TRAI’s logic in guarding non-vertically integrated MSOs against content aggregators S

The complaints by the independent cable TV operators about the menace of vertical integration in the cable TV distribution sector and its resultant impact on competition in the cable TV distribution sector prompted the Telecom Regulatory Authority of India (TRAI) to clip the wings of content aggregators or television distribution companies.

In its explanatory memorandum, the sector regulator has listed out how vertically integrated multi-system operators (MSOs) gained by getting ‘sweet’ deals from content aggregators even as the non-vertically integrated MSOs remained at the receiving end. TRAI noted that the market distortions arising out of the current role assumed by the aggregators were amply reflected during the implementation of digital addressable systems (DAS), Phases I and II. Several MSOs had complained that they were forced to swallow unreasonable terms and conditions to obtain signals of the broadcasters through some of the major aggregators, that too at the fag-end of the implementation deadline. This, TRAI stated, had impacted the smooth implementation of DAS. The non-vertically integrated MSOs and in particular smaller MSOs had categorically reported to TRAI that they always ended up with raw deals. Even in the Open House Discussions (OHDs) held in various parts of the country on cross-media ownership, concerns had been vehemently voiced by various MSOs and local cable operators (LCOs) regarding the monopolistic practices of the major aggregators, the authority mentioned. The allegations turned out to be true to some extent when the regulator examined the interconnection agreements the aggregators had made with vertically integrated and non-vertically integrated distribution platforms. The authority discovered that the vertically integrated distribution platforms got content at rates which were considerably lower than those charged from other distribution platforms. The rates being charged from non-vertically integrated distribution platforms were, in some cases, 62 per cent higher than those charged from vertically integrated distribution platforms, the authority noted. This was despite the fact that the non-vertically integrated distribution platforms had a higher subscriber base which commercially offered a better business proposition compared to the vertically integrated distribution platform. The situation, TRAI said, became even worse in the case of relatively smaller non-vertically integrated distribution platforms in which case the rates charged were higher by about 85 per cent compared to the vertically integrated distribution platforms. TRAI’s analysis is based on data contained in the interconnection agreements and the subscriber base submitted by the respective distribution platforms to the authority for a particular city covered under the first phase of DAS implementation. Since the absolute figures of the interconnection agreements and other details—though available with the authority—are commercially sensitive in nature, TRAI did not reveal such information. Presenting the argument of one of the cable operator associations, the authority said that as many as 186 cases were filed by MSOs and LCOs against Media Pro Enterprise India in the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) in 2012, which provided sufficient indication of the level of discontent among the distribution platforms vis-a-vis the aggregators. TRAI also noted another point raised by the association: that the maximum number of cases was against Media Pro and, unsurprisingly, there was no case filed by either DEN or Siti Cable against the aggregator, precisely because they were Media Pro’s vertically integrated partners. “It has also been opined by this set of stakeholders that removing the aggregator will reduce costs to consumers,” TRAI said. Media Pro Enterprise is an equal joint venture between Zee Turner and Star DEN. “It seems quite clear that the objective of creation of such aggregator entities is not merely facilitation of the channel distribution work but to serve some other extraneous considerations,” the authority observed. “In effect, the broadcasters, through these aggregators, are able to exercise market power [dominance] in the market to further their commercial interests. Such cartels become even more dangerous in cases where these aggregators are also integrated with major distribution platforms,” TRAI added. Also Read: Why content aggregators caught the eye of TRAI How TRAI’s content aggregators’ regulation can shift the balance of power TRAI issues regulations for content aggregators Content aggregators’ regulation this week, says TRAI chairman Rahul Khullar TRAI to take decision on content aggregators, DTH licence and FM radio in two weeks: Khullar Tags: Content aggregators, Cross media ownership, DAS, DEN, Media Pro Enterprise India, MSO, Siti Cable, STAR DEN, TDSAT, Trai, ZEE Turner

Source: http://cablequest.org/news/national-news/item/4299-trai%E2%80%99s-logic-in-guarding-non-vertically-integrated-msos-against-content-aggregators.html
Source: http://cablequest.org/news/national-news/item/4299-trai%E2%80%99s-logic-in-guarding-non-vertically-integrated-msos-against-content-aggregators.html