After a wait of more than six years, the government has finally approved the new direct to home (DTH) license guidelines. The new guidelines are based on the recommendations issued by the Telecom Regulatory Authority of India (TRAI) titled ‘Issues related to New DTH Licenses’ on 23rd July 2014.
The guidelines approved by the Union Cabinet under Prime Minister Narendra Modi has increased the DTH license period to 20 years in place of the present 10 years. Further the period of License may be renewed by 10 years at a time.
The license fee has been revised from 10% of GR to 8% of AGR. AGR will be calculated by deduction of GST from GR. The license fee will be collected on a quarterly basis.
The DTH industry has four players namely Dish TV, Tata Sky, Airtel Digital TV, and Sun Direct. The total active DTH subscriber base stands at 70.58 million as of June 2020.
The DTH operators have a long-running feud with the ministry of information and broadcasting (MIB) over the issue of license fees. In 2014, the MIB had sent notices asking them to pay license fees totaling Rs 2,066 crore (Rs 20.66 billion) within 15 days. The DTH operators challenged the decision in courts. The matter is currently sub-judice.
Further, the DTH operators will be permitted to operate a maximum of 5% of their total channel carrying capacity as permitted platform channels. A one-time non-refundable registration fee of Rs. 10,000 per PS channel shall be charged from a DTH operator.
DTH operators willing to share the DTH platform and transport stream of TV channels, on a voluntary basis, will be allowed. Distributors of TV channels will be permitted to share the common hardware for their Subscriber Management System (SMS) and Conditional Access System (CAS) applications.
The cap of 49% FDl in the existing DTH guidelines will be aligned with the extant Government (DPIIT's) policy on FDl as amended from time to time. In 2015, the government had amended the FDI policy by allowing 100% FDI in broadcasting carriage services including cable TV and DTH.
Subsequently, the government had brought the sector under 100% automatic route in 2016. Earlier, the FDI route in the sector was under the government beyond the 49% FDI route. The government had, however, clarified that the infusion of fresh foreign investment, beyond 49% in a company not seeking license/permission from the sectoral Ministry, resulting in a change in the ownership pattern or transfer of stake by existing investor to a new foreign investor, will require FIPB approval.
The new DTH guidelines will come into effect as per revised DTH guidelines issued by the MIB.
The government said that the proposed reduction is intended to align the license fee regime applicable to the Telecom sector and will be prospectively applied. The difference may also enable DTH service providers to invest for more coverage leading to increased operations and higher growth and thereby enhanced and regular payment of License Fee by them. The registration fee for Platform Services is likely to bring a revenue of approximately Rs. 12 Lakhs.
It further stated that the sharing of infrastructure by the DTH operators may bring in more efficient use of scarce satellite resources and reduce the costs borne by the consumers. Adoption of the extant FDI policy will bring in more foreign investment into the country.
“We are grateful to Shri Javadekar for resolving the long-standing impasse on the DTH License policy which will provide certainty to the sector. We look forward to a level playing field via parity of Licence Fee with Cable TV which too is Licensed by MIB and follows the same prices and margins as regulated by TRAI’s NTO.”
- Harit Nagpal, MD & CEO, Tata Sky.
DTH is operable on a pan-India basis. DTH sector is a highly employment-intensive sector. It directly employs DTH operators as well as those in the call centers besides indirectly employing a sizeable number of installers at the grass-root level.
The government noted that the amended DTH guidelines, with a longer license period and clarity on renewals, relaxed FDI limits, etc., will ensure a fair degree of stability and new investments in the DTH sector along with employment opportunities.
In 2018, the TRAI had reiterated most of its recommendations on the new DTH license guidelines in response to a backreference received from the MIB. The recommendations were further deliberated upon in the Inter-Ministerial Committee (IMC) meetings held in the ministry. Based on the recommendations of IMC meetings for obtaining approval of HMIB a draft Cabinet Note was circulated on 27 February 2017 for inter-ministerial consultation.
Based on the IMC recommendations, comments of other Ministries/ Department and opinion of the MIB, the ministry differed with the TRAI recommendations on five key issues namely license fee duration, levying of entry fee, charging license fee at 10% of GR, furnishing of bank guarantee and the period of paying a license fee (annual or quarterly).
The MIB had also made two additional proposals to the TRAI. The first proposal was that the MIB may allow the renewal of the license of only those DTH operators who have no dues outstanding, payable to the Government, and are security cleared. Further, nobody will be allowed to operate without the cover of a license.
Secondly, it had also proposed to ask DTH operators to install a chip in the new set-top boxes (STBs) which can give data about channels watched and their duration. This proposal had led to a furour with experts pointing out that installing chips in STBs will amount to an infringement on people's privacy.
The TRAI had agreed to the first proposal while on the second proposal it had stated that asking DTH operators to install a chip in the new STBs is a new issue and cannot be part of the backreference. It had also requested the ministry to send a separate reference if it desires TRAI’s recommendation on the issue of installing chips in STBs.