Is piracy of content a byproduct of under-declaration by DPOs?

New Delhi: The lack of audits of distribution platform operators (DPO) despite regulations being in place took centre stage as the Ministry of Information and Broadcasting is expected to discuss the Telecom Regulatory Authority of India’s (TRAI) recommendations on the National Broadcasting Policy (NBP) later this week.

Clause 15(1) of the TRAI’s Interconnect Regulations states that every DPO, once in a calendar year, should conduct an audit of its subscriber management system (SMS), conditional access system (CAS) and other related systems by an auditor to verify that the monthly subscription reports made available by the distributor to the broadcasters are complete, true and correct, and issue an audit report to this effect to each broadcaster with whom it has entered into an interconnection agreement.

However, a report by the Indian Broadcasting and Digital Federation highlighted that the DPOs have not been following the regulations properly with more than 800 DPOs found to be defaulting on the audits for the last four years.

The situation has remained unchanged despite broadcasters and MIB urging DPOs to conduct audits, the IBDF report said.

The lack of audits has caused major distrust between broadcasters and DPOs due to the lack of transparency in the operations of DPOs. However, the case remains the opposite when it comes to the broadcaster’s relationship with DTH operators.

“The relationship between broadcasters and direct-to-home (DTH) operators is amicable because of transparency. Broadcasters know how many people watch whose channel is on a DTH platform and how much the DTH operator needs to pay. Each set-top box (STB) is divided as a single subscriber. There is no under-declaration of numbers when it comes to DTH operators. However, the case is the opposite when it comes to multi-system operators (MSO) and local cable operators (LCO),” a top broadcast executive highlighted on the condition of anonymity.

Additionally, sources from the broadcasting fraternity highlighted that cable TV operators have not been following licensing regulations including providing a consumer redressal mechanism by setting up a website and a 24/7 available consumer helpline number, a bill has to be issued with the bifurcation of the service being provided and broadcasters needs to be paid the revenue share along with paying the government goods and service tax (GST) and entertainment tax.

Broadcasters have further requested the TRAI to specify strict penalties action against auditors to dissuade them from providing incorrect certification to DPOs that systems of such DPOs comply with TRAI’s prescribed requirements.

Most importantly, broadcasters raised the issue of adequate training to the auditors as they might not have a proper understanding of both the spectrums of the broadcasting ecosystem.

“The empanelled auditors have never been trained to audit a product like broadcast content. The auditors should undergo two sets of training with broadcasters and DPOs. They should have an understanding of both sides,” said an industry observer.

“We have strong copyright laws which are the best amongst other countries, but we have a weak enforcement mechanism. Cable operators use the weak enforcement mechanism to their advantage. The money that they generate through piracy is not taxable and the revenue is also not being shared with broadcasters which is a loss-loss situation for both the government and broadcasters,” a broadcast veteran said.

Moreover, the broadcasters have accused cable TV operators of minting money through the piracy of content. The issue has also been addressed in the recent recommendations on inputs for formulating the National Broadcasting Policy rolled out by the TRAI as stakeholders suggest that all the STBs/CAS manufactured in India should comply with Bureau of Indian Standards (BIS) norms, to ensure the delivery of high-quality products and services to consumers.

“Under-declaration of subscribers directly translates to financial losses for broadcasters as well as loss to public exchequer. It tilts the level playing field in favour of independent DPOs who may not be complying with provisions of clause 15(1) for ulterior motives,” stated an IBDF note outlining DPO-caused audit issues.

On the other end of the spectrum, DPOs claim that audits are being conducted as per TRAI’s regulations.

Sources from the cable TV industry state that audits are conducted as per TRAI’s regulations since it is a prerequisite for any cable TV operator. Moreover, they added that audits conducted take three months to be completed.

“Audits are conducted as per clause 15(1) of TRAI’s Interconnect Regulations where a TRAI empanelled auditor conducts the audit. Broadcasters have been asking for audits of their own which would take a long time for DPOs to complete as separate audits would take place for different broadcasters,” sources from the cable TV industry stated.

Various sources mentioned that if different broadcasters start initiating an audit, then it would take more than a year for all broadcasters to finish their audits.

However, the sources highlighted that it is largely smaller DPOs who avoid audits. “Listed entities maintain transparency with audits being conducted once annually as prescribed in the regulations,” one of the sources told BestMediaInfo.com.

On piracy of content, a distribution executive said that such actions carried out by a few smaller DPOs jeopardise the image of the entire cable TV ecosystem and label the entire industry as a menace.