Commentary: TRAI's overreach to become the third master of OTT sector is fallacious and unwarranted

Instead of letting market forces grow the sector, regulations and overregulation have obstructed the growth of the broadcast sector, including the complainant cable operators. And now the same wisdom may attempt to kill the OTT sector

Niraj Sharma
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Commentary: TRAI's overreach to become the third master of OTT sector is fallacious and unwarranted

#Censor_Web_Series, a top Twitter trend on Sunday, was well-timed considering the newly formed resolve by the Ministry of Information and Broadcasting to set an institutionalised self-regulatory body for OTT platforms, similar to the Press Council of India for the print industry and Censor Board of Film Certification for the cinema industry.

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Given the spread and the impact OTT is fast making in India, there have been repeated demands from vested interested groups wanting MIB to bring OTT content under government regulation. Although MIB and MeiTY do not want to regulate OTT content, they are pushing stakeholders to discuss and put together a self-regulatory mechanism on the lines of BCCC in the linear broadcasting space.

Despite MIB’s constant pushing and prodding so far, the OTT platforms failed to meet the 100 days deadline given in March by the I&B Minister, Prakash Javadekar, under whose chairmanship the Ministry met with a group of OTT companies under the aegis of IAMAI.

One of the serious concerns of the OTT companies is that if MIB oversees their content, it would apply traditional broadcast medium regulations on internet-based platforms, which should come under the Information Technology Act (IT Act), whose parent ministry is MeiTY.

With the increased viewership, the government is of the view that time has come to put in place some sort of regulatory oversight as OTT platforms are no longer meant for a small section of the society.

However, the stakeholders are not overly concerned with the self-regulatory mechanism, which the government wants to encourage but their biggest concern is the “third” master in the field, TRAI, which is trying to introduce economic regulations on OTTs like the linear broadcasting sector. Logic? Their main constituency, i.e. the cable operators, demand “parity” as they witness more and more households — because of their failure to provide quality service and the failure of TRAI to enforce the same — resort to cord-cutting as in other markets.

The MSOs and LCOs rather than batting for lowering their regulatory burden, and thus making their business competitive, have been petitioning TRAI to bring OTTs under the regulatory arbitrage. The cable TV distributors in the last two decades have lived their own cocooned lives without investing in new technologies and business models but when their business interests are threatened with the entry of new digital technologies, they play their victim card before TRAI. This is the typical Indian mindset of pulling down those who succeed or, more succinctly, they want to stop the progression of new technology that is in a better position to efficiently serve the entire value chain, including the consumer. 

Moreover, the video-based OTT sector, unlike linear broadcasting, doesn’t use any public spectrum or any public resources. Rather, it largely uses unused spectrum but TRAI is eyeing scope creep to bring video-based OTT under its purview although it has not yet introduced any regulation on voice OTT.

Video OTTs should not fall under TRAI because they are governed under the IT Act and the sector falling under the IT Act do not come under the TRAI Act.

The first and foremost reason is that both the IT Act and TRAI Act fall under separate domains. And hence, the government will have to amend the TRAI act to give power to regulate sectors fall under the IT Act.

While the broadcast industry, which is suffering due to overregulation, has already started discussions to take out the broadcast sector from the clutches of TRAI, the regulatory body is looking for the right opportunity to kill another growing sector by issuing a consultation paper on Regulatory Framework for Over-The-Top (OTT) communication services in March 2015.

According to our sources, TRAI has been preparing to issue a consultation for the video OTT sector at any time although its two consultation papers (March 2015 and November 2018) have not yet seen the light of the day.

If the video OTT segment becomes another prey of TRAI, it will hurt the Prime Minister’s “Digital India” push as well as new investment coming into new-age digital platforms such as Jio Platforms.

The moot question in stakeholders’ mind is: Has TRAI been successful in regulating the Indian telecom and broadcasting sectors? Can the regulator honestly inform the country that both the sectors are in good shape and health because of its regulations?  With an unfortunate “no” for those questions — then why does TRAI want to regulate video OTT platforms?  Has any one of the line ministries — MIB or MeiTY — made any reference to TRAI to undertake a consultation process to introduce economic regulation on an evolving sector like video OTT?

Then on whose instigation TRAI is overreaching to kill another sector? There is no surprise guess. has pointed out the source of wisdom for the authority time and again, i.e. TRAI always gives eyes and ears to a section of the linear distribution segment — the powerful MSOs and ever-crying LCOs.

The one introspection that TRAI has to do is to ask itself whether it is in a position to enforce quality of service at the last mile or, to be precise, is it successful in regulating the relationship between cable operators and consumers? Will TRAI confirm that a cable TV subscriber has a real freedom and choice to choose his services or channels or packages that he wants? Have the cable operators set up call centres to address subscribers’ complaints or has any cable operator issued itemised billing, showing what they charge for and how much tax is being deducted?  Has TRAI successfully stopped transmission of analogue signals being transmitted in many parts of India or has it stopped piracy at the last mile? 

The interesting point is neither the cable operator nor TRAI admits their failure to serve the consumer who ought to be the king in the entire value chain. TRAI, in its urgency to take control of another sector, is playing to the cable operators’ gallery and blame broadcasters, who have started their own OTT companies, in the garb of “parity”. Why should a sectoral regulator punish broadcasters for bringing new technologies to the country? Any serious player would not only want to expand their business operations but would look for ways and means to reach their subscriber directly by eliminating intermediaries as that will also bring in efficiency and bring down the cost of servicing.

The wiser thing for TRAI to do is to lower the regulatory burden on the linear broadcasting sector but strictly enforce quality of service in letter and spirit as that will allow LCOs to compete with emerging digital mediums like video OTTs.  This will also give freedom to consumers to choose the platforms that they want to opt for taking into account (a) affordability and (b) quality of service.

197 million households use TV with another 90 million homes, mostly poor, ready to join. If the regulatory burden on linear television is reduced, TV viewing will become cheaper and OTTs will be forced to compete with LCOs.

Instead of letting market forces govern the sector, TRAI wants to place a cart on the runway where the flight (video OTT) is going to take off. 

Whilst the government of India has been working hard to revive the failing economy with Minimum Government and Maximum Governance, TRAI is trying to bring another young sector on its knees.

TRAI OTT sector commentary