated early also.

90. Thus, the Authority came to a conclusion that the carriage fee rate shall in no case exceed Rs. 0.20 per channel per subscriber per month. Since the bandwidth consumed by HD channels is approximately double the bandwidth required for SD channels therefore the Authority has kept the ceiling of carriage fee as Rs. 0.40 for HD channels. The DPOs may declare the rate of carriage fee in their RIOs within the prescribed cap for this purpose to optimise their revenues.

91. In this framework, the provision 'must carry' has been enshrined keeping in view the channels whose presence is not known by the subscribers. In order to expand its reach, the carriage fee will enable broadcasters to interconnect with DPOs in a desired target market. There are six private DTH operators which are having capacity of carrying around 400-600 channels on their platforms. The majority of MSOs are having capacity ranging from 300-600 channels. The Authority in the tariff framework has decided that the network capacity amount to be charged by the DPOs from the subscribers, to recover the distribution expenses. In the framework, a DPO has been assured for a network capacity amount for 100 channels from the subscribers. Further, the network capacity fee increases with the increase in subscription of channels.

92. When the real choice will become available to subscribers, the number of channels subscribed by a household may vary in the range of 80 to 120 channels which come out to be approximately 20% of the average platform capacity of a DPO. Therefore if a channel attains 20% of the subscriber base it can be reasonably assumed that the said channel is demanded by the subscribers which is equivalent to a channel being carried under 'must provide' which do not attract any carriage fee. Therefore the Authority is of the view that, in case a channel gathers popularity and wider viewership, the quantum of carriage fee should diminish owing to the increased revenues accruing from subscriptions by the DPO for that channel. Further, the carriage fee payment must decrease with the increase in the subscription level of a channel even before reaching 20% penetration level as the network capacity fee paid by subscribers also contributes towards recovering the retransmission expenses.

93. For ease of computation, the Authority has decided that in a given month, if the monthly subscription of the channel reaches 5% or more but below 10%, of the monthly average active subscriber base of the DPO in target market, there should be, a reduction of 25% in carriage fee amount payable by the broadcaster in that month and, a reduction of 50% in carriage fee amount in case the monthly subscription of the channel reaches 10% or more but below 15% of the monthly average active subscriber base and, a reduction of 75% in carriage fee amount in case the monthly subscription of the channel reaches 15% or more but below 20%, of the monthly average active subscriber base. If the monthly subscription of channel reaches 20% of monthly average subscriber base in a given month, then the DPO shall not charge any carriage fee for that month.

94. The Authority observed that, a channel reaches to all the subscribers in the geographical area covered by a particular head end or the earth station installed by a DPO. Therefore, it is legitimate expectation on the part of DPOs to calculate the carriage fee amount by considering the monthly average active subscriber base of the head end or the earth station. The Authority also observed that a particular head end covers more than one state and therefore restricting the target market area to the boundaries of state will not be reasonable. Therefore, the Authority has decided that every DPO shall declare coverage area of each distribution network head end wise or Earth station wise as a target market. However, to meet the specific needs, it shall be permissible for a distributor to declare, in non-discriminatory manner, any area within the coverage area of distribution network(s) as a target market(s).

95. In respect of HD channel, the Authority observed that the HD channels can be seen only if a subscriber's STB is capable of receiving HD signals. Therefore, for carriage of HD channels the average active subscriber base of the distributor, capable of receiving HD TV channels should be considered. Accordingly provision has been made in the regulation that for arriving the carriage fee of HD channels, the average active subscriber base of the DPO in that month in the target market shall be of subscribers capable of receiving high definition television channels. The apprehension expressed by some broadcasters in their comments that the DPOs will not allow channel reach beyond 20% for their own carriage benefits is not tenable as it is in the interest of DPOs to get more network capacity fee and subscription fee from distribution of channels. Moreover, if the channel is attractive, the subscriber would like to subscribe such channels. The DPOs cannot deny subscriber choice.

96. In addressable systems, the technology provides for an Electronic Program Guide (EPG) wherein the channels being carried on a DPO's network can be arranged in a simple and easy to understand manner so that the subscriber can easily go through this guide and select the channel of choice instead of flipping through all the channels. In the draft Interconnection Regulations, 2016, the DPOs were mandated to list all the channels available on the platform in the EPG, in such a manner that a consumer can easily select the channel of its choice. The genre and language wise listing of TV channels in the EPG was proposed in the draft Interconnection Regulations, 2016 to ensure placement of a channel among similar channels. Further, in the draft, it was proposed that the broadcaster cannot put any pre-condition for providing signals to the DPOs to place his channels at a particular position in the EPG or to assign a particular number to his channel as such stipulation may not be practically possible to implement. For example, if any two broadcasters insist for same position in the EPG as a pre-condition before providing signals of their TV channels then it is not practically possible for a DPO to meet the pre-condition.

97. In response, most of the broadcasters opined that the placement of channels and placement fee should be brought under the ambit of regulatory framework. As per them, non regulated placement and marketing fee makes the model non-transparent and create a back door entry by allowing negotiated agreements between DPOs and broadcasters for LCN.

98. In these regulations the broadcasters have been given a complete freedom to declare the genre of their channels and in terms of the regulations, it has been mandated that a DPO shall place the channels in the EPG under the respective genres so declared by the broadcasters. Further it has also been mandated that DPOs shall place the channels of the same genre in such a manner that all TV channels of same language within the same genre shall appear together consecutively in the EPG. In order to curb the practice to frequently change LCN number, it has been mandated that LCN number once allocated will not be changed for duration of at least one year. Therefore, the placements of channels have been adequately regulated and necessary protection has been granted to the broadcaster so that their channels are not placed at any disadvantageous position in the EPG. Hence as such there is no requirement for a broadcaster for asking for a specific position in the EPG.

99. In the new regulatory framework, emphasis has been increased on consumer choice. Therefore, when consumers will choose only selected channels which they actually want to view, the importance of placement of channel reduces drastically. Further, in the regulatory framework, the carriage and placement have been clearly distinguished. The carriage fee as per demand of the stakeholders has been regulated and must carry provisions would ensure the access to the distribution networks in nondiscriminatory manner. Earlier, these two kinds of fees were clubbed together by service providers and non payment of combined fee could have denied a channel the access to the network. Now the same will not be possible. Mandating provision for discount within ceiling of 15% for allocation of placement or LCN as some percentage of channel price (MRP) may not serve the purpose as it will create a non level playing field for pay channels vis-a-vis FTA channels as in case of FTA channels the MRP is nil. However, in case, a broadcaster still wishes to place its channel at a particular position or a specific number assigned to its channel, subject to the provisions of these regulations, the broadcaster may offer discount within the prescribed framework or pay the mutually agreed fee, after signing the interconnection agreement, to a distributor for placing the channel. It is important to note here that such interconnection agreements, signed for placement of channels, shall also be non-discriminatory. Such agreements, if any, shall be appended with the main interconnection agreement and would be filed with the Authority as per the regulations notified by the Authority from time to time. It will ensure the transparency.

100. It is noted that in the comments received from the stakeholders and the agreements entered by service providers, varied terms like marketing fee, bandwidth support fee, channel visibility fee etc. are used for different purposes and commercial arrangements between broadcasters and DPOs. Any such commercial arrangement is a type of interconnection agreement and therefore it has to be on non-discriminatory basis. Therefore, to avoid the regulatory gaps, it has been mandated that in case more than one interconnection agreement are entered with a distributor of television channels in respect of television channel(s) or bouquet(s) of pay channels, each subsequent interconnection agreement shall contain the details of the earlier agreements in force with that distributor for such channel(s) or bouquet(s).

101. It is also observed that many times a fee in the name of marketing is paid by a service provider to other service provider for the promotion and advertisement of its services. Sometimes broadcasters provide incentives to the distributors for inclusion of channels in the bouquets offered by the DPO in the name of marketing. In these regulations, the Authority has clearly mandated that no incentive, in whatsoever name, can be given by the broadcaster to the DPO for inclusion of its channels in the DPO's bouquet because it results in pushing of channels to the subscribers. The marketing fee towards promotion and advertisement of services contributes towards increase in business which is due to the effort of the two parties. Therefore, there cannot be a specific parameter for regulating such fee. Hence, at this stage, any regulation by Authority on such fee is bound to be a porous regulation. Still the Authority has permitted that a service provider may offer transparent discount to the other service provider out of the limit of 15% if it is mutually agreed. However it has been decided that any agreement, for any kind of fee for a channel, between two service providers should be made part of interconnection agreement and reported to the Authority to enable the Authority to monitor the industry practices. Audit of Addressable System before Provisioning of Signals

102. The Authority in its earlier regulatory framework had prescribed technical audit methodology before provisioning of signals. In the CP, the issues in the current methodology of technical audit of addressable systems and need to review them were discussed.

103. In response to CP, broadcasters opined that before any license is granted by MIB a mechanism should be introduced to ensure that any applicant seeking license to operate is completely compliant of addressable system requirements. A DTH operator commented that the responsibility of audit lies with the broadcaster however such audit should be restricted to once a year and added that technical audit for each new channel should not be conducted every time. Another DTH operator stated that if the broadcaster intends to do the technical audit, it should be done either after providing the channel or simultaneously, and opined that TRAI or TDSAT or appropriate forum should take action against erroneous parties. Some DPOs opined that onus of audit should not lie with broadcasters and suggested that TRAI can publish a list of authorized auditors who can be approached by DPOs to get its CAS and SMS independently verified. Some DPOs commented that broadcaster should be mandated to complete audit within 15 days else issue IRDs after signing the interconnect agreement within next 15 days. An MSO and an LCO association stated that if a platform is inspected by BECIL/authorized agency, then no objections should be raised however, if no such inspection is done, broadcasters should audit in 30 days. Taking into account of the suggestions and concerns of the stakeholders certain clauses were proposed in the draft Interconnection Regulations, 2016.

104. In response to the draft Interconnection Regulations, 2016, broadcaster association stated that the broadcaster should be given the right to conduct the audit of the technical systems of DPOs through its own technical team; BECIL or empanelled auditor may be appointed only in case of dispute between the parties. They have argued that DPOs can take advantage and tamper with the systems later on the pretext that there systems are audited by BECIL and in terms of draft regulations the same cannot be challenged by broadcaster since it is valid for a period of one year. Some broadcasters commented that Audits should be conducted quarterly and not limited to once a year, to bring in 0% discrepancy and transparency in the system. While another broadcaster submitted that 1st Audit should be conducted in presence of broadcaster representative by an Audit firm decided by IBF or any broadcaster industry body.

105. The Audit of the systems of DPO is necessary to ensure that the systems deployed by a DPO are addressable as per the regulatory requirement. To ensure that the audit does not delay the process of getting signals of TV channels, it is desirable that the DPO ensures that the addressable system installed by it meets the requirements specified in regulations. It is also important that the broadcaster assure itself that the addressable systems of the DPO meet the minimum requirement as specified in the regulatory framework. In order to balance the requirements of broadcasters and DPOs, the Authority is of the view that the onus of carrying out audit should lie with the broadcaster, however, to ensure that the audit should not delay the process of providing of signals of TV channels, a mechanism needs to be devised. Accordingly, suitable provisions have been brought in these regulations. These are explained in the following paragraph.

106. To speed up the process of auditing, the Authority has decided that it may specify a panel of auditors from which broadcasters may choose any one. Once a distribution system is audited and certified by an empanelled auditor, it is only logical that other broadcasters will also have to accept the same for at least one year period from the time of issue of certification. This will not only reduce burden on the service providers but also reduce number of audits. However, in the event of any change in configuration or version of the addressable systems installed, to check that the system remained in conformance with the requirements specified in Schedule III of these regulations, it would be permissible to the broadcaster, before providing signals of television channel(s), to cause audit of the addressable systems of the distributor even if the addressable systems of such distributor have been audited during the last one year.

107. In case a broadcaster is unable to complete the audit in time for reasons attributable to DPO, due to which it is unable to provide signals of TV channels within the prescribed period of 60 days from the date of the request for providing signals of TV channels, the same should be communicated to the DPO within such prescribed time period.

108. It has also been provided that if in the opinion of a broadcaster the addressable system of a DPO does not meet the requirement of the regulations then the broadcaster may audit the system of DPO not more than once in a calendar year. However, it is clarified that the broadcaster can carry out the audit only once a year after provisioning of signals of TV channels to the DPO for the purpose of checking the conformance of the addressable systems and/or to verify the subscription reports submitted by the DPOs. Accordingly provisions have been made in these regulations. Further, it has also been provided that if a DPO's system does not meet the requirements for addressable systems, the broadcaster may disconnect its signals to such DPO after giving a 3 weeks written notice for the same to the DPO.

109. The Authority in its earlier framework had prescribed minimum technical specifications for addressable systems in respect of SMS, CAS, and STBs etc. These technical specifications primarily ensure the addressability and transparency, and help in preventing piracy. In the CP, the Authority sought the inputs of the stakeholders on updating the specifications, if required, due to the progress in technologies. On the issue, most of the stakeholders were of the opinion that existing technical specifications by TRAI need a review in line with the current market scenario. In the draft Interconnection Regulations, 2016, after considering the comments of the stakeholders and internal analysis, some amendments and additions were proposed to further strengthen the quality and standards of systems installed by the distributors.

110. In the draft regulations, the requirement of SMS with capability of minimum 1 million subscribers was dropped as there could be many MSOs who will serve smaller subscriber base. To ensure that each DPO have right sized systems in place, a provision was added which mandated that the system deployed should be capable enough to carry out activation of at least 50% of the subscriber base within 24 hours.

111. Most of the broadcasters have stated that the specification needs to be further strengthened to ensure that piracy does not happen. One DPO has stated that the condition that the addressable system deployed should be capable enough to carry out activation of at least 50% of the subscriber base within 24 hours is very stringent and the requirement should be reduced to 10%.

112. After considering the comments received from the stakeholders, some of the provisions have been further strengthened which are required for increasing transparency in the system and controlling piracy. In line of the suggestions received, the requirement of carrying out activation of at least 50% of the subscriber base within 24 hours has been revised to 10%.

113. To enable organic growth, provisions were made in the draft Interconnection Regulations, 2016, wherein it was mandated that the interconnection agreement signed between a broadcaster and a DPO should contain the licensed/ permitted / registered area of operation of the DPOs as mentioned in the license/ permission / registration granted by the Government; the names of specific areas for which distribution of signals of television channel(s) has been agreed, initially, at the time of signing of the interconnection agreement and the names of the corresponding state(s)/ union territory (ies) in which such agreed areas are located. It was provide that the DPOs could re-transmit signals of television channel(s) of a broadcaster in other area(s) by giving a prior written notice of at least thirty days to the broadcaster, provided that such area(s) falls within the state/UT mentioned in the interconnection agreement.

114. In response, some broadcasters commented that for such expansion, a prior notice of at least 60 days should be mandated and it must be subject to written agreement and not merely on the basis of a written notice by the DPO. While another opined that such expansion should not be allowed as it would be detrimental to the broadcaster, and would lead to unaccountability, therefore fresh agreement needs to be executed for the new areas. It was also stated that unrestricted movements of DPOs may cause disputes between competing DPOs. One of DPO has suggested reducing the notice period to 15 days.

115. The Authority noted that in non-addressable systems, due to the requirement of specific assessment on the basis of a ground survey for number of subscribers before entering into interconnection agreement for a territory, separate agreements were required. These requirements no more exist after the emergence of the addressable systems and recording of subscriber details in the SMS. It is in the interest of broadcasters that reach of their channels is increased so that they get better subscription revenue as well as the advertisement revenue. Necessary provisions can be made at the time of signing in the interconnection agreement that intimation notice issued under the agreement for expanding territory, as per the regulations, would become part of the agreement; and all terms and conditions of the agreement would apply for expanded territories also. Further, it is in the interest of MSOs also as they can plan their area of operations without much difficulties. The argument that the unrestricted movements of DPOs may cause disputes between competing DPOs is not tenable as any DPO is free to expand its operations within the permitted area under registration. This would provide more options for the consumers also. Therefore it is win - win for everyone and it would improve the ease of doing business in the sector. In these regulations, a time period of 30 days have been provided for the entering into written interconnection agreement, therefore, the Authority is of the view that, DPO may expand distribution of signals of TV channels after completion of 30 days period from the date of receipt of such notice by broadcaster. The broadcaster will have liberty to raise written objection on such expansion during the said 30 days notice period. The notice of expansion shall deem to be an addendum to the existing interconnection agreement. Any unreasonable objection by the broadcaster shall be deemed as denial of request form the DPO.

116. In DAS and HITS services, the last mile connectivity is mostly provided by Local Cable Operators (LCOs). In terms of the IPTV licensing guidelines issued by the Government, the LCOs can also provide last mile connectivity for IPTV service providers. Efficient interconnection arrangements between a DPO and an LCO are vital for delivering services to the subscribers. LCOs play a very important role in the value chain for meeting the quality of service norms for the subscribers. LCOs, like any other entity in the value chain, are registered service providers. As per the Cable TV Act and Rules made there under, LCOs are registered in the head post office of the area of their operation. The fundamental principles of non-exclusivity, must provide, non-discrimination, written agreement, and time bound provisioning of signals applies to interconnection arrangement between a DPO and an LCO as well.

117. In the CP, on the issue relating to interconnection between DPO and LCO, stakeholders were asked to provide their opinion as to whether framework of Model Interconnection Agreement (MIA) and Standard Interconnection Agreement (SIA) as it was mandated in terms of Interconnection Regulations, 2012 should be made applicable for interconnection between DPOs and LCOs providing broadcasting services through addressable systems. After considering the comments of the stakeholders and internal analysis, in the draft Interconnection Regulations, 2016, it was proposed that the regulations applicable for interconnection agreement between MSO and LCO shall also apply mutatis-mutandis for interconnection agreement between HITS / IPTV operator and LCO. Further, the settlement of service charges between LCO and DPO shall be governed by mutual agreement. Provided that in cases where the DPO and the LCO fails to arrive at a mutual agreement for settlement of service charges, then the network capacity fee amount for subscribed channels and the distribution fee was to be shared in the ratio of 55:45 between MSO and LCO respectively.

118. On the issue of revenue sharing, one LCO stated that the complete network capacity fee amount should be charged by LCOs as LCOs are the one who are providing last mile connectivity through their network of coaxial cable and optical fibre. LCOs have no other source of income apart from subscription revenue, where as DPOs have other revenue sources such as advertisement on local video channels, placement of free to air channels and carriage fee. They further stated that LCOs have to maintain their network for good quality of service and give salaries to its workers and pay electricity bills to give uninterrupted service to its subscribers. Accordingly, in order to compensate this cost of collection and remittance and maintenance of network, the Authority should decide that broadcasters will provide twenty percent (20%) distribution fee to LCOs for collection and remittance of pay channel revenue and not to DPOs.

119. The framework of MIA and SIA which provide enough flexibility and ample freedom to the parties to the agreement to carry out their business. They may enter into an interconnection agreement, for provision of broadcasting services to subscribers, by mutually agreeing on distribution of responsibilities, respective settlement of service charges and billing. Further it has been provided that in case of failure of mutual discussions, as a fall back option, the interconnection agreement will be signed in terms of SIA wherein the Authority has demarcated the responsibilities and fixed the corresponding settlement of service charges between DPO and LCO. In the SIA, LCOs have been given the consumer centric responsibilities whereas the MSOs have been given the responsibilities which are directly linked with the SMS including billing for the subscribers.

120. In the addressable systems, the SMS contains database regarding the subscriber base and the channels/ bouquets subscribed by each subscriber. This database is verifiable and auditable. Under the provisions of MIA and SIA, the access of the corresponding SMS database has been extended to link LCOs. With these details, the exact subscription details are known to the DPO as well as to the LCOs connected to the DPO. The service charges need to be settled on work done principle. However, the distribution of responsibilities and costs of maintaining the distribution networks, of DPOs as well as LCOs, vary on case to case basis. The sources of revenue and associated expenses of DPOs also vary on case to case basis. Keeping in view these dissimilarities and the transparency inbuilt into the addressable systems, the Authority is of the view that DPO and LCO settle the service charges, based on mutual discussions. To protect the interest of service providers and to ensure that signals are not disrupted due to dispute between the service providers, the Authority has prescribed a fall back arrangement between DPO and LCO, only for cases where the mutual discussions fail between DPO and LCO; and still they want to continue their relationship.

121. The LCO in the value chain provides last mile connectivity to subscribers and he should be able to recover the expenses incurred and earn a reasonable amount of profit. The argument of an LCO that the complete network capacity fee amount should be charged by LCOs as LCOs are the one who are providing last mile connectivity through their network of coaxial cable and optical fibre is not tenable as the distribution of TV channels involves the systems and networks of DPO also. Further, the argument of LCO that in order to compensate their cost of collection and remittance and maintenance of network, the Authority should decide that broadcasters will provide twenty percent (20%) distribution fee to LCOs for collection and remittance of pay channel revenue and not to DPOs is also not tenable as distribution of pay TV channels involves the services of DPO as well as link LCO and LCOs do not have any direct relationship with broadcasters. In this framework network capacity resembles the FTA only subscriptions of erstwhile regulatory framework and these two requires the similar kind of resources for delivery of services to subscribers. Keeping in view the fact that in terms of the Interconnection Regulations, 2012, in a fall back arrangement, the service providers were required to share the subscription revenue in respect of FTA only subscriptions in the ratio MSO::LCO as 55::45, the Authority has decided to prescribe the same ratio for sharing of network capacity fee amount. In respect of pay channels also since in this regulatory framework, the charges for services involved in the distribution of pay channel has been separated from the pay channel price, the distribution fee, which corresponds to the charges for services, of DPO and link LCO together, involved in the distribution of pay channels, has been distributed in the same ratio.

122. In addressable systems, the number of subscribers of a channel or a bouquet of pay channels is auditable and verifiable. The Interconnection Regulations, 2004 and the Interconnection Regulations, 2012 contained provisions relating to subscription reports for addressable systems.

123. On many occasions, complaints were received that DPOs do not provide subscription reports in time to broadcasters. On the other hand, DPOs often complained that broadcasters do not have a common format for subscription report and it becomes practically difficult for them to generate customized reports each time for individual broadcaster.

124. DPOs also informed that quite often broadcasters seek subscription information that do not relate with the channel of that particular broadcaster. On the manner of calculation of monthly subscription numbers, broadcasters had many times expressed their concerns that the subscription report prepared as per erstwhile regulatory framework may not include those subscribers who remained active for less than 30 or 31 days, as the case may be, in a calendar month. This can put them at a commercially disadvantageous position. These issues were discussed in detail in the CP.

125. The Authority is aware of the fact that the timely availability of correct subscription reports is fundamental to ensure revenue of the stakeholders in the value chain and orderly growth of the sector. Any delay in subscription report affects the billing cycle and cash flow in the value chain. After considering the comments of the stakeholders and internal analysis, in the draft Interconnection Regulations, 2016, a schedule was inserted which prescribed the format of subscription report and the methodology for calculation of subscription numbers. For ensuring the timely availability of subscription report, a provision was made in the draft regulations wherein the DPOs were mandated to provide subscription report within 15 days from end of each calendar month. In the event of non- receipt of subscription report from DPO due to any reason, a right was given to the broadcaster to issue a provisional invoice, for an amount increased by 10% of the 'broadcaster's share of maximum retail price' payable by the distributor for the immediate preceding month, and the distributor was put under obligation to make the payment on the basis of such provisional invoice. Further, to avoid bill shocks, it was proposed that invoice raised by a broadcaster shall clearly specify the current payment dues and arrears, if any. For deterrence, a provision was made that the broadcaster shall have no claim on any arrear amount which has not been specified by him in the immediate next three consecutive invoices issued after the due date for the invoice to which arrears pertain.

126. In response to the draft Interconnection Regulations, 2016, on the aspect of time period for capturing subscription count between 19:00 HRS to 23:00 HRS of the day, some broadcasters stated that the Authority should consider revising the time period for capturing information between 7 PM to 9.30 PM. Some broadcasters opined that the time of 15 days provided for generation of subscription report should be reduced to 7 days. A broadcaster association stated to remove the provision relating to arrears in the invoices and restore their legal right to claim their arrears at any time. The broadcasters have stated that there should be a provision of security deposit. In case of non-submission of reports, a broadcaster suggested that disconnection should be allowed after 1st month itself.

127. On the other hand, some MSOs and its association have suggested that capturing of subscription count 4 times in a month is cumbersome and it will also put strain on SMS and CAS impacting the performance of the system. As per them, the current procedure of capturing of subscription count at the beginning and end of the month is fine.

128. On the suggestion of some of the stakeholders regarding changing of time period for capturing of information, it is noted that the subscriber count is not dependent on the channel being viewed by a subscriber but it depends on the fact that which channels which have been authorised for viewing to a subscriber. Therefore, change in timing of the capturing of the report would not make any difference in the subscriber numbers. The proposal is for prime time. Therefore no change is required in the proposed time period. As far as capturing of the data from CAS and SMS 4 times in a month is concerned, it is noted that the CAS and SMS can be pre-programmed to capture the data automatically and no manual effort is required. Therefore mandating increased periodicity for capturing data and reporting on the basis of captured data 4 times a month would help the service providers to monetise their products on closer to actual subscribers. On the issue of reducing time for sending subscriber reports, the Authority is in agreement with the view of stakeholders and therefore it has been reduced to 7 days from the end of each calendar month. If the DPO fails to provide the monthly subscription report then the broadcaster may disconnect the signals of TV channels after giving prior notice of 3 weeks to the DPO. This provision would help in ensuring the timely availability of the subscription report to the broadcaster. The broadcaster may also issue a provisional invoice for an amount increased by 10% of the 'broadcaster's share of maximum retail price' for the immediate preceding months, in case the DPO fails to issue the subscription report on time. It has also been mandated to the service provider to carryout reconciliation with 2 months. This is expected to bring in the discipline in the sector.

129. In the draft interconnection regulation, 2016, the Authority proposed a methodology for audit for the purpose of verifying the information contained in the subscription reports. The DPO was required to conduct subscription audit of its systems by any one empanelled auditor and send the report to the broadcaster. It was provided that in case the broadcaster feels that the conduction of audit is necessary to protect its business interests then the broadcaster may, not more than once in a calendar year, audit the SMS, CAS and other related systems of the DPOs. In order to deter and discourage any kind of discrepancies and manipulation in the subscription reports provided to the broadcasters, Authority had proposed that the cost of audit would to be borne by the DPO if the difference in audited and reported subscription figures is more than 2%, otherwise the broadcaster seeking audit of subscription report shall be liable for audit fee payment. However, it was provisioned that any variation, due to audit, resulting in less than 0.5% of the billed amount shall not require any revision of the invoices already issued and paid.

130. In response, one broadcaster stated that the discrepancy of 0.5% in the subscriber report should not be neglected. On the other hand, MSOs and its association have stated that it is impossible to maintain perfect harmony between CAS and SMS as there are many factors which can hamper the accuracy, and suggested to increase the discrepancy percentage to 2.5-3% from 0.5 %. However they have not given any justification for the same. One MSO has suggested that the cost of audit shall be borne by the broadcaster only and not by DPO under any circumstances. Some broadcasters suggested that in case of any discrepancy there should be a provision of penalty of at least 20% of monthly 'broadcaster's share of maximum retail price'.

131. Proper and accurate subscription report is very important as the settlement of charges between the service providers is based on such reports. Audit of systems is a tool to verify the correctness of data and systems specification as per the requirements under the regulations. Moreover allowing audit of addressable systems will help in confidence building measure in the value chain. Therefore, a mechanism is required to be put in place for audit of such addressable systems. The Authority is of the view that if a DPO gets its system audited from an auditor for the purpose of verifying subscription reports and sends these reports to the broadcasters then the problem of multiple audits can be solved significantly. This will also reduce the burden on the broadcasters and DPOs. The concerns of some broadcasters that after initial audit, a DPO's system may not remain compliant with the technical specification and therefore, the right of audit should be given to the broadcaster has been considered by the authority. It has been provided that if a broadcaster it is not satisfied with the audit report received or, if in the opinion of a broadcaster the addressable system being used by the distributor does not meet technical requirements specified in Schedule III then the broadcaster may, after communicating the reasons of dissatisfaction in writing to the DPO not more than once in a calendar year, audit the SMS, CAS and other related system of the DPOs. The provisions of this regulation provide a level playing field to all the stakeholders and also help in reducing burden and litigations. As far as, allowing discrepancies of 0.5% is concerned, it is noted that such variation may happen due to system limitations resulting in a difference between the actual number of subscribers and reported subscriptions on some occasions. Therefore, revising invoice would delay the payment settlements. However, the stakeholders should undertake utmost care that such discrepancies should not occur on regular basis. On the suggestion of the broadcaster regarding penalty, it has been provided that a broadcaster may levy interest on the payable amount and if such amount including interest exceeds by 2 % then the DPO shall be bear the broadcaster's audit expenses. The Authority has at this stage not specified any further penalty as such discrepancy needs case to case examination and proof of evidence in the appropriate forum.

132. Disconnection of signals of TV channels is one of the issues, where the interest of consumers also needs to be safeguarded along with that of the broadcasters and DPOs. In the past instances have been observed where, due to dispute between the service providers, signals by a broadcaster or DPO are cut off, leaving consumers in the lurch. The Interconnection Regulations 2004, as well as the Interconnection Regulation 2012, had a provision where the service providers were mandated to give a prior written notice of 3 weeks to the concerned service provider before disconnection of signals of TV channels. Further in these regulations a provision was also available which mandates service providers to publish information regarding disconnection of TV channels through News papers. The requirement of publication of information regarding disconnection in the News papers was removed in the draft regulations 2016,as such notifications in local/regional newspaper often go unnoticed by the targeted subscribers due to their limited reach. Further, while retaining the notice period of 21 days to the service providers, the requirement of publication through scrolls on the concern channel was proposed to protect the interest of consumers

133. In response, an MSO opined that the compulsory provision of publication of notice in the news papers should be continued as was mandated in the past regulations. He argued that in event of proposed disconnection, the broadcasters/MSOs may send a normal communication to the MSOs/LCOs respectively which may result in surprise disconnection of channel. A broadcaster commented that for intimating subscribers regarding non-availability of channels on the platform, DPOs should not be allowed to run scrolls on broadcaster's channels; but the scrolls should be allowed to run only on DPO's home channels.

134. Broadcasting industry is a consumer centric industry. In no case, a consumer, who has not defaulted, should bear the brunt of the disputes or non-agreements between the service providers. The Authority observed that it is necessary to protect the interests of consumers as well as service providers in the event of disconnection of signals of TV channels due to any reason. Therefore, the time of three weeks provided in the erstwhile regulation has been retained in these regulations. This period will allow the affected parties to look for possible solutions to prevent disconnection. On the suggestion of continuance of the publication of information regarding disconnection through news papers, the Authority is of the view that the mandate of publication of news paper notice increases burden on the service providers without much impact on the consumers as such notifications in local/regional newspaper often go unnoticed by the targeted subscribers due to their limited reach. On the aspect of running scrolls about the disconnection of channel it is mentioned that such communication is more effective to protect the interest of consumers. Therefore the Authority is of the view that it would be the responsibility of DPO to inform the subscriber 15 days prior to the date of disconnection through scrolls on concerned channels. To ensure that such scrolls or information do not hamper the viewing experience of the subscriber or obstruct normal viewing of the channel, any display of information in form of static images overlaid on the television screen has been prohibited.

135. In addressable systems, the technology provides for a Electronic Program Guide (EPG) wherein the channels being carried on the DPO's network can be arranged in a simple easy to understand manner so that the subscriber can easily go through this guide and select the channel of choice instead of flipping through all the channels. The EPG also assigns a channel number to each TV channel available on the platform. In the draft Interconnection Regulations, 2016, it was proposed that every DPO should assign a channel number for each television channel distributed by him in such a way that the TV channels of same genre are placed together consecutively and one channel appear at one place only. Further, it was proposed that the number assigned to a television channel shall not be altered by the distributor for a period of at least one year from the date of such assignment.

136. In response, most of the broadcasters stated that channels should be listed in the EPG as per the last 12 months average of Broadcast Audience Research Council (BARC) rating. They opined that channels with higher ratings should be placed at the top of LCNs (Logical Channel Number) allocated to a particular genre of channels and this exercise can be repeated annually. A news broadcaster suggested that there should be sub-categorization within genre like Hindi, English, Business channel, Regional etc. While another news broadcasters commented that after new Regulations come into effect status quo should be maintained for LCNs allotted channels and DPOs should not be allowed to change LCNs, unless the overall genre series is changed, and even then, the sequential position of the channel should remain the same in that genre while any new additions should be in the chronological order in that genre.

137. Some DPOs stated that in the cases of disconnection of TV channels for any reason, DPO should not be obligated to provide the same channel number again to the broadcaster if the channel comes back again on the platform. One DPO stated that the period mandated for assignment of channel number should be reduced from 1 year to 6 months.

138. The issue of genre classification was well articulated in the consultation paper titled as "Tariff Issues related to TV Services". In the draft Tariff Order, seven genres were proposed and complete freedom was given to the broadcaster to classify their channels in any of the proposed genre. In terms of these regulations, the DPOs have been mandated to place the channels in the genre so declared by the broadcasters. There are around 800 TV channels in the country. If every broadcaster is allowed to create its own genre then there would be an unmanageably large number of genres which would cause great hardship and inconvenience to the consumers as it would be next to impossible for a consumer to scroll through EPG having lot of genres on their TV sets. Thus the proposal to allow broadcasters to create their own genres will be impracticable. Therefore the Authority has mandated that the broadcasters should declare the genre of its channel in any of the specified eight genres. To provide the flexibility to the broadcasters, miscellaneous genre has also been specified.

139. Proper listing of channels in the EPG helps the subscribers in selecting the channel for the purpose of viewing. If the channels are listed on the basis of Television Rating Point (TRP) then it may cause change in the position of the channels from time to time based on the television rating point which will create annoyance to the subscribers who generally remembers the position of the channel in the EPG under a genre. Therefore, the listing of channel on the basis of TRP is not being mandated and it is left open to the distributor to decide listing of channels within the prescribed framework. The Authority is in agreement with the views of some of the stakeholders that sub-categorisation will help the consumer in selecting the channel of its choice for viewing and therefore the Authority has mandated the DPO to place channels in the EPG, in such a way that the TV channels of same genre, as declared by the broadcaster, are placed together consecutively and all TV channels of same language within the same genre shall appear together consecutively in the electronic programme guide.

140. The consumer generally remembers the channel number and enters the channel number on his remote for viewing that channel. Frequent changes in the channel number assigned to a particular channel causes inconvenience to the subscribers. It has also been observed that many broadcasters advertise their TV channel to consumers along with the number assigned to it on the network of a particular DPO. The broadcaster also faces difficulty if the channel number is changed frequently. Therefore the Authority is of the view that the 6 months time may not be sufficient and therefore the DPOs have been mandated not to alter the channel numbers for at least one year from the date of such assignment. However, the Authority is in agreement of the view of some stakeholders that if the channel becomes unavailable due to any reason or there is a change in the genre of the channel by a broadcaster then the channel number assigned to a particular television channel can be changed to place such channel with the channels of new genre in the EPG. Accordingly, suitable provisions have been made in these regulations.

141. Regarding the stakeholder's suggestion to mandate DPOs to maintain status quo for LCN allotted after coming into effect of new regulations. The suggestion is not tenable as availability and its nature of channel in the DPOs platform may vary in the light of new framework.

142. In broadcasting and cable TV sector, the number of service providers namely broadcasters, MSOs, LCOs, DTH operators, HITS operators and IPTV operators are very large. The information availability at a single place by use of ICT would help service providers to know the available service providers in a particular area and would provide ease of doing business in terms of entering into interconnection agreement. This would also help the Authority to monitor the compliance of the regulation bringing much needed discipline in the market which may take the sector on a sustainable growth path. In the draft Interconnection Regulations 2016, a provision was made regarding reporting of details by the service providers. The stakeholders, in their response, have largely supported this requirement.

143. Accordingly, in these regulations the service providers have been mandated to report their details such as name, address, contact number, e-mail address and license/ permission/ registration issued by the Central Government on the website to be specified by the Authority. Further, it has been provided that the service providers shall verify, from the website that the other service provider seeking interconnection for providing signals of TV channels or access to the network, as the case may be, has reported its details on the website. However, for removal of any doubt it is clarified that mere providing the information on the website would not give any service providers the right to carry out such business unless such permission/approval/licence/registration has been obtained from the Government under relevant policy /guidelines.

144. In order to fulfil the objective of regulatory framework, it is important that the reporting requirements specified under the regulations are complied by the service provider in letter and spirit. Therefore, in the draft Interconnection Regulation, 2016 it was proposed that every pay broadcaster and DPO shall appoint a compliance officer however, it was not mandatory for the DPOs having average subscriber base over preceding calendar quarter less than 2 lakh. In response, one broadcaster stated that the limit of subscriber base should be reduced from 2 lakh to 50 thousand and compliance officer should be appointed in every target market. The MSO's association stated that the time period given for appointment of compliance officer should be increased from 30 days to 60 days and in event of any change the time period of 10 days as provided in the draft regulation is less because re-appointment of persons takes time.

145. The objective of regulatory framework can be fulfilled only if the compliance level of all the service providers is good. It is therefore very important that the provisions of these regulations and requisite reports prescribed in the regulations and tariff orders are provided to the Authority. Therefore, the provisions have been made in these regulations that every broadcaster and DPO shall designate a compliance officer irrespective of nature of their offerings and size of their operations. Further, if the broadcaster or DPO is a company then it has been prescribed that the compliance officer should be designated by the board of directors of the company. Whereas, if the DPO is an individual or a partnership firm or an association of individuals then the broadcaster or DPO should furnish the authorisation letter signed by all the partners or the head of the association, as the case may be, authorising such compliance officer. On the suggestion of some of the stakeholders regarding increase in time period for designating a compliance officer the Authority agrees that sufficient time should be given to the service providers so that they can take approval for designation of compliance officer and report the details to the Authority. Accordingly, it has been provided in these regulations that the designation of compliance officer shall be done within 30 days of commencement of the regulations and after such designation the details of the compliance officer shall be communicated to the Authority within 30 days. Further, any change in the name of the compliance officer shall be communicated to the Authority within 10 days from the date of occurrence of such change.

146. With the Gazette notification of the Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) Regulations, 2017, the Telecommunication (Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff Order, 2017 and the Telecommunication (Broadcasting and Cable) Services Standards of Quality of Service and Consumer Protection (Addressable Systems) Regulations, 2017, the Authority has made a comprehensive and common regulatory framework applicable for all types of addressable systems. Therefore, the Interconnection Regulation, 2012, applicable for Digital Addressable Cable TV Systems, along with all its amendments and directions issued there under has been repealed. The Interconnection Regulations, 2004 which were applicable for non addressable systems as well as addressable systems such as IPTV, DTH and HITS except DAS has been repealed to the extent they are applicable to addressable systems. The provisions relating to analog systems shall continue to be governed by the Interconnection Regulations, 2004. All the existing interconnection agreements for providing services through addressable systems have to be either necessarily modified or entered as a fresh agreement in compliance with the provisions of the Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) Regulations, 2017.

147. These regulations shall come into effect immediately on the date of their publication in the Official Gazette. The Authority is aware that, as on the date of coming in to effect of these regulations, there would be large numbers of existing interconnection agreements in place, which have already been entered into by the service providers based upon the framework of earlier interconnection regulations. Therefore to protect the interests of consumers as well as service providers and to enable a smooth transition from the earlier regulatory framework to the new one, the Authority has provided a time of 150 days from the date of commencement of these regulations to either renew or amend all the existing interconnection agreements in compliance with the provisions of the regulations and the tariff orders notified by the Authority. The service providers are advised to modify their existing interconnection agreements well in advance before the time period of 150 days allowed, so as to avoid the sudden disconnection of signals or to avoid the risk of violating the regulations. Situation may also arise that some existing agreements may be expiring before the said cut-off date, though they were valid as on the date of commencement of these regulations. Therefore, the service providers have been permitted to renew such existing agreements so as to extend the validity of such agreement till the cut-off date. It is clarified that no new interconnection agreement shall come within the purview of such savings. All the new interconnection agreements have to be signed on the basis of these regulations.

[Schedule IX]

(Refer regulation 4A)

Conditional Access System (CAS) and Subscriber Management System (SMS)

(b) CAS system shall be capable of generating reports pertaining to the channel/bouquet subscriptions and active/deactivated subscribers, or any combination thereof; of sharing the same with SMS as a scheduled activity, and also upon request, including, but not limited to, the following details:

(i) STB Number

(ii) Viewing Card (VC) Number [or, in case of card-less CAS, chip identification (ID) or virtual card number of the STB]

(iii) Product Code pertaining to channels/ bouquets available on the platform

(iv) Start date of entitlement

(v) End date of entitlement

(vi) Status of card (Active/Inactive)

(c) It shall be possible to generate following reports from the logs of CAS:

(i) STB-VC pairing/de-pairing

(ii) STB activation/deactivation

(iii) Channel assignment to STB

(iv) Report of the activation/deactivations of a particular channel for a given period

b. CAS must support the following options with reference to uploading of unique access (UA)/ viewing card (VC) details in CAS database:

i. a secure un-editable file of card details, as purchased by the distributor, to be uploaded by the CAS vendor on the CAS Server directly, or,

ii. if it is uploaded in any other form, UA/VC in CAS database shall be captured in logs.

iii. Further, CAS shall support an automated, application programming interface (API)-based mechanism to populate such UA/VC details in the SMS, without any manual intervention.

(b) CAS shall be capable of individually addressing subscribers, for the purpose of generating the reports, on channel by channel and STB by STB basis.

(c) CAS shall be capable of tagging and blacklisting VC numbers and STB numbers that are involved in piracy, to ensure that such STB/ VC cannot be redeployed.

(d) CAS shall be capable of upgrading STBs over-the-air (OTA), so that the connected STBs can be upgraded.

(b) CAS (and SMS) shall have the capability to handle such number of broadcaster/DPO bouquets, as required by the DPO.

(b) The fingerprinting shall be on the topmost layer of the video.

(c) The fingerprinting shall appear on the screen in all scenarios, such as menu, electronic programme guide (EPG), settings, blank screen, games, etc.

(d) The fingerprinting shall not get invalidated by use of any device or software.

(e) CAS shall have the capability to run fingerprinting at regular intervals (e.g., minimum of 2 fingerprints per hour on a 24x7x365 basis) and provide broadcasters with the fingerprint schedule on request.

(f) The fingerprinting shall be available on global as well as on individual STB basis.

(a) The entitlement end date in CAS shall be equal to the entitlement end date in SMS, or,

(b) The entitlement end date in CAS shall be open and SMS shall manage entitlements based on the billing cycles and payments.

(b) SMS shall have a provision to generate synchronization report, with date and time, with the minimum fields as listed below:

(i) STB No.

(ii) VC No. (Or in case of card-less CAS, chip ID or virtual card number of the STB)

(iii) Product Code pertaining to a-la-carte channels and bouquets available on the platform

(iv) Start Date of entitlement

(v) End Date of entitlement

(vi) Status of card (Active/Inactive)

(c) The file output of CAS shall be processed by SMS system to compare and generate a 100% match or mismatch error report.

(a) Create and manage all channels and bouquets along with the relevant details such as name, tariff, broadcaster, or DPO bouquet, etc.

(b) Manage changes in the channel/bouquet, as may be required, from time to time.

(c) Link the products'IDs for a-la-carte channels and bouquets (Single and Bulk) created in CAS with the product information being managed in SMS, for smooth working of SMS and CAS integration.

(d) Management of historical Data of Product name, i.e., Broadcasters (name), maximum retail price (MRP), distributor retail price (DRP).

(b) SMS shall have the provision of generating the user activity log report to enable tracking users' work history. It shall not be allowed to delete the records from the log.

(c) All logs shall be stamped with date and time and the system shall not allow altering or modifying any logs.

(d) The logs shall be maintained for a period as specified in Schedule III or at least two audit cycles, whichever is later.

(b) SMS shall not provide an option to split SMS database or for creation of more than one instance.

(c) SMS shall have the provision to enable or disable channel (a-la-carte channel or bouquet of channels) selection by subscribers either through website or an application through interface provided by the distributor platform operator.

(d) SMS shall be capable of capturing the following information required for audit or otherwise:

(i) Bouquet a la carte status change history

(ii) Bouquet composition change history

(iii) Change in status of connection (primary to secondary and vice versa)

(b) In the event of unsuccessful deliveries of the messages, the life of the messages should be specifiable.

(ii) The actual service-level arrangement for the system support shall be governed by the mutual agreement / service-level agreement (SLA) between the service provider, i.e., CAS vendor and the customer (DPO).

(iii) The signatories to the said agreement may mutually choose lenient/stringent service-level guarantee.

(a) White list of STB/VC along with active/inactive status

(b) Faulty STB/VC - repairable and beyond repairable

(c) Warehouse fresh stock

(d) In stock at local cable operator (LCO) end

(e) Blacklist

(f) Deployed with activation status

(g) Testing/demonstration STB/VC with location

a. Subscriber related:

(i) Subscriber contact details change history

(ii) Connection count history

(iii) Transition of connection between Disconnected/Active/Temporary Disconnected

(iv) Subscription change history

b. LCO related:

(i) LCO Contact details change history

(ii) LCO and DPO sharing change history

c. Product (Bouquet/a-la-carte channel) related:

(i) Broadcaster a-la-carte relation

(ii) Bouquet name change history

(iii) À la carte name change history

(iv) Bouquet a-la-carte channel rate change history

d. STB/Smartcard related:

(i) Change in location history

(ii) Change in status (Active/Damaged/Repaired)

(a) List of a-la-carte channels and bouquets, digital headend (DHE) and Zone-wise: Provision to support/manage Zone/ Sub-Headend-wise list of a-la-carte channels and bouquets, in sync with the list available in CAS.

(b) Revenue Sharing Between DPO and LCO: Provision to define and calculate DPO and LCO revenue share separately for distribution fee as well as for NCF, as per the agreement executed between them, with the option to maintain historical information can be very useful and is desirable.

(c) LCO invoicing with GST: Provision to generate invoicing under multiple GST registration numbers of LCO's and to comply with GST invoicing norms as applicable.

(d) Product(a-la-carte channels and bouquets)-wise Renewal and Reversal setting for the Subscriber Account: Provision to allow renewal of a product to a subscriber after the expiry date of a product, and provision to auto-calculate and refund the amount to a subscriber if he discontinues a product midterm. These requirements may be configurable on selective products, as required by the DPOs as per their business plans.

(e) Product (a-la-carte channels and bouquets)-wise Reversal setting for LCO Account: Provision to calculate and refund the amount due to LCO, if he or the subscriber discontinues a product midterm.

(f) Product (a-la-carte channels and bouquets) Tenure-wise LCO and Subscriber Discount Scheme/Free Days Scheme: Provision to create Discount Scheme and Free-day scheme for LCO and Subscriber, based on the duration (Tenure) of the product subscription.

(g) Calendar/Activity Scheduling: Provision to auto-schedule activities like STB activation/ deactivation, a-la-carte channels and bouquets addition/removal, channel/bouquet composition modification, etc.

(h) Bulk Channel/Bouquet Management: Provision to perform bulk activity of a-la-carte channels and bouquets addition and removal on all or a designated group of STBs.

(i) Token-number-based reports: Provision to download multiple generated reports with the help of token number, such as audit reports with different intervals.

(j) Third-Party Integration: Provision to support integration with relevant third-party systems, such as, payment gateway integrations, interactive voice response (IVR) Integrations, SMS Gateway Integrations, etc.

(k) Bill payment and reconciliation feature: Provision for bill payment and reconciliation (in case a DPO is running service in post-paid mode).

(l) Generation of Reports: Provision to generate the following reports for operational purpose:

(i) All, selective and single boxes' current status with their first-time activation date.

(ii) Total number of a-la-carte channels and bouquets and STB expiring detail till given future date on the dashboard, according to the permission.

(iii) Today's fresh activation count, de-activation count, re-activation count, a-la-carte channels and bouquets addition/ removal count on dashboard, according to the permission.

(iv) Total active and inactive subscriber's details with multiple criteria (network-wise, a-la-carte channels and bouquets-wise, state-city wise and broadcaster-wise).

(ii) The actual service-level arrangement for the system support shall be governed by the mutual agreement/SLA between the service provider, i.e., SMS vendor and the customer (DPO).

(iii) The signatories to the said agreement may mutually choose lenient/stringent service-level guarantee.

Explanatory Memorandum

2. During the consultation undertaken to prepare the Audit Manual certain comments and observations reflect some issues in the Schedule III of the Interconnection Regulations 2017.

3. Accordingly, Draft Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) (Amendment) Regulations, 2019 [hereinafter referred to as the Draft Regulations] was issued on 27 August, 2019. These Draft Regulations amended Schedule III of the Interconnection Regulations 2017, on the following issues: -

i. Digital Rights Management Systems

ii. Transactional capacity of CAS and SMS system

iii. Fingerprinting - Support for Visible and Covert fingerprinting in STBs

iv. Watermarking network logo for all pay channels

4. The comments of the stakeholders were invited by 9 September, 2019. On request of stakeholders, the deadline to submit the comments was extended till 16 September, 2019. Twelve comments were received from stakeholders. Subsequently, an Open House Discussion (OHD) was held on 26 September, 2019 in Delhi, which was attended by a large number of stakeholders.

5. After taking into consideration the comments received from the stakeholders and in-house analysis, the Authority finalized the Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) (Amendment) Regulations, 2019 [hereinafter referred to as the Amendment Regulations]. The subsequent paragraphs explain the objects and reasons of the Amendment Regulations.

6. Draft Regulations specified that the annual Audit caused by Distributor shall include the Audit in compliance with this Schedule and the Subscription Audit.

7. During the consultation process, a few stakeholders suggested some modifications in this clause. According to the suggestion, the annual Audit caused by Distributor shall include the Audit to validate compliance with this Schedule and the Subscription Audit. In addition, some stakeholders also proposed explanation to this clause that detailed audit methodology / steps provided in Audit Manual read with provisions of interconnection agreement are required to be followed, the empanelled auditor shall have the right to seek / obtain directly any data / information / declaration from CAS / DRM and SMS vendors regarding audit requirements, empanelled auditor shall have access to complete and unaltered data & logs of the DPO's systems in the audits caused either by DPO or by Broadcaster, there should not be any filtering of data by DPO from CAS and SMS server for any reason whatsoever till the Audit report is prepared and released by the Auditor.

8. The Authority is of the view that the issues proposed as explanation and other comments have already been discussed at length in the consultation process related to audit manual. Keeping in view all the comments and suggestions received from the stakeholders on this clause, the authority is of the view that the annual Audit caused by Distributor shall include the Audit to validate compliance with this Schedule and the Subscription Audit.

9. During the comments and discussion on the Draft Audit Manual many stakeholders have suggested that the authority should specify the schedule of audit for DPOs to ensure that the audit is held effectively and in a timely manner. Clause (1) of regulation 15 of Interconnection Regulations 2017 provides that a DPO will get audit completed once every year. Stakeholders that are desirous that the Authority may specify the audit schedule refer to the limited availability of auditors and also that if all DPOs chose to get their systems audited during the last quarter of a year, there will be a severe capacity constraint.

10. On the contrary, most of the DPOs have averred that being responsible stakeholders, they will get their systems audited properly and in a time-bound manner in compliance with the regulations. As per the framework, it is incumbent upon distributors to maintain a current and valid audit compliance. Any slippage by DPO will entail follow up and audits by multiple broadcasters. The framework, therefore, has sufficient checks and balances in the interest of DPOs as well as broadcasters.

11. There is another argument as regards the gap between the two audits caused by the DPOs. One of the comments received by TRAI was that it is possible for a DPO to schedule audits of two different calendar years in consecutive months. That is first one in December of current year and next one in January of next calendar year. In such hypothetical cases, the systems of the distributor will remain out of the ambit of audit for a long period of 23 months. Given that audit is an important foundation in establishing the trust-based regime under the new regulatory framework, therefore the Draft Regulations mentioned that the annual Audit caused by Distributor shall be scheduled in such a manner that there is a gap of at-least six months between the audits of two consecutive calendar years.

12. During the consultation process, most of the stakeholders favoured the inclusion of this clause. However, some stakeholders suggested an addition to this clause. According to them, wording in proposed amendment takes care of erroneous situation where DPO causes audits in two consecutive months (December of first calendar year and January of second calendar year). However, this does not take care of the other undesirous situation where DPO causes audit in January of first calendar year and then causes next audit in December of second calendar year i.e. there is a gap of 23 months between two consecutive audits. These stakeholders opined that this long gap if allowed is detrimental to the interest of broadcasters for revenue assurance and proposed that there should not be a gap of more than 12 months between audits of two consecutive calendar years.

13. Keeping in view all the suggestions given by the stakeholders the Authority is of the opinion that there should be a minimum and a maximum gap of 6 and 18 months respectively, between two annual audits caused by a DPO. The Authority is of the view that there should not be a gap of more than 18 months between audits of two consecutive calendar years.

14. Further, quite a few stakeholders have raised the issue that the Authority should incorporate appropriate provisions for dealing with such DPOs who do not comply with regulatory provisions, especially when it comes to adherence to timelines. After due consideration, the Authority has prescribed levying of financial disincentives on the distributor of television channels for not causing an audit in a calendar year. The financial disincentive is proposed on a graded scale. That is if the audit is not caused by the due date, then the distributor of television channels will be liable to pay an amount of rupees one thousand per day for the delay of first thirty days. In case of delay beyond thirty days, the financial disincentive will increase and will be @Rs. 2000/- per additional day beyond first thirty days. In addition, the Authority considers that the maximum financial disincentive may be restricted to an upper limit. Therefore, the Authority has prescribed a maximum limit of Rs Two Lakhs (Rs. Two Hundred Thousand) only per instance of violation/delay.

15. Para 8 of Section A of the Schedule III of the Interconnection Regulations 2017 specifies that, 'The CAS and the SMS should be able to activate or deactivate services or STBs of at least 10% of the subscriber base of the distributor within 24 hours.'

16. While the requirement seems as reasonable, this puts an unwarranted investment on part of certain large DPOs. The issue becomes really alarming for most of the DTH service providers and top four to five MSOs. Each one of these operators have a subscriber base of more than five million customers. Hence, they had requested the Authority to review this threshold limit.

17. In general, these large operators do not need to activate/ deactivate/ re-configure more than 1 % of their active subscribers on everyday basis. Therefore, the operators have represented that prescribing to deploy equipment to cater to 10% of activation/ deactivation is uncalled for.

18. However, some stakeholders have suggested that most of the subscribers are on monthly pre-paid packages these days and by the law of averages every customer is required to pay/ recharge once every month and may require to be configured at the SMS level once every month. Therefore, such stakeholders have argued that a minimum of 3.3 % capacity of CAS/ SMS is necessary. The Draft Regulations mentioned that the CAS and the SMS should be able to activate or deactivate services or STBs of at least Five percent (5%) of the subscriber base of the distributor within 24 hours.

19. During the consultation process, some stakeholders supported the amendment. One stakeholder opined that MSOs/DPOs should increase the capacity of their systems to activate STBs seamlessly without any glitch. Low transactional capacity of MSOs/DPOs result in loss to the subscribers and broadcaster. Another stakeholder suggested that the subscriber base may not be the appropriate criteria to assess the capacity of CAS and SMS, more so, in the current framework when a single customer can generate more than one transaction in terms of activation/deactivation of channel, recharge, etc. Therefore, they suggested that the criteria of 5% should be measured in context to total volume of transactions.

20. Taking into considerations all the comments received during the consultation process and internal analysis, the authority is of the view that the CAS and the SMS should be able to activate or deactivate services or STBs of at least Five percent (5%) of the subscriber base of the distributor within 24 hours.

21. There are issues related to the availability of both visible and covert fingerprinting on all the STBs. Based on industry information, it has been ascertained that not all the deployed STBs provide both types of fingerprinting. Before the Interconnection Regulations 2017, the STBs with overt fingerprinting would suffice to comply with the regulations. Therefore, some of the distributors have represented that the set-top boxes deployed prior to the year 2017 does not support covert fingerprinting as they were not mandated by The Telecommunication (Broadcasting and Cable Services) Interconnection (Digital Addressable Cable Television Systems) Regulations, 2012. The BIS standards also did not mandate both overt and covert fingerprinting.

22. Quite-a-few number of distributors have requested the authority to review the Schedule III of Interconnection Regulations 2017 in view of the above-mentioned inconsistency. These stakeholders are of the opinion that the system requirement of covert fingerprinting specified in Interconnection Regulations 2017 should be applicable only on the settop boxes which are deployed after the coming into effect of the Interconnection Regulations, 2017 and not on the boxes deployed before that. Some stakeholders have opined that given that average life of an STB is around 3 years, all such old STBs will get retired within next two years.

23. Noting the inconsistency, the Draft Regulations mentioned that the STB deployed after coming into effect of Interconnection Regulations 2017 should only be mandated to support the covert finger printing.

24. During the consultation process, some stakeholders suggested that there should be a sunset date. Some stakeholders suggested that all the STBs deployed shall support covert fingerprinting for all pay channels by sunset date of 1 July, 2020. According to one stakeholder, covert fingerprint is a vital tool to detect piracy on the ground and it should be made applicable all across India. TRAI should come up with a deadline for DPOs to replace their existing technologies/ STBs with covert fingerprinting technology.

25. Keeping in view all the comments and suggestions the Authority is of the view that the STB deployed after coming into effect of these Amendment regulations shall support the covert finger printing. Given the life-span of STB, it is but natural that in due course all STBs in network will become compliant to both covert and overt fingerprinting. Therefore, to include any specific regulation for the same is redundant.

26. The 'watermarking' logo can be inserted at the encoder end before combining of all the signals by a DPO. Alternatively, a DPO can introduce the 'Watermarking' through their middleware provided in the STB.

27. Para 13 of part B of Schedule III of Interconnection Regulations 2017, states that, 'The watermarking network logo for all pay channels shall be inserted at encoder end only'.

28. Many DPOs have requested TRAI that the 'Watermarking' network logo can be inserted by the encoder itself, only when the encoders have this feature. However, many of encoders deployed currently by such MSOs are part of their legacy system and do not have the provision for water marking logo insertion.

29. Considering the issue and the cost implications on legacy systems, the Draft Regulations mentioned that the encoders deployed after coming into effect of Interconnection Regulations 2017 should only be mandated to support watermarking network logo for all pay channels at the encoder end.

30. During the consultation process, some stakeholders suggested that there should be a sunset date. Some stakeholders suggested that all the encoders deployed shall support watermarking network logo for all pay channels at the encoder end by sunset date of 1 July, 2020. According to one stakeholder, there has been a rise of online piracy in the industry. In the case of absence of the watermarking logo, there is possibility of manifold increase in instances of piracy. There should be a provision to retain watermarking clause and encoders currently present in the market should be directed to be replaced by encoders, which have the feature to support watermarking logo for pay channels, to get a curb on piracy.

31. Taking into considerations all the comments, the Authority is of the view that the encoders deployed after coming into effect of these Amendment regulations shall support watermarking network logo for all pay channels at the encoder end.

32. DRM is a systematic approach to copyright protection for digital media. The purpose of DRM is to prevent unauthorized redistribution of digital media and restrict the ways consumers can copy content they've purchased. DRM products were developed in response to the rapid increase in online piracy of commercially marketed material, which proliferated through the widespread use of peer-to-peer file exchange programs. Typically, DRM is implemented by embedding code that prevents copying, specifies a time period in which the content can be accessed or limits the number of devices the media can be installed on. DRM technology focuses on making it impossible to steal content in the first place, a more efficient approach to the problem than the hit-and-miss strategies aimed at apprehending online poachers after the fact.

33. The Schedule III of the Interconnection Regulations 2017 does not provide for the requirements / specifications of DRM based systems. The Authority, during its consultations on Audit manual, received the feedback that owing to its benefits the IPTV based DPOs are switching to DRM technology. It is necessary that the Audit regime covers the DRM based networks and provides for enabling provisions for such operators. Accordingly, Draft Regulations included DRM specifications in Schedule III.

34. During the consultation process, the Authority received numerous comments and suggestions from various stakeholders on this issue. Numerous modification/additions were proposed by several stakeholders. Hence, the Authority is of the opinion that system requirements for DRM shall be dealt with in a separate consultation paper.

35. In addition to the amendments proposed in the Schedule III of the Interconnection Regulations, 2017 on issues related to scope and scheduling of audits, transactional capacity of CAS and SMS system, covert fingerprinting, watermarking logo and DRM, the Authority received a large number of comments from several stakeholders on other clauses of Schedule III. Several stakeholders suggested modifications on other clauses of Schedule III. Suggestions were also received on additional clauses/ sections to be included in Schedule III.

36. The Authority is of the opinion that most of these suggestions were related with Audit process and has been discussed at length during the consultation process of the Audit Manual. Further, issues related to DRM need to be discussed during separate consultation process. Other issues have been discussed pointwise in this Explanatory Memorandum.

37. In addition, a representation dated 20.09.2019 was received from M/s. Broadcast Engineering Consultants India Limited (BECIL), wherein they informed TRAI that the name of BECIL has not been mentioned in carrying out the audit under Section 15 of the Interconnection Regulations 2017 whereas regulation 10 of Interconnection Regulations 2017 mandates BECIL or any other empaneled agencies of TRAI to conduct the audit. BECIL mentioned that in view of this many MSOs who wish to take the services of BECIL in carrying out the audit under regulation 15 are not able to do so. BECIL has been conducting technical as well as commercial audits under earlier interconnection regulations of TRAI of 2004, 2009 and 2012 regularly as well as Hon'ble TDSAT directed audits which include both commercial as well as technical audits. BECIL further mentioned that it appears that in regulation 15, mention of BECIL's name has been left inadvertently. Therefore, BECIL requested that they should also be nominated for conducting the commercial audit under regulation 15, in addition to the empaneled auditors of TRAI, keeping in view BECIL's vast experience and expertise in conducting these audits since last 10 years. BECIL also raised this issue in the OHD conducted on the Draft Regulations. During the OHD, the Authority consulted all the stakeholders on this issue, and it was felt that BECIL's name may be included in regulation 15.

38. Accordingly, the Interconnection Regulations 2017 dated the 3rd March, 2017, have been amended.

Explanatory Memorandum

1. Pursuant to TRAI's recommendations dated 5th August 2010 on Digital Addressable Systems (DAS), the Government issued notification dated 11th November 2011 for implementation of DAS in the country. This laid down the roadmap for implementation of the digitalization in the cable television sector. The digitalization in the cable television sector comprised of four phases. The entire process across India was completed by 31st March 2017.

2. DAS has enabled addressability, transparency, high channel carrying capacity, and has also provided technical feasibility to offer choice to the consumers. Conditional Access System (CAS) and Subscriber Management System (SMS) form the core of the Digital Addressable Broadcast ecosystem. They are responsible for delivering content in a secured and encrypted form to the authorized subscribers.

3. The Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) Regulations, 2017 (hereinafter referred to as the Interconnection Regulations, 2017), notified by TRAI on 3rd March 2017, and subsequently amended on 30th October 2019, cover technical and commercial arrangements between the Broadcaster and the Distributor for providing television services to the consumers. As per the current scheme, the digital addressable systems deployed by the Distributor Platform Operators (DPOs) for distribution of television channels through cable and satellite must conform to Schedule III of the Interconnection Regulations, 2017. Schedule III, inter alia, contains the features of CAS and SMS for compliance.

4. To enable the stakeholders, the Authority has released ?The Telecommunication (Broadcasting and Cable) Services Digital Addressable Systems Audit Manual'⁴ dated 8th November 2019. The manual provides process and audit procedure and includes procedural compliance requirements to be ascertained during the Audit as prescribed under the extant regulations. The audit, inter alia, includes self-certification by CAS and SMS vendors to confirm compliance to certain provisions in Schedule III.

⁴The Audit Manual is only a guidance document for stakeholders and auditors. The manual does not supersede any provision(s) of the extant regulations.

5. The extant Regulatory Framework establishes a trust-based transparent regime, whereby distributors themselves offer the network for regular Audit and undertake full compliance. The Cable Television Networks (Regulation) Act, 1995, stipulates for transmission of content in an encrypted manner. However, the Authority regularly receives complaints about the unauthorised distribution of signals/piracy from various broadcasters and DPOs. Complaints have also been received on issues related to support from CAS/SMS providers, under-reporting of subscription, etc.

6. As per the Cable Television Networks (Regulation) Act, 1995, issues related to content piracy and transmission of unencrypted signals are under the purview of the Authorised Officers⁵. However, it is quite difficult for the Authorised Officers to identify issues arising out of the deployment of sub-standard CAS. The extant provisions have no such prescribed minimum benchmark/criteria for appropriate security and compliance mechanism. Sub-standard CAS and SMS render the distribution network vulnerable to hacking and content piracy.

⁵Section 2 (a) of the Cable Television Networks (Regulation) Act, 1995 defines an ?authorised officer' to mean? within his local limits of jurisdiction: - (i) a District Magistrate, or (ii) a Sub-Divisional Magistrate, or (iii) a Commissioner of Police and includes any other officer notified in the Official Gazette, by the Central Government or the State Government, to be an authorized officer for such local limits of jurisdiction as may be determined by that Government?.

7. The Authority observed that in some cases, the distributors were unable to comply with the new regulatory framework within the prescribed time owing to the constraints of their CAS and SMS systems. Some distributors have raised support-related issues from the vendors of such systems.

8. Therefore, the Authority issued a consultation paper on "Framework for Technical Compliance of Conditional Access System (CAS) and Subscriber Management Systems (SMS) for Broadcasting & Cable services" on 22nd April 2020. The objective of this consultation process was to invite comments and suggestions from all stakeholders on the pertinent issues. The comments and counter-comments received from stakeholders are placed on TRAI's website. An open-house discussion was held on 25th June 2020.

9. CAS and SMS are specialised systems that are responsible for core functions of DAS. The comments, in-general, reflect the issues and challenges faced by the stakeholders due to CAS and SMS. The stakeholders have suggested that the Authority should introduce some regulatory provisions for compliance by CAS and SMS. The Authority is also aware that the requisite regulatory interventions must remain light touch. Therefore, it is incumbent to ensure that requirements specified (if any) remain minimalistic. Taking this in cognizance, the Authority constituted a committee ('The Committee') comprising of industry stakeholders and domain experts. The Committee included nominees from the Indian Broadcasting Foundation (IBF), All India Digital Cable Federation (AIDCF), and a nominee representing the direct-to-home (DTH) operators. From among the technology providers, representative of the SMS providers and Indian as well as global CAS companies also contributed as committee members. The Authority also nominated representatives from expert bodies/eminent institutes like Telecommunications Engineering Centre (TEC), Standardisation Testing and Quality Certification (STQC), Centre for Development of Advance Computing (C-DAC), Broadcast Engineering Consultants India Limited (BECIL), and Indian Institute of Technology (IIT) Kanpur, in the Committee. After several rounds of detailed deliberations on the suggested features, received as comments to the consultation paper, the Committee recommended to introduce a testing and certification regime. The testing and certification regime will ensure that the systems deployed in the television channel distribution networks comply with the extant standards and ensure content security. The report of the Committee forms the mainstay of the amendments and Schedule IX of the Interconnection Regulations, 2017.

10. As explained in the consultation paper, CAS and SMS are the key elements that govern content security and proper accounting. As per the extant provisions, DAS for distribution of television channels must comply with the requirements as specified in Schedule III of the Interconnection Regulations, 2017. Oversight of the compliance to Schedule III provisions is through an audit process. The audit, inter alia, includes self-certification by CAS and SMS vendors.

11. Schedule III requirements are generic in nature and do not prescribe testing and certification of CAS or SMS. Some vendors undertake elaborate measures and use advanced embedded security to ensure adequate mechanism towards content security. However, a few others do not take such measures and the systems they deploy do not conform to sufficient level of security and encryption. Such systems remain vulnerable to hacking, putting the content security at risk. Any piracy or content hacking causes market disruption and huge financial loss to the service providers. In addition, it causes loss of tax revenues for the government.

12. In order to find a suitable solution to the afore-stated problems, the comments were sought as to whether all CAS and SMS are in compliance with Schedule III. If not, what additional checks or compliance measures are required to improve the compliance of CAS/SMS. Stakeholders were also prompted to provide a list of all the important features of CAS and SMS to adequately cover the requirements for DAS with a focus on the content protection and the factual reporting of subscriptions.

13. In response, majority of the stakeholders were in favour of additional regulatory measures in addition to Schedule III to address the issues raised in the consultation paper. A few stakeholders suggested that the current mechanism under Schedule III is sufficient and favoured status quo.

14. The Authority observes that despite divergent views in terms of finer details, almost all stakeholders were of the opinion that the provisions under Schedule III were not adequate to address the issues raised in the consultation paper. Stakeholders have provided detailed and reasoned arguments that the self-certification mechanism is not sufficient. Most of the stakeholders have considered it necessary to strengthen the framework for enhancing the content security and better Quality of Service.

15. The Committee, after due deliberations, recommended that there is a need for additional mechanism for testing and certification of CAS and SMS. Such mechanism will ensure better conformity to the standards for DAS and improve the consumer experience.

16. The distribution of television services should ideally be a smooth and problem-free operation in consonance with the extant regulatory framework and supported by the relevant technology. The underlying technologies have advanced over the years to enable secure transmission of content with adequate protection to the authorized subscribers. Even though CAS and SMS are critical for providing better services, the prescribed benchmarks are missing.

17. Therefore, the stakeholders were requested to provide their comments as to whether the certificate issued by CAS and SMS vendor suffices to confirm the compliance to Schedule III. If not, what additional checks/measures are required to improve the compliance to CAS/SMS. Stakeholders' views were also sought regarding the need for defining a framework for CAS and SMS, and to prepare a benchmark for the minimum requirements of the system before these can be deployed in the network.

18. In response, most of the stakeholders opined that current compliance mechanism is not adequate, and there is a need to ensure effective compliance through additional measures. There were diverse suggestions regarding additional measures to be adopted. Few stakeholders have opined that all CAS and SMS vendors/OEMs should seek certification of their systems from international third-party content security expert body(ies).

19. Further, few stakeholders opined that an effective compliance of statutory provisions is ensured through the comprehensive Audit Manual published by the Authority. However, some other stakeholders have underlined the limitations of the audit-based mechanism citing lack of adequate technical expertise of the empaneled auditors.

20. Another stakeholder has suggested that Department of Telecommunications (DoT)/BECIL should test the systems and issue validation certificates as per TRAI's regulatory framework, and that all CAS and SMS should be type approved by a neutral government agency. It was also suggested to make Schedule III more effective by shifting industry standards to higher-bit encryption for secure layer protection and mandate the generation/storage of encryption logs [Entitlement Control Message (ECM) / Entitlement Management Message (EMM) storage tables] during audit.

21. Few technology vendors suggested that there should be an additional certificate for CAS and SMS, and any new deployment needs to show compliance with secure Trusted Execution Environments (TEE) or hardware root of trust certificate issued by the System-on-Chip (SoC) vendor.

22. Few stakeholders requested TRAI to prescribe registration process for all CAS/SMS providers under a regulatory body by laying down appropriate guidelines, including the establishment of a Trusted Authority/Industry Licensing Authority. Such authority/body should mandatorily check and approve CAS and SMS and other related head end equipment.

23. Further, almost all stakeholders opined in favour of defining a framework for CAS and SMS. This, in their opinion, will also help DPOs in selection of the right solution for their network. Few stakeholders suggested that a comprehensive framework for CAS/SMS system is essential for end-to-end content protection. Better content security will enable better high-end content to be available for Indian viewers. Such a framework will improve the robustness of implementation and make the economics of content distribution more favourable to all the parties in content distribution chain.

24. One stakeholder stated that with the changing and fast improving technology, it becomes essential to review the standards and requirements of a CAS/SMS system and update them on a regular basis with appropriate testing and evaluation through an autonomous body. Moreover, such standards should be at par with global standards, in consonance with which the deployed CAS/SMS should be upgraded, within a defined period from its date of implementation.

25. One of the stakeholders stated that SMS and CAS vendors demand exorbitant amount for upgrading CAS/SMS, and any such statutory upgradation in the system should not be burdened on the service providers.

26. A scrutiny of the reported issues that led to the consultation on the subject reveals that the origin of the issues could be due to the deployment of sub-standard systems (CAS /SMS). Such issues could, sometimes, also be due to fraudulent operation of the systems. The effective way to curb the fraudulent operation of the system is to have an inspection/oversight mechanism with the relevant technical support. However, creating a framework that prevents deployment of sub-standard systems in the network entails pre-deployment evaluation by a trusted agency/organisation.

27. The Committee while analysing the comments also unanimously accepted that there is a need to prescribe some mechanism. However, everyone agreed that the prescribed regulation should be minimalistic, and only such parameters be enforced that are absolutely necessary. There were some concerns for specific features that are either futuristic or introduce much higher level of network robustness. Such features/parameters have been included as desirable features.

28. The Authority also observes that there is an overwhelming opinion in favour of additional measures, in addition to the requirement specified under Schedule III of the Interconnection Regulations, 2017. The Authority notes that the extant audit mechanism is based on Schedule III requirements. However, the concerns raised in the consultation paper and comments thereof reflect a need to benchmark the capabilities of the system that differs from the current audit mechanism. Thus, the additional requirements/framework suggested by majority of the stakeholders differ in context and scope. Any new regulation entails compliance cost, and the Authority is conscious of the same. Therefore, the Authority intends to specify the framework with minimum essential requirements to take care of the most important issues.

29. The purpose of the new framework will be to assess and certify the capabilities of CAS and SMS. Some stakeholders have voiced that such a framework needs to be dynamic and evolve with the advancement of technology. Keeping this in view, the Authority proposes to establish a standing committee of stakeholders (including members from academia and expert bodies) for regular review/updating of the framework. The Authority will review and change the composition of this stakeholders' committee from time-to-time.

30. The industry faces loss of revenue due to mis-reporting or under-reporting of the subscribers. Absence of tight and non-intrudable integration between CAS and SMS is a leading cause behind such under-reporting or similar malfeasance. Many of the service-provisioning issues are also caused by non-existence of specifications for CAS and SMS integration. The integrated network performs in such a way that while the SMS is the interface of man-machine command, actual action on such command happens through configuration settings in CAS. Sometimes, the absence of proper command and execution mechanism between SMS and CAS causes service and reporting related issues. The issues are further aggravated as many networks deploy locally developed SMS solutions. Such solutions provide minimum essential features, and do not cater to stringent requirements requisite for fail-safe performance.

31. Furthermore, there are instances of complaints raised by DPOs regarding the lack of adequate support from their CAS/SMS vendors in carrying out necessary modifications in the systems, as per the license or regulatory requirements. Hence, the stakeholders were asked to express their views on the safeguard/measures that are necessary so that the consumers/DPOs do not suffer due to want of regular upgradation /configuration by the CAS/SMS vendors.

32. In response, many stakeholders have expressed the need of an industry-led body, with government participation, for laying down a complete framework, registration and certification of CAS and SMS. Many other stakeholders expressed that all partners involved in the value chain, including CAS provider and SMS provider should have an office in India with 24×7 support. Moreover, CAS and SMS database of all vendors must be stored at physical or cloud servers in India only. The need for registration of CAS/SMS vendors under the Companies Act, 2013, was emphasized by majority of the distributors. There was a suggestion that all the CAS and SMS companies should be mandated to get themselves registered with Ministry of Information and Broadcasting (MIB). And further, that the list of latest software version that can be deployed in the field should be approved by an agency like Standardisation Testing and Quality Certification (STQC) Directorate and should be published online.

33. Some of the stakeholders proposed that there should be an active Service-Level Agreement (SLA) between the DPO and the CAS/SMS vendor. CAS/SMS vendors, who are unable to provide local technical support and/or are unable to enter into or abide by SLA, should be deregistered and disqualified to operate in India and should not be allowed to install any of their systems in India.

34. Few of the stakeholders have suggested that all CAS/SMS systems falling short of any of the features mentioned in Schedule III should have a roadmap delineating specific timelines and actions. There should be a provision for actions against the CAS/SMS vendors for non-compliance, so that the customers do not suffer. One of the vendors expressed that Secure OTA upgrade may be made a mandatory qualifying requirement for all CAS.

35. Upon analyzing the diverse inputs about the issues, the Authority observes that it is necessary to specify parameters with regards to integrated operations of CAS and SMS. To get the desired performance and to generate factual reports, the smooth, synchronized functioning of SMS along with CAS is crucial.

36. As regards the issues related to support, it is desirable that CAS and SMS vendors have an establishment in India for after-sales support. In addition, the vendor of CAS and SMS should be able to meet the stringent uptime requirements, as are requisite for distribution services of television channels. Given that the distribution networks need to function on 24(hours a day) × 365 (days a year) basis, the vendor should be capable to provide service support to maintain the desired uptime. CAS and SMS vendor must build their support infrastructure, to assure their buyers of service whenever needed. It is important to note that while the Authority is prescribing capability standards for the vendors, the individual networks are free to form arrangements (service agreements) as per their own requirements and business analysis. Of course, every network must ensure that it meets the Quality-of-Service standards, as per the extant regulations.

37. The regulatory framework provides for non-discrimination and mandatory sharing of signals. These provisions have helped many new small multi-system operators (MSOs)⁶ to install networks and start their services. As per the extant regulations, if the addressable system does not meet the requirements as specified in Schedule III, the broadcaster is permitted to disconnect signals of television channels, as per proviso to sub-Regulation (2) of regulation 15, after due notice. Sometimes, small MSOs suffer such eventuality due to deployment of sub-standard CAS and SMS. This arises from the fact that there are no prescribed, tested, and certified solutions. Small MSOs have limited awareness of necessary technical parameters. Many a times, cost remains the primary deciding factor for buying certain products/solutions.

⁶For more details, please refer to TRAI's White Paper on ?Benefits of 'New Framework' for Small MSOs?https://www.trai.gov.in/sites/default/files/WhitePaper_23042019.pdf

38. Hence, not only there is a need for drafting and deployment of adequate standards for content security for CAS, but an effective compliance of statutory framework is also essential to build the trust and confidence among all the stakeholders. This entails entrustment of testing and certification work to a reputed and trusted agency. With this view, the stakeholders were asked to suggest the structure of the agency that will be entrusted with the task of testing and certification.

39. In response, stakeholders have expressed mixed opinions regarding the nodal agency to carry out the testing and certification to ensure compliance to such framework. Many stakeholders have expressed that there should be an independent industry-led body consisting of representatives from TRAI, C-DAC, BECIL, Digital Video Broadcasting (DVB), Technical Experts, CAS/SMS vendors, MSOs, and DTH operators - for registration, certification, testing, auditing, and taking punitive action. This industry body should be entrusted with the task of defining the framework for CAS and SMS through a consultation process, and with the involvement and support of relevant stakeholders.

40. Few stakeholders opined that there should be a TRAI-led agency for defining the framework for CAS and SMS along with the execution support from Bureau of Indian Standards (BIS). The final input on the framework may be provided by industry members.

41. On the other hand, one of the stakeholders stated that in addition to the BIS certification, the vendors of CAS/SMS should be required to get an ISO certification. An independent stakeholder has stated that requirements under Schedule III and Audit Manual could be a starting point for defining the framework; the industry stakeholders and government can jointly add and modify the same.

42. There were few suggestions in favour of STQC Directorate, Quality Council of India (QCI) or a nominated Trusted Authority (TA)/Certification Authority (CA) of international repute to define the framework for CAS and SMS.

43. Some of the stakeholders were of the view that the testing and certification can be done by an industry body based on international standards, through a consultative process. It should lay down a process for certification of any new version of CAS and SMS from the vendors before it is released in India. It was further suggested that if deployed CAS and SMS are not certified within the suggested time frame, intimation must be given to the DPOs using such CAS.

44. On the other hand, there were several suggestions in favour of statutory/government bodies being entrusted to carry out the testing and certification. Arguing for the framework to be fair, reasonable, and non-discriminatory, suggestions were made for bodies like Standardisation Testing and Quality Certification (STQC) Directorate, Telecommunications Engineering Centre (TEC), Quality Council of India (QCI), Bureau of Indian Standards (BIS) and government accredited labs to carry out the certification. One of the stakeholders commented that BIS is a reputed agency with a proven track record and could be the designated agency to carry out the testing and certification of CAS. There were also comments that TEC is appropriately placed to carry such testing and certification, as they have been doing the same for telecom equipment and have processes and procedures in place for the same.

45. One individual stakeholder had suggested that the process of implementation, adherence, monitoring, and upgradation of the requirements should be kept simple to bring in transparency. More layers and agencies will make the involved process more complex, and all the DPOs will not have the means to meet these requirements.

46. The Authority observes that the development and operationalization of a framework would require several factors to be taken into consideration. While such a framework should address important concerns, aspects related to its implementation and operationalization also need due consideration. Trust and confidence among all stakeholders should be the cornerstone of any statutory framework for its effective compliance. Therefore, the testing and certification agency must not only be fair, reasonable, and non-discriminatory; it must also generate such confidence and trust among all the stakeholders. There are statutory bodies that are already carrying out testing and certification in their respective domain with some degree of correlation with the requirements of testing and certification of CAS and SMS.

47. The Authority shall designate Testing and Certification Agency(ies) that shall oversee the testing and certification of different CAS and SMS. The Authority, in consultation with the designated testing and certification agency(ies) shall issue a ?Test Schedule' with a detailed testing procedure for each requirement, as may be required. Looking to the importance of synchronized functioning of SMS along with CAS as emphasized in preceding sections, such ?Test Schedule' shall also check that the CAS under testing supports to integrate with any other SMS and vice versa. The designated agency(ies) may carry out the testing on its own or get the testing done through accredited test labs, as per the prescribed test schedule. For this purpose, the agency(ies) shall empanel accredited testing laboratories (domestic and international accredited test labs, as may be necessary).

48. The Authority envisages that there will be some time-gap before the ecosystem becomes fully compliant to the testing and certification framework. Accordingly, the Authority will prescribe the timeline within which such systems shall get tested and certified to meet the requirements as specified in the Schedule IX. It is obvious that once the regime is in place, the current provisions of self-certification by CAS and SMS, as per Schedule III and Audit Manual, will need revision. Accordingly, the Authority shall notify relevant amendments, if any, in Schedule III and the Audit Manual, as may be required along with the dates of effect of the testing and certification regime. The said amendments shall take into account the inputs received from stakeholders in response to this consultation.

49. Diverse suggestions were received from the stakeholders regarding the oversight mechanism required to ensure compliance. Many stakeholders have suggested that the new framework should be introduced gradually, with a phased migration period, and that all CAS and SMS vendors should get their already deployed systems duly certified by the industry body within three to six months of the framework coming into effect. Existing DPOs should be given an opportunity to rectify the deficiencies, and non-compliant systems should be de-registered and disqualified to operate in India. It was suggested that the existing systems can migrate within a period ranging from one to three years. It was commented by some stakeholders that upon release of a new version of CAS/SMS, fresh certification should be mandated. There was also a suggestion to grant certifications for limited periods, for example three years. Further, upon evidence of system getting compromised, there should be provisions for rectification and for penal action too. Few stakeholders had raised the issue that the Authority should incorporate appropriate provisions for dealing with such DPOs who do not comply with regulatory provisions, especially when it comes to adherence to timelines.

50. There were few comments in favour of regular review of the framework in view of continuous technological advancements. Some stakeholders have suggested that certification by international security agencies, such as Farncombe Security Audit, with suitable changes to suit the Indian market, may be considered. One stakeholder suggested that due consideration should be given to the entire process, i.e., designating an agency to carry out the testing and certification, and to ensure adequate technical understanding and tools to test and certify the compliance.

51. The Authority is of the view that the deployed as well as upcoming systems must get a fair opportunity to ensure compliance to the notified framework. Accordingly, they should be allowed appropriate time to check their systems and get the necessary testing and certification done by their respective CAS and SMS vendor. This would avoid any undue disruption of services. It is to be kept in consideration that upon designation of the Testing and Certification Agency(ies), they will require time to suggest a test schedule to the Authority. The agency may also release the list of accredited labs to do the testing. As such, the timeline to be allowed to the deployed systems can only be referred from the publication of the test schedule and accredited labs, whichever is later. However, notification of the framework will provide additional lead time to the industry to review and ramp-up their system as per the notified framework. The solution providers will then be able to identify the challenges, if any, and initiate the remedial measures to ensure compliance. Keeping this in view, the Authority may specify different timelines for the distributors of already deployed networks or those deploying new networks, to ensure that the CAS and SMS in their networks are certified.

52. For better compliance to the prescribed timelines, some dissuasion is necessary for those who do not comply. The Authority, therefore, considers it prudent to prescribe financial disincentive to deal with non-compliant service providers. In case a distributor of television channels deploys addressable systems, which are not compliant to the Schedule IX after the due date, a financial disincentive may be imposed. The financial disincentive is proposed on a graded scale. That is, if the CAS and/or SMS system deployed by the distributor continue to remain untested/uncertified after the date (as prescribed), the distributor of television channels shall be liable to pay a financial disincentive of @Rs. 1000/- (Rupees One Thousand) per day for the delay of the first thirty days. In case of delay beyond thirty days, the financial disincentive shall increase to @Rs. 2000/- (Rupees Two Thousand) per additional day. The Authority is aware that there are some very large as well as small distributors in the sector. Therefore, a capping of disincentive is necessary to ensure that the maximum disincentive remains reasonable for even the small distributors. Accordingly, the Authority considers that the maximum financial disincentive should be restricted to an upper capping. Therefore, the Authority has prescribed a maximum limit of Rs 2,00,000/- (Rupees Two Lakhs) only, per instance of violation/delay. The Authority will follow the principal of natural justice and provide the distributor with an opportunity to make submissions before levying financial disincentive. In addition, if the default continues beyond sixty days, the Authority may direct the broadcasters to disconnect the signals of television channels, after giving a written notice of three weeks to such defaulting distributor. The Authority also retains the right to take further suitable action against a defaulting distributor of television channels as per the provisions of the TRAI Act, 1997.

53. In an ever-developing technological field such as television distribution, no framework can be final. Such framework will require continuous oversight and updation. Therefore, the Authority proposes to establish a committee of stakeholders (including members from academia and expert bodies) for regular review/updation of the framework. The committee would be empowered to review the testing and certification process at regular intervals and provide its recommendations to the Authority. The committee would include nominees of leading associations of the sector and will be re-configured from time-to-time to retire existing members and bring-in new representatives.

54. Most of the stakeholders have expressed that the standardization and certification of CAS and SMS will help the distributors of television channels in offering better services. The framework would reduce piracy and benefit the entire ecosystem. Some of the stakeholders opined that standardisation would result in nil or less service outage. Standardized SMS will not have any bottleneck in processing multiple transactions. Few other stakeholders commented that the advantages of standardization are not just limited to economic efficiency, improving quality of service, and enhancing end-consumer experience, but also extends to ease of doing business, easing adaptation of new technology and technology upgrades. The SMS vendors would be able to reject the demands of providing alternate revenue recognition mechanism in violation of extant regulations by their customers. They can rather focus on providing enhanced features to ease the work flow. On the other hand, there were few comments that such a framework will lead to additional cost burden, which could be passed on the subscribers, thus leading to a higher subscription pay-out. Some stakeholders have also commented on the dearth of genuine testing labs that can test complex products such as CAS and SMS.

55. Upon analyzing the inputs, the Authority observes that there is a consensus among stakeholders that the framework will bring long-term benefits, both economic and otherwise. A robustly designed and tightly coupled CAS and SMS are expected to put a check on piracy and result in factual reporting of subscriptions, which in turn, will lead to improved revenue realization by all concerned stakeholders. Furthermore, the framework promises many nonpecuniary benefits, such as being conducive to ease of doing business, aiding in adoption of better technology, which in turn, can result in better quality of service and end-user experience. A more secure network can also attract availability of more high-quality content, thereby providing consumers with more choice.

56. Regarding cost concerns raised by some stakeholders, the Authority is of the view that a minimalistic framework, addressing the important issues, may keep costs associated with testing and certification to a minimum. Such an approach is aimed to address the referred issues with least disruption in the sector. It is with this view that the Authority has pruned some of the recommendations made by the Committee. The report of the Committee has been further scaled down to include bare minimum essential parameters in Schedule IX. More stringent provisions with higher quality considerations, as suggested during the consultation process by few stakeholders, may be appropriately reviewed at a later stage. The Authority will constitute a multi-stakeholder committee for the periodical review of the framework.

57. The Authority acknowledges that initially there may be a capacity constraint as regards the testing facilities for complex systems. However, the Authority considers leaving this issue to the Testing and Certification Agency(ies). The agency(ies) can either itself develop testing facilities or identify such accredited labs that may be domestic or international as accredited testing laboratories. The international testing and certification ecosystem is well-established with various national accreditation boards/agencies working under the aegis of international institutions like International Laboratory Accreditation Cooperation (ILAC). A test certificate issued by any accredited test lab from within India or from outside India will be sufficient to recognise a product as tested and for being included in the certified product list. The Authority observes that once a testing and certification regime is enforced in the country, the testing ecosystem will also start developing. Such ecosystem will help domestic solutions to develop further. The Authority considers that such ecosystem will also boost product localisation as envisioned under 'Atmanirbhar Bharat'.

58. Apart from the comments on the major issues raised in the consultation paper, there were some suggestions, which were not directly focused on the topic of consultation. For example, one stakeholder has suggested that apart from CAS and SMS, the role of other components of distribution chain, e.g., encoder, multiplexer (MUX), middleware, SoC, etc., may also be examined. A stakeholder suggested that the guidelines on internet protocol television service (IPTV) should clearly define the medium to be multicast or unicast. Such suggestions have been kept on record for appropriate consideration in future.

Explanatory Memorandum

"Q6. Should there be any discount, in addition to distribution fee, on MRP of a-la-carte channels and bouquets of channels to be provided by broadcasters to DPOs' If yes, what should be the amount and terms & conditions for providing such discount' Please provide your comments with justifications."

"(4) It shall be permissible to a broadcaster to offer discounts, on the maximum retail price of pay channel or bouquet of pay channels, to distributors of television channels, not exceeding fifteen percent of the maximum retail price:

Provided also that the parameters of discounts shall be measurable and computable."

"(12) A broadcaster shall not incorporate any provision, directly or indirectly in its interconnection agreement with a distributor of television channels which requires such distributor of television channels to give a guarantee for a minimum subscriber base or a minimum subscription percentage for the channels offered by the broadcaster and any agreement to contrary shall be void.

Explanation: For removal of doubt, it is clarified that any discount, offered as an incentive by a broadcaster on the maximum retail price of the pay channel or the bouquet of pay channels, based on actual number of subscribers or actual subscription percentage, recorded in a month shall not amount to guarantee for a minimum subscriber base or a minimum subscription percentage for its channel."

1 Using Performance-Based Pay to Improve the Quality of Teachers, Victor Lavy, The Future of Children Vol. 17, No. 1, Excellence in the Classroom (Spring, 2007), pp. 87-109 (23 pages), Published By: Princeton University

2 Strategic Human Resource Management: A Guide to Action, 2008

3 Regis Terpend & Daniel R. Krause, 2015. "Competition or Cooperation? Promoting Supplier Performance with Incentives Under Varying Conditions of Dependence," Journal of Supply Chain Management, Institute for Supply Management, vol. 51(4), pages 29-53, October.