TDSAT SEMINAR
DISPUTE RESOLUTION AND REDRESSAL
OF CONSUMER GRIEVANCES
IN BROADCASTING SECTOR
(March 13, 2010)
Presented by:
A. Mohan
Executive Vice President
Zee Network, India
amohan@siti.esselgroup.com
This presentation depicts the personal views of the
speaker and should not be treated as the views of the
Company.
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INDIA – one of the largest media market
500+ television channels; 600m viewers : 2x the
population of United States
100m+ newspaper circulation across 50,000+ editions
: Next only to China
3.5bn movie tickets sold annually for 1000+ movies :
2.5x the size of the second largest market
87m Cable and Satellite homes :Next only to USA
and China
Sources : IDFC/SSKI - India Entertainment & Media - February 2010 - Nikhil Vora / Bhushan Gajaria / Swati Nangalia
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BROADCASTING VS TELECOMMUNICATION
• Three fastest means of communications:
– Tele-communication
– Tele-vision
– ?????
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WHAT WE PROVIDE
 We, provide you content on 365 days a year on 24X7 basis.
 Broadcasters are required to invest heavily in acquisition / procurement of content which
inter-alia include:
 News & Current Affairs content disseminating news, views & infotainment, business affairs.
 Entertainment programmes such as serials, quiz shows, celebrity shows, talent hunts.
 Movies rights.
 Religious content.
 Events Rights & Sports Broadcasting rights.
 Huge expenditure on setting-up broadcast facilities, uplinking teleports & leasing
transponder space on satellites to effect delivery of channels to distributors of channels.
 Rate regulation and price controls distort the market and lead to a misallocation of resources.
 Artificially low prices deter any further investment in new Channels and programming,
affecting consumer choice and creating a shortage of quality channels and variety in
programming.
 A Myth - Channel prices are quite high and need regulation.- Newspaper example
 ARPU in India – $3.5 - $ 4 - lowest in the world (Vs $ 65 in US)*
 Regulator needs to balance “equity” and “consumer interest”.
*WIPO Report dt.30/11/2009
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Projected growth of Indian Television Industry 2009-2013
In Millions
2008
2009f
2010f
2011f
2012f
2013f
TV Households
% Change
118.0
2.6%
120.0
1.7%
125.0
4.2%
130.0
4.0%
132.0
1.5%
135.0
2.3%
2.7%
Pay TV Households
% Change
80.0
8.8%
87.5
8.7%
94.0
8.0%
100.0
6.4%
107.0
7.0%
115.0
7.5%
7.5%
Cable TV households
% Changes
71.0
1.4%
72.0
1.4%
74.0
2.8%
75.0
1.4%
77.0
2.7%
80.0
3.9%
2.4%
DTH Households
% Changes
9.0*
157.1%
15.0
66.7%
20.0
33.3%
25.0
25.0%
30.0
20.0%
35.0
16.7%
31.2.0%
2009f
2010f
2011f
2012f
2013f
CAGR
2009-13
In Millions
2008
Television Distribution
% Change
150.0
9.9%
165.0
10.0%
185.0
21.1%
205.0
10.8%
225.0
9.8%
250.0
11.1%
10.8%
Television Advertising
% Change
84.2
7.9%
91.0
8.1%
100.0
9.9%
112.0
12.0%
130.0
16.1%
150.0
15.4%
12.2%
Television Content
% Changes
10.5
11.7%
11.5
9.5%
13.0
13.0%
15.0
15.4%
17.0
13.3%
20.0
17.6%
13.8%
Total
% Changes
244.7
9.3%
267.5
9.3%
298.0
11.4%
332.0
11.4%
372.0
12.0%
420.0
12.9%
11.4%
Sources : Industry estimates and PWC analysis; PWC – Indian Entertainment and Media Outlook 2009
CAGR
2009-13
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Subscriber Break-Up FY09
others,
4%
Digital
Cable, 3%
Subscriber Break-Up FY15E
Other, 4%
DTH, 13%
DTH, 31%
Analogue
Cable,
80%
Analogue,
50%
Digital,
15%
Source : Industry, Elara Securities Research
Elara Capital – Cable & Satellite Industries – Future is digital – Media & Entertainment 19
November, 2009
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Sources: Group M, KPMG Interviews, KPMG Analysis
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Sources: Group M, KPMG Interviews, KPMG Analysis
ANALOGUE VALUE CHAIN FAVOURS LCO
Broadcasters
Multiple
Due to lack of
addressability,
forced to sell
negotiated lump
sum rather than at a
fair rate per end
subscriber. However,
advertisement
revenue has been
their relief.
MultiSystem
Operators
6,000
Local Cable
Operators
60,000
Clutter of MSOs
Too many
Monopoly in their
areas of operation.
suppliers of the
same content
targeting max 1-2
LCOs per area.
Easy substitution of
content from one
MSO with content
from another.
Forced to resort to
undercutting in
order to widen
subscriber base.
Hence high
bargaining power
with MSOs
Households
90 Million
Have to bear
monopoly at the last
mile leading to
inferior quality
services and
monopolistic LCOs.
Dissatisfaction with
Analogue cable.
Eager for an
alternative.
Source : Elara Securities Research
Elara Capital – Cable & Satellite Industries – Future is digital – Media & Entertainment 19 November, 2009
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REVENUE LEAKAGES
Distribution of Revenues
C&S homes
80m
X
Average ARPU
USD4/ Month
=
Annual cable
collection
Broadcaster’s
share
USD 3.8 bn
(Rs.17,100 Cr.)
_
USD 500M
USA
UK
Australia
Japan
India
60%
63%
65%
65%
90%
40%
37%
35%
35%
10%
• Unorganised nature of
cable distribution; 7,000
MSOs and 40,000 LCOs
(Rs.2,250 Cr.)
• Cash transaction
MSOs and DTH
operator’s shares
LEAKAGE
USD 500M
(Rs.2,250 Cr.)
USD 2.8 bn
• Lack of addressability –
analogue
distribution
(Rs.12,600 Cr.)
Sources : IDFC/SSKI - India Entertainment & Media - February 2010 - Nikhil Vora / Bhushan Gajaria / Swati Nangalia
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Cost of Piracy in 2009 – US$ 1280 million
(Rs. 5,760 Cr.)
 Continued rapid growth in
market size – US$5.3 billion
(Rs.23,850 Cr.) – 20% up in 2008
Individual illegal connections
US$ 22 million (Rs. 99 Cr.)
 Piracy levels up 7% although
actual piracy cost up 12% due to
increased ARPU and currency
movements
 Grey market for cable operators
is the biggest factor
 With nearly $1.3 billion (Rs.5,850 Cr.)
of revenue leakage in India
continues to be the largest
monetary contributor in Asia
Digital Deployment, Asia-Pacific, Pay-TV, Industry Study, November 2009
Indian grey market
US$ 1258 million (Rs. 5,661 Cr.)
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2006-09 – digitization remained a ‘concept’
What has gone wrong for the cable industry?
•
•
Mandated CAS in
notified areas
•
•
•
Voluntary digitization
•
•
•
MSOs not funded for seeding STB
Execution a failure - high resistance from
LCOs
Lack of political will
Consumer Psyche – If digital is mandated,
why not switch to DTH, a professionally
managed service
Lack of funds to subsidize customer
acquisition
DTH industry funded to the tune of
USD4bn-5bn
Subsidies on DTH as high as Rs2500-3000
per connection
Absence of clear cut road map and lack of
regulations
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FUTURE - MULTIPLE LAYERS OF CONVERGENCE
YESTERDAY
TODAY
(Silos into the home)
(Convergence of services,
networks & devices)
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Most
affected
Broadcaster
Dispute
MSO
Dispute
Channel(s)
Switch
off
LCO
Dispute
Most
affected
Subscriber
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DISPUTES
LCO
 Service Quality
 Price discrimination
 Limited choice of channels
 Interruption in cable services
 Change in channel placements
 No effective consumer redressal system
 No value for money
 Non availability of channel guides
Subscriber
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DISPUTES
MSO
 Non disclosure of complete subscriber base
by LCO.
 Piracy of signals/Inserting advertisements.
 Non payment of subscription fees.
 Non renewal of service agreements.
 Frequent change in loyalty of the LCOs i.e.
migration from one MSO to another
leaving subscription dues/arrears.
 Resistance to adapt themselves to changing
technology.
LCO
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DISPUTES
Broadcaster
 Subscriber base.
 Territory issue – transmission in unauthorised











MSO
areas.
Digital Transmission without paying any additional
subscription.
Non payment of subscription fees.
Non renewal of service agreements.
Alleged unreasonable clauses in service agreements.
Piracy of signals/violation of copyrights.
Resistance to adapt to changing technology.
Limited bandwidth capacity.
Change in channel placements.
Interruption of cable services at their own.
Undue advantage of regulations.
Compliance cost.
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SOLUTIONS OF
DISPUTES
DIGITALISATION WITH
ADDRESSABILITY
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SOLUTIONS
LCO
 Written agreement in place between the LCO &
consumer. (QSR for CAS and Non-CAS areas)
 Subscription fee receipts to be issued by the LCO. (Tariff
Order dt.4/10/07 – Cl.4B & Cl.9 of QSR)
 LCO providing technical support at the time of any cable
breakdown (QSR dt.24/2/09).
 21 days notice for discontinuation of channel(s).
 LCO providing complete channel guides.
 LCO upgrading their network & improving the
quality of
services (Cl.18 of QSR).
 Local body to be authorized for settlement of
disputes.
(TRAI recommendations)
 Discourage monopoly and encourage healthy
Subscriber
competition.
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SOLUTIONS
MSO
 Maintaining contractual agreement with LCOs.
(Interconnection Regulations/Agreements)
 MSO maintaining detailed records of subscriber
base served by the LCO. (Interconnection Regulations
– SLR)
 Appointing independent piracy check agencies.
 MSOs facilitating LCOs to help them in investing in
better infrastructure.
 MSO coordinating with local bodies to shoulder the
accountability of consumer complaints (QSR).
 Digitalisation.
LCO
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SOLUTIONS
Broadcaster
 MSO maintaining a record of number of
franchisees served & their individual HH
connections through a transparent system.
(Interconnection Regulations – SLR)
 Timely payment & renewal of agreement.
(Interconnection Regulations – SLR)
 Appointing independent piracy check agencies.
 Broadcaster providing relevant information.
 Joint public awareness campaigns on the channel list,
new programmes etc.
 Both should encourage healthy competition.
 Digitalisation
MSO
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 Section 14A of TRAI Act provides as under:
1) The Central Government
local
or a
State Government
or a
authority
or any person may make an
application to the Appellate Tribunal for adjudication
of any dispute referred to in clause (a) of Section 14.
2) The Central Government or a State Government or a
local authority or any person
aggrieved by any
direction, decision or order made by the Authority may
prefer an appeal to the Appellate Tribunal.
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Broadcasting Services – categorized as Essential Services
Hon’ble TDSAT in its judgment dt.
27/02/2007 in Case of Set Discovery
Vs. TRAI & others has observed as
under:
“Cable broadcasting may not be an essential commodity in
the sense that it is not an item of food without which one
cannot survive, yet looking to the figures of TV viewership in
this country its importance cannot be underestimated.
Available figures suggest a TV viewership of 68 million for the
whole country. This shows that television viewing has almost
attained the status of an essential service in this country.” 24
• Three fastest means of communications:
– Tele-communication
– Tele-vision
– ?????
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