On 30 June, the Bombay High Court upheld the Telecom Regulatory Authority of India or TRAI’s amendments to the New Tariff Order that outlines how TV channels should be priced, which the regulator issued in January 2020. Last week, multiple appeals were filed in the Supreme Court by various broadcasters as well as the Indian Broadcasting Foundation against the Bombay High Court judgment.
The current situation is symptomatic of TRAI’s controversial administration of the broadcasting sector. The regulator has made more than 75 changes to broadcasting laws, of which more than 65 per cent have been challenged before a tribunal, a high court, or the Supreme Court. Broadcasters and distributors have bent their business models to a breaking point in order to accommodate frequent changes to the regulatory landscape. Consumers see ever-changing bills, abrupt non-availability of channels, and constant reminders from the distributor to select or deselect channels and then move to a long-term subscription plan. Many TV stations, including HBO and AXN, have gone off air since the New Tariff Order (NTO) came into effect in 2020. Design flaws in TRAI are directly responsible for the TV sector becoming litigious, and the regulator’s continued interference could mean the end of it.
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Fatal design flaws in TRAI regulation
Seventeen years of TRAI regulation have been chaotic, and consumer interest, as well as orderly industry growth, have suffered immensely due to three key reasons.
First, the government created TRAI as a communications regulator in 1997 and then force-fit broadcasting within its ambit in 2004. TRAI had no prior experience or in-house expertise to regulate a complex sector like broadcasting, where creative industries and protection of intellectual property (IP) play a significant role. The broadcasting industry relies on communications infrastructure for distribution and the IP-based creative industry for content creation. From a regulatory perspective, it is imperative to differentiate between these two aspects — access to distribution infrastructure is universal and unequivocal but access to content requires a balance between the creators’ IP rights and the public’s ability to view it. TRAI fails to appreciate this nuance and evidence lies in the NTO. It prescribes a price ceiling on channels, favouring access to content over the content creators’ right to monetise their IP.
TRAI is a specialised regulator for telecommunications but the same cannot be said for broadcasting because the TRAI Act does not require the body to have expertise on broadcasting laws. The same holds true for the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), which does not require its members to have broadcasting or copyright expertise.
Second, the consultation procedure followed by TRAI is arbitrary and opaque. The telecom and broadcasting regulator maintains no record of how it conducts consultation processes. Normally, TRAI floats a paper for consultation, seeks comments and counter-comments, and then notifies the final regulation with an explanatory memorandum. At no stage does TRAI seek further clarification from a stakeholder, engage subject matter experts or explain why it rejected some comments or recommendations. This is because the TRAI Act does not specify procedural safeguards for the consultation and subsequent rule-making process. Last month’s Bombay High Court order struck down one provision of the new TRAI regulations, citing lack of transparency in the consultation process. The High Court borrowed principles from the Airports Economic Regulatory Authority of India Act to determine what transparency means for TRAI. Under Section 13 of the Airports Economic Regulatory Authority of India Act, transparency means due consultation with all stakeholders, evaluation of all stakeholder submissions and documenting and explaining final decisions. However, there is no uniform policy document on procedural safeguards that regulators in India should follow.
This is in stark contrast to consultation practices in other countries. In 2015, the European Commission published Guidelines on Stakeholder Consultation, which sets minimum standards for EU regulators when it comes to public consultations. Among other things, it requires the consultation process to be open for a minimum of 12 weeks and encourages stakeholder participation throughout the policy-making cycle. Canada has ‘Guidelines for Effective Regulatory Consultation’, which specifies minimum standards for effective consultation and provides a detailed checklist for regulators to follow during the lifecycle of a consultation. It includes preparing realistic timelines and a roadmap for continuous evaluation of proposed changes before the consultation is opened to the public.
Third, TRAI’s rule-making process has little scope for an appeal at any stage. The TDSAT does not hear challenges against its regulations but only resolves disputes between service providers and consumer groups. The High Courts and the Supreme Court are reluctant to engage with the substance of TRAI regulations because the judiciary presumes that administrative and policy decisions, made by an independent regulator, are backed by expertise. As the Bombay High Court judgment revealed, the courts rely on the regulator’s judgement unless there is an obvious error in the procedure followed. In effect, TRAI can notify a regulation even if it has adverse repercussions on the industry, and neither the TDSAT nor the courts intervene to rectify this process.
Now, broadcasters and distributors have challenged TRAI’s latest changes to all three broadcasting regulations (Tariff Order, Interconnection Regulations and Quality of Services Regulations). The petition in the Bombay High Court against the new regulations challenged the authority of TRAI to make prescriptive regulations, arguing that the regulator’s rules violate channels’ freedom of expression and the freedom to conduct business. They also alleged that TRAI did not follow adequate consultation before finalising the latest regulations.
The New Tariff Order saga began in 2017 when the TRAI introduced prescriptive regulations that introduced a price cap on channels and restrictions on packaging channels into bouquets. After a prolonged legal battle, TRAI directed distributors and broadcasters to implement the NTO in March 2020 but reports suggest that many operators failed to do so. The outcome of multiple appeals filed in the Supreme Court could determine the future of India’s TV industry. As mentioned earlier, several channels that offer quality content on a subscription basis have ceased operating in India as a consequence of the NTO. At the same time, online streaming or OTT platforms have emerged as alternatives for consumers who are tired of the homogenous content offerings on television. In such a scenario, who would want to invest precious money in creating TV content?
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Recognise different aspects of broadcasting regulations
Given the design flaws in TRAI, it is imperative to approach broadcasting regulation from a new perspective to ensure that the television industry can survive. Thrice before, in 1997, 2001 and 2006, the Indian government had considered a separate regulator for broadcasting but the bills never passed Parliament. India can also consider separating channel pricing and packaging, from the communications aspects that TRAI is equipped to regulate. In most countries, the practice is to separate the content-related aspects of television broadcasting from the communications ones.
Among the countries that regulate both aspects together, there is a clear distinction between the dual aspects of broadcasting regulation. The Infocomm Media Development Authority (IMDA) of Singapore adopts a differentiated approach towards content and carriage, even though it regulates both. The IMDA does not intervene in channel pricing, even though it licenses subscription services for television. Regardless of the government entity that governs broadcasting, it is important to incorporate standards for the aforementioned concerns – expertise on both content and carriage aspects, transparent and meaningful consultation, and an appropriate mechanism to review and address grievances over a regulator’s decisions. Only then will India’s TV sector be able to flourish and offer consumers quality content.
The author works at Koan Advisory Group, a technology policy consulting firm. Views are personal.
This article is part of ThePrint-Koan Advisory series that analyses emerging policies, laws and regulations in India’s technology sector. Read all the articles here.