The Telecom Regulatory Authority of India (TRAI) has floated a consultation paper on monopoly, market dominance and competition issues in cable TV services.
Justifying the need for the consultation process, the regulator said that the level of competition in the MSOs’ business is not uniform across the country. Certain states (e.g., Delhi, Karnataka, Rajasthan, West Bengal, and Maharashtra) have many MSOs providing their services. Whereas in certain other states like Tamil Nadu, Punjab, Orissa, Kerala, Uttar Pradesh, and Andhra Pradesh the cable television market is dominated by one or two MSOs.
DTH service providers do offer an alternate option for consumers. “However, one may opine that DTH services are not perfectly substitutable, as certain factors are unique to cable industry. Cable TV operators can provide broadband and voice services in addition to the distribution of TV channels, which DTH operators cannot. Furthermore, even for the distribution of TV channels, competition within the cable TV sector is essential as cable TV networks operate on a State/regional basis and can choose specific channels to be supplied according to the demand in a particular area whereas DTH services operate on a national basis and transmit the same channels throughout the country irrespective of variations in demand of channels in different markets,” TRAI argued.
Justifying the need for curbing monopoly, the regulator highlighted the growth opportunities for cable operators, a point made by BestMediaInfo.com through several articles. “The telecom networks can provide access to the broadcast content in addition to telecommunication services. Similarly, with digitisation, cable TV networks can also provide Internet access as well as telephone services. Market-related convergence also occurs as consumers desire one-stop services. Therefore, it is important to examine the subject of monopoly of cable services in-toto, keeping all alternative options into consideration,” the regulator said.
Issues for consultation:
Q1: Given that there are multiple options for consumers for availing of television services, do you think that there is sufficient competition in the television distribution sector?
Q2: Considering the current regulatory framework and the market structure, do you think there is a need to regulate the issue of monopoly/oligopoly/market dominance in Cable TV Services?
Q 3. Keeping in view the market structure of the television broadcast sector, suggest proactive measures that may address impending issues related to monopoly/market dominance in the cable TV sector?
Q4. Do you think that there are entry barriers in the Indian cable television sector? If yes, please provide the list and suggest suitable measures to address these?
Q 5. Do you think that there is a need to regulate LCOs to protect the interest of consumers and ensure growth/competition in the cable TV sector? If yes, then kindly suggest suitable regulatory/policy measures.
Q6. What should be the norms of sharing infrastructure at the level of LCO to enable broadband services through the cable television infrastructure for last-mile access? Is there a possibility that LCO may gain undue market control over broadband and other services within its area of operation? If yes, suggest suitable measures to prevent such market control.
Q 7. What should be the relevant market for measuring the market power of cable services?
Q 8. Can a state or city or sub-city be identified as a relevant geographic market for cable television services? What should be the factors in consideration while defining the relevant geographic markets for cable television services?
Q 9. Do you think that MSOs and their Joint Ventures (JV) should be treated as a single entity, while considering their strength in the relevant market? If yes, what should be the thresholds to define a MSO and its JV as a single entity?
Q 10. Which method is best suited for measuring the level of competition or market concentration of MSOs or LCOs in a relevant market?
a) Provide your suggestions with justification.
b) Do you think that HHI is appropriate to measure market concentration of MSOs in the relevant market?
c) If yes, then in your opinion should MSO and its JVs may be considered as a single entity for calculating their HHI?
Q 11. In case you are of the opinion that HHI may be used to measure market concentration of MSOs in the relevant market, then is there a need to revise threshold HHI value of 2500 as previously recommended? If yes, what should be the threshold value of market share beyond which a MSO and its group companies should not be allowed to build market share on their own?
Q 12. Do you think that there should be assessment of competition at LCOs level on district/ town basis? If yes, what should be threshold HHI in your opinion for such assessment.
Q 13: In cases where a MSO controls more than the prescribed threshold, what measures/ methodology should be adopted to regulate so as to bring the market share/HHI below the threshold level?
Q 14. Do you think that DTH services are not perfect substitute of cable television services? If yes, how the relevant market of DTH service providers differs with that of Multi System Operators or other television distribution platform owners?
Q 15. Is there a need to change the criterion of market share in terms of number of active subscribers for determination of market dominance? Should the active subscriber base of JVs may also be considered while determining the market dominance of a MSOs. Do elaborate on the method of measurement.
Q 16. How the new technological developments and alternate services like video streaming services should be accounted for, while determining market dominance?
Q17. If HHI is used for measuring the level of competition, do you agree with the restrictions prescribed in TRAI’s previous recommendations? If no, do provide alternative restrictions for addressing monopoly/market dominance in a relevant market.
Q18. M&A in the cable TV sector may lead to adoption of monopolistic practices by MSOs. Suggest the measures for curbing the monopolistic activities in the market. Explicitly indicate measures that should be taken for controlling any monopolistic tendency caused by a merger or acquisition.
Q 19. Ease of doing business should not be adversely affected by measures/ regulations to check merger and acquisitions. What compliance mechanism or regulations should be brought on Mergers and Acquisition to ensure that competition is not affected adversely, while ensuring no adverse impact on Ease of Doing Business?
Q20. Do you agree with the definition of ‘control’ as provided in the 2013 recommendations? If not, then suggest an alternative definition of ‘control’ with suitable reasoning/justification.
Q 21. Do you think that there should be different definition of ‘control’ for different kinds of MSOs?
Q 22. Should TRAI restrict the ambit of its recommendations only on certain kinds of MSOs?
Q 23. Do you agree with the disclosure and monitoring requirements mentioned in the 2013 recommendations to monitor the TV distribution market effectively from the perspective of monopoly/market dominance? If no, provide alternative disclosure and monitoring requirements.
Q24. Elaborate on how abuse of dominant position and monopoly power in the relevant market can manifest itself in cable TV services. Suggest monitoring and remedial action to preserve and promote competition.
Q 25. Is there a need to recommend cross-holding restrictions amongst various categories of DPOs/ service providers?
This is the second time that the regulator has issued a consultation paper on this subject. Ministry of Information and Broadcasting (MIB) vide its letter dated December 12, 2012, had sought recommendations of the regulator on the issues related to monopoly/market dominance in the cable TV services. After following a due consultation process, TRAI issued its recommendations on November 26, 2013.
TRAI has now received a back reference dated February 19, 2021, from MIB mentioning therein that a considerable time has passed since the recommendations were made and that the media and entertainment (M&E) landscape has changed drastically, particularly with the advent of new digital technologies in this sector, and, therefore, MIB felt that some of the issues need further consideration by the authority and it may provide a fresh set of recommendations in the matter looking at the subsequent developments/expansion in the M&E sector.
Written comments on the consultation paper are invited from the stakeholders by November 22, 2021. Counter comments, if any, may be submitted by December 6, 2021.