TRAI schedules Open House Discussion on December 5

The Telecom Regulatory Authority of India (TRAI) has scheduled an Open House Discussion (OHD) with the stakeholders on December 5 for the Consultation Paper on ‘Audit related provisions of Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) Regulations, 2017’ and ‘Telecommunication (Broadcasting and Cable) Services Digital Addressable Systems Audit Manual’.

The Indian Broadcasting and Digital Foundation (IBDF) has written to the regulator, “Under the New Regulatory Framework, subscriber count has become the industry’s currency, and any incorrect subscriber reporting and content security breach has enormous financial ramifications for the whole sector, and especially for the broadcasters and also for the public exchequer. Hence, it is imperative that along with a transparent audit process, equal opportunity should be given to broadcasters to verify the subscriber base and also validate the addressable systems deployed by the Distribution Platform Operators (DPOs) for the transmission of TV channels.

There are longstanding issues with the current audit process. For example, while the current regime provides for mandatory DPO-caused audits, it has been observed that a majority of DPOs have either never conducted an audit of their systems or failed to do so in a time-bound manner.

Even where DPOs are conducting audits, the audit reports are incomplete and rife with discrepancies. They are either not submitted to broadcasters or are submitted late, leading to outdated and incorrect information. When the statutory period of 2 years for retaining data expires, verification of the subscriber base for that period is impossible.

These issues persist; despite penalties prescribed under the regulations and broadcasters using the regulatory provisions at their disposal, constantly following up with DPOs, the number of DPO-caused audits has not increased significantly. Furthermore, DPOs do not permit broadcasters to conduct audits under Regulation 15(2).

Broadcasters should have an unfettered, first right to audit
To overcome the aforesaid audit-related issues, it is imperative that broadcasters have an unfettered, first right to audit and the DPO-caused audits under Regulation 15(1) be done away with. Broadcasters are the owners of TV channels and subscriber base forms the basis of broadcasters’ revenues. Hence, broadcasters must be able to independently verify the veracity of the reported subscriber numbers and validity of the DPOs addressable systems to mitigate under-reporting and manipulation of the CAS and SMS systems3 , without relying on a DPO caused audit / Monthly Subscriber Reports (“MSRs”) submitted by DPOs.

Currently, DPOs push back on broadcaster-caused audits, by asking broadcasters to provide strict proof of discrepancies found in the DPOs’ audit report, and by delaying the broadcaster-caused audits on various pretexts. The very purpose of audits is to ensure transparency and verify Monthly Subscriber Reports and validate addressable systems deployed by the DPOs to retransmit TV channels of broadcasters.

The Hon’ble TDSAT in the matter titled Sony Pictures Networks India Pvt Ltd. vs Digiana Projects Pvt Ltd4 has also held that the 15(2) right “does not and should not require any contest or legal dispute for permitting the broadcaster to proceed with its right to hold an audit.” Accordingly, only broadcasters should have an unfettered, first right to audit, and the provision relating to DPO-caused audits under Regulation 15(1) should be deleted. This will even provide relief to small DPOs, relieving of them burden of the audit fee and related obligations. Irrespective of which party causes the audit, the process of conducting audits, including the information sought and the time period covered, should be uniform.
BCS Bureau