TRAI against market share restrictions in cable TV sector

In a major relief for the cable TV sector, the Telecom Regulatory Authority of India (TRAI) has recommended to the Ministry of Information and Broadcasting that there is no need to impose any market share-related restrictions on multi-system operators (MSOs) since the TV distribution market is highly competitive with multiple players vying for the consumer's share of the wallet.

The regulator, however, suggested that the ministry must monitor the developments in the cable TV sector and intervene, if necessary, at an appropriate time.

In order to enable the last mile provision of broadband services, TRAI has also recommended sharing of cable infrastructure by local cable operators (LCOs) with Telecom Service Providers (TSPs). It is pertinent to note that Bharti Airtel and Reliance Jio are already working with LCO partners to grow the wireline broadband penetration in the country.

Further, the regulator has recommended that the government must amend the Cable Television Networks (Regulation), Act 1995 to encourage LCOs to provide last-mile access to service providers for the provisioning of broadband services. TRAI has suggested the insertion of the following clause in the CTN Act, “Cable operators may strive to provide last mile access to Access service providers/Internet Service Providers in a fair, transparent, and non-discriminatory manner for the proliferation of broadband services.”

On the question of imposing cross-holding restrictions amongst various categories of DPOs/service providers, TRAI noted that issues related to vertical integration, horizontal integration, and M&A are being dealt with through a separate consultation process. The authority also pointed out that it has given recommendations on cross-media restrictions in the past.

TRAI's rationale behind having a liberal regulatory policy for the cable TV sector stems from the fact that the TV universe has enough competition due to the presence of diverse service providers like MSOs & LCOs, direct-to-home (DTH) operators, including DD Free Dish, Head in the Sky (HITS) operators, Internet Protocol Television (IPTV) operators and over the top (OTT) platforms.

TRAI noted that there are 1,75,511 registered MSOs (as of June) besides 4 pay DTH operators, 1 HITS operator, and a few IPTV operators (as of August). The regulator pointed out that the number of LCOs ranged from 81,706 to 1,72,063. DD Free Dish is projected to have a user base of 43 million. Additionally, there are 40+ OTT platforms.

TRAI has also contended that the TV distribution industry was facing several challenges like a declining subscriber base and low average revenue per user (ARPU). Further, pay-TV subscribers in India pay around 20 to 25% of the average price paid by TV consumers in the UK, US, Thailand, or Malaysia. The growth of the OTT landscape further illustrates that fierce competition is prevalent in the sector and it is only expected to grow in the future, the regulator added.

"Hence, considering the number of options available to the consumers, the authority is of the view that at this stage there is no need to intervene in the current structure of Cable TV distribution sector at the MSO or LCO level," TRAI averred.

MIB had sent a backreference dated 19th February, 2021, to TRAI on its 'Recommendations on Monopoly/Market dominance in cable TV services' dated 26.11.2013. The ministry had requested TRAI to provide a fresh set of recommendations in the matter looking at the subsequent developments/expansion in the M&E sector.

In its 2013 recommendations, TRAI had suggested an introduction of a 50% market cap on MSOs with the state as a relevant market. At that time, TRAI had noted that states like Tamil Nadu, Punjab, Orissa, Kerala, Uttar Pradesh, and Andhra Pradesh are characterised by the dominance of a single MSO. However, the market dynamics have seen a big shift with DTH eating away a sizeable chunk of the cable TV market followed by telecom/broadband/OTT players.