DPOs flag compliance cost, feasibility concerns over TRAI’s new audit rules

New Delhi: India’s cable television distribution industry is assessing the cost and operational impact of the Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) (Seventh Amendment) Regulations, 2026, with multiple stakeholders flagging that the proposed changes could impose a compliance cost of up to Rs 1 crore on large multi-system operators (MSOs) that share infrastructure.

The draft regulations, which seek to tighten reporting norms and improve transparency in subscriber declarations, propose that distribution platform operators (DPOs) sharing infrastructure must operate through “separate instances” of conditional access systems (CAS) and subscriber management systems (SMS), rather than relying on logical separation within a common system.

This change could translate into a one-time cost of anywhere between Rs 50 lakh and Rs 1 crore for larger MSOs, at least two DPOs told BestMediaInfo.com.

“Mandating separate instances will impose a cost of anywhere between Rs 50 lakh and Rs 1 crore on large MSOs, depending on the size of operations and the CAS or SMS service provider involved,” a senior executive at one of the DPOs said.

The official noted that the cost would vary based on the technology vendor and the scale of the subscriber base involved. 

While the expenditure is not recurring, the representative said it would directly affect operators that currently share infrastructure, a practice common among larger MSOs to optimise costs.

Logical separation versus separate instances

At present, most infrastructure-sharing arrangements operate on what the industry describes as “logical separation”, where subscriber data for different operators is digitally segregated within the same server environment. 

MSOs argue that this system already allows for clear identification and auditing of operator-wise subscriber numbers.

“Even today, infrastructure sharing works with clear logical separation. Auditors are able to distinctly segregate subscriber data for each operator without any ambiguity,” a top executive from a large MSO said. 

Under the proposed “separate instance” requirement, while the physical server may remain common, operators would need fully segregated databases branching out from the base level. This would require additional development work by CAS and SMS providers, triggering the higher compliance cost highlighted by the federation.

“Audits already present operator-wise data clearly, For instance, X, Y and Z are separately identifiable. The transparency objective is already being met,” the executive said, arguing that the proposed change may not materially improve reporting outcomes.

Transparency and under-reporting concerns

TRAI’s stated objective behind the tighter norms is to ensure accurate subscriber reporting and to address concerns from broadcasters around under-declaration of subscribers by DPOs, particularly in cases of shared infrastructure.

On this point, DPOs said they broadly agree with the regulator’s intent. 

“The authority’s concern is that there should be no under-reporting, and we agree with that completely. There should be zero tolerance for under-declaration,” one DPO executive said. 

However, they believe the risk of under-reporting does not stem from the absence of separate instances, but from gaps in enforcement and accountability mechanisms.

“If there is evidence of malpractice, the solution should be to act against the responsible auditor, including blacklisting where required, rather than increasing compliance costs for the entire industry,” the executive noted. 

The 30,000 subscriber threshold issue

Beyond infrastructure-sharing costs, another aspect of the draft regulations that has drawn industry attention is the revised treatment of smaller operators and subscriber thresholds.

Under the current framework, smaller operators below a certain subscriber base have historically received exemptions or lighter audit requirements. 

Industry stakeholders said that while operators below 30,000 subscribers are exempted from some audit obligations, the draft regulations could lead to an increase in the number of entities clustering around this threshold.

They cautioned that applying uniform compliance logic to very small operators, some of which may lack the scale or operational capability of a full-fledged MSO, could have unintended consequences for the sector.

“Smaller operators have already been given certain exemptions in the audit framework, but there is a possibility that the number of entities around the 30,000-subscriber mark could increase,” said a representative from the cable industry. 

From the industry’s perspective, the concern is that entities without the scale to function as full-fledged MSOs could be subject to regulatory requirements that were originally designed for much larger distribution platforms. 

This, the representative said, could distort the competitive landscape without necessarily improving reporting accuracy.

Broadcaster presence during audits

The draft regulations also propose that broadcaster representatives be present during certain audits, a provision industry bodies and large distribution platform operators (DPOs) have described as operationally impractical.

“Subscription and technical audits do not happen in one location. Headends are spread across cities, and audits run over several months,” a top MSO executive said. 

The executive explained that a single MSO may have headends in multiple cities, with audits taking place sequentially across locations.

“Expecting broadcasters to depute representatives across multiple locations and timelines is operationally unworkable and unrealistic,” the executive said, adding that such a requirement could force broadcasters to create dedicated audit teams solely to track MSO audits.

Engagement rather than litigation

Despite their concerns, MSOs and industry bodies said they do not intend to challenge the draft regulations through legal action. Instead, the stakeholders plan to continue engaging with the regulator through representations and consultations.

“We do not want to challenge the regulations in court. Our approach is to engage and explain the practical implications,” a representative from an industry body said.

They also expressed optimism about the current regulatory environment. 

“The current TRAI leadership is far more consultative. If we are able to explain the issue clearly, an amendment or clarification is possible,” they said.

They reiterated that the objective is aligned with that of the regulator and broadcasters, accurate reporting and transparency, while ensuring that compliance measures remain proportionate and feasible.