The consultation paper floated by the Telecom Regulatory Authority of India (TRAI) to review the market structure of the cable television service segment provides a good opportunity to iron out the distortions that exist in this largely unregulated industry. After starting as a premium service in 1990 with the demand for foreign channels during the Gulf war, the cable TV business in the country now comprises 357 broadcasters, 1,733 multi-system operators, 1.5 lakh cable operators, serving nearly 185 million households. While the cable TV industry has grown rapidly, several anti-competitive practices have crept into the ecosystem that has distorted the playing field between various types of service providers. Some multi-system operators (MSO) have become local monopolies by devouring smaller players, compromising consumer choice. While Direct-To-Home (DTH) services can be a substitute, the costs are high due to regulatory fees. DTH platforms, which distribute both pay and free-to-air channels, pay a license fee of 8 per cent of annual revenues. Cable TV operators and MSO platforms do not have to pay any fees to the Centre. There are also no cross-holding restrictions on cable operators with respect to owning a broadcasting company. As a result of this, certain large MSO have cross-holdings across the television value chain, from owning broadcasters to controlling distribution platforms. These operators give preferential treatment to the channels owned by their group entity, while blocking competitors’ channels.

Some large MSOs are squeezing out local cable players by fixing a skewed revenue share. TRAI had noted in 2013 that MSOs had been acquiring market share through M&As, and that restrictions were required to prevent an entity from building dominant positions in the TV channel distribution market. TRAI had made some recommendations, which included making it mandatory for MSOs to seek prior approval for an acquisition. The Centre could revisit these suggestions.

The advent of Over The Top (OTT) platforms has introduced further complications. For example, as per downlinking regulations issued by the I&B Ministry, a broadcaster cannot provide TV channels directly to customers. Broadcasters have to provide channel signals to MSOs or a DTH operator. However, several broadcasters are now offering live streaming of their channels on their respective OTT platforms without regulatory oversight. The TRAI should conduct a thorough audit of the industry to understand the distortions that have been in existence for several years, as well as those that have crept in more recently.

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