The curious case of OTT regulation in absence of a basic audit of DPOs

New Delhi: With the Ministry of Information and Broadcasting set to meet industry stakeholders later this week on the proposed National Broadcast Policy (NBP) by TRAI, the broadcasters have called for ensuring a basic audit of DPOs before getting into any sort of advance policy-level talks.

Despite failing to achieve a complete audit, the Cable TV industry’s push for OTT regulation made it to the recommendations released for the National Broadcast Policy (NBP) by the Telecom Regulatory Authority of India (TRAI).

“Disparity in the regulatory structure and pricing structure of OTT platforms need to be addressed and suitable measures are needed for level playing field. Regulating OTT platforms will promote healthy market competition as it will ensure price parity,” mentioned a few stakeholders’ submissions in recommendations released by the TRAI.

The disparity has been one of the major reasons why distribution platform operators (DPO), multiple system operators (MSO) and local cable operators (LCO) have called for regulating OTT as part of the broadcasting ecosystem.

However, the OTT platforms believe that there should be freedom of speech and expression, especially if the sector is being considered a ‘sunrise’ sector.

Various sources from the cable industry opine that OTT platforms are directly contributing to cord-cutting happening in India. Moreover, they conceded that OTT has personalised content which can be viewed as per the consumer’s own space and time, leading to discontinuation of cable connections.

“The moment the customer is hooked on to OTT platforms, it means the discontinuation of cable TV since OTT platforms have compelling content and the user gets more personalised content and gets to watch it in their own time and space, thereby posing a threat to cable TV,” they further added.

Moreover, the sources accused broadcasters of luring the consumers towards OTT platforms which would result in subsequent bypassing of the cable TV.

Additionally, cable TV operators believe that there is a momentum shift in the ecosystem as cable operators who were the ones to introduce TV connections are now being run ragged by the broadcasters.

“Broadcasters are selling to OTT aggregators for as low as Rs 30-40 while the bouquets the broadcasters provide us with cost approximately thrice the price at Rs 140 inclusive of taxes. If this happens, then the cable ecosystem goes for a toss. Additionally, the bouquet price continues to increase year-on-year while broadcasters are selling content for low prices to OTT aggregators,” sources from the cable industry stated.

However, on the other end of the spectrum, broadcasters believe that OTT is a sunrise sector and therefore, it should not be regulated. Rather, it should be given freedom to flourish.

“OTT being a sunrise sector needs a forward-looking policy approach while TV requires an action plan for resilience. Moreover, the infrastructure pipes for the delivery of broadcasting and OTT are distinct and require specialised policy/regulatory oversight. TV is a push-based medium and OTT is a pull-based medium, therefore, transposing legal broadcasting regulations onto OTT would affect the ease of doing business (EoDB) and hinder growth,” various stakeholders in their submissions to the TRAI stated.

Sources from the broadcasting fraternity highlighted that while OTT is a ‘sunrise sector, requiring a more liberal approach, cable TV is in its stage of resilience.

Additionally, the sources stated that the distrust between DPOs, LCOs and broadcasters has led to the latter finding alternatives.

As per an Indian Broadcasting and Digital Federation (IBDF) report, more than 800 DPOs did not conduct any audit which is a mandatory requirement as per clause 15(1) of TRAI’s Interconnect Regulations.

The report further highlighted that there are approximately 1181 total DPOs where one of the IBDF members has provided its signals.

“Regulators/broadcasters have pushed DPOs aggressively and consistently over the last three to four years for them to conduct audits, but things have not moved. Similar measures have been adopted by the Ministry of Information and Broadcasting (MIB) as well; however, they too have not yielded any results. The regulator also introduced penalties for not conducting the audit has also not resulted in a desirable outcome. Broadcasters have also used regulatory provisions at their disposal along with constant follow-ups with DPOs to get the audits done but even that has not led to any significant success in increasing DPO-caused audits,” the IBDF report stated.

“Cable TV and OTT are fundamentally different as TV, as a product, serves ‘one to many’ whereas OTT serves ‘one to one’, which makes both of them distinct. I believe that there should not be regulation of OTT because there is no comparison and thereby, treated differently,” a broadcast veteran said.

On price parity, the veteran said that while cable TV is a business-to-business-to-consumer (B2B2C) model, OTT is a business-to-consumer (B2C) model, which makes OTT cheaper due to the lack of intermediaries in the operations of the industry.

“We must not forget that OTT regulation is the demand of a few stakeholders, whereas cable TV had to be regulated due to consumer exploitation,” a top executive of a distribution arm of a large broadcaster said on the condition of anonymity.

Sources from the broadcasting industry also discussed the issue of piracy, noting that OTT platforms provide them with an alternative where content piracy is no longer a concern. 

“The lack of audits has given rise to piracy of content which the broadcasters are not being paid for by the DPOs, MSOs or LCOs,” said the broadcast veteran quoted above.

The broadcasting fraternity feels that they take a risk when they invest in exclusive content, hoping that they will recover the amount they have spent. Despite that, cable TV operators often retaliate against the exclusive content available on OTT platforms, said a top broadcast executive.