TRAI draft code gives broadcasters stronger audit rights with FY compliance, infra-sharing

New Delhi: The Telecom Regulatory Authority of India (TRAI) has released the draft Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) (Seventh Amendment) Regulations, 2025, proposing major compliance changes for the broadcasting and distribution ecosystem. 

The draft is open for stakeholder comments until October 6, 2025 and is scheduled to come into effect from April 1, 2026.

At the heart of the amendments is a shift from calendar-year to financial-year audits, designed to align regulatory compliance with the accounting cycles of broadcasters and distributors. 

Under the new framework, every distributor of television channels will be required to have its addressable systems, including the subscriber management system (SMS), conditional access system (CAS), digital rights management (DRM), and related platforms, audited annually for the preceding financial year. 

Audit reports must be shared with all broadcasters by September 30. The audits are to be conducted by Broadcast Engineering Consultants India Limited (BECIL) or auditors empanelled by TRAI. 

Distributors must also provide broadcasters with at least 30 days’ advance notice of the audit schedule and the appointed auditor. Broadcasters will be allowed to depute one representative to observe and share inputs during the audit.

The draft provides relief to smaller operators. Distributors with 30,000 or fewer active subscribers on the last day of the preceding financial year will not be required to conduct annual audits. However, broadcasters retain the right to commission audits of such distributors once a year, if required. 

If a distributor fails to share its audit report by the September 30 deadline, broadcasters,  individually or jointly, may also commission an audit at their own expense. Such broadcaster-led audits must be limited to once a year and completed within four months starting from September 30.

The regulations also close a long-standing compliance gap by mandating that when the new rules come into force, any unaudited period prior to the first financial year audit will also have to be covered.

To ensure accountability, auditors must furnish a certificate confirming both their independence and that the audit has been conducted strictly in accordance with TRAI’s regulations.

TRAI has put in place a defined mechanism for resolving disputes. If a broadcaster disagrees with the audit report received from a distributor, it must raise specific objections with evidence within 30 days. The distributor must forward these objections to the auditor within seven days. The auditor then has 30 days to address them and issue an updated report, which the distributor must share with the broadcaster within seven days. 

If the broadcaster is still not satisfied, it may approach TRAI with supporting evidence. The regulator can, after examining the case, permit a special audit at the broadcaster’s cost. In the case of discrepancies in subscriber numbers, settlements must be made as per the terms of interconnection agreements. If an audit finds that a distributor’s systems do not meet regulatory specifications, broadcasters will be permitted to disconnect signals after giving three weeks’ notice.

The penalties for failing to complete an annual audit are retained but aligned with the financial year. Distributors will face a penalty of Rs 1,000 per day for up to 30 days of default, Rs 2,000 per day thereafter, subject to a cap of Rs 2 lakh in a financial year.

A key element of the draft regulations is the incorporation of the Ministry of Information and Broadcasting’s infrastructure-sharing guidelines into the interconnection framework. Where distributors share infrastructure, they must run separate instances of SMS, CAS or DRM to ensure that data is fully segregated and reconciliation can be done on an entity-wise basis. 

For watermarking and logos, infrastructure providers will insert them at the encoder end, while infrastructure seekers will add theirs through set-top boxes or middleware. TRAI has clarified that consumers should not be subjected to a cluttered screen, with preferably only two logos visible at any time – that of the broadcaster and the last-mile distributor.

These changes follow a consultation process that began in August 2024, where broadcasters pressed for stronger rights to audit distributors, citing concerns over revenue leakage, while distributors argued that mandatory annual audits created costs and duplication.