The Hindu Business Line : ‘Hike cap on foreign investment in cable TV network, news channels’

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TRAI says the cable industry is in need of a re-haul and will require anywhere between Rs 15,000-20,000 crore to get itself a digital facelift.
The “enormous amount of investment” required for upgrading the cable networks justifies revising the 49 per cent limit fixed long before digitisation was on the horizon.

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New Delhi, April 26 Terming the Information and Broadcasting Ministry’s reasoning for keeping the foreign investments (FI) limits in the cable TV network at 49 per cent as over-cautious, the Telecom Regulatory Authority of India (TRAI) on Saturday recommended that it be raised to 74 per cent. The regulator is also in favour of allowing the FI limit for news and current affairs channels to be raised from the current 26 per cent to 49 per cent.

Explaining the move, TRAI said the cable industry was in need of a re-haul and would require anywhere between Rs 15,000-20,000 crore to get itself a digital facelift, the only way forward for the cable TV industry comprising of a highly fragmented last mile, estimated to consist of 40,000- 60,000 operators, and 6000 multi-system operators (MSOs).

The Ministry had indicated its preference in continuing with the existing limit of 49 per cent. The regulator has, however, argued that it was inconceivable that a network as large as that, even after consolidation, would pass on to foreign hands as feared by the Ministry. It is also betting on the fast-growing DTH base to prevent such a situation. Current DTH operators and licensees, it noted, were all large corporate entities who would “provide excellent competition and alternative in times to come to the incumbent cable operators, whether foreign owned or domestically held.”

‘Welcome move’

The MSO Alliance welcomed the move stating that if broadcasting and telecom were at par where regulation was considered, they should be at par with regards to FDI caps too. “If notified, it will lead to a consolidation and also benefit from the experience of international players who would now look at the industry,” said Mr Ashok Mansukhani, President, MSO Alliance.

The cost of upgrading to a two-way (750-850 MHz broadband) digital cable is even higher, estimated in the range of $ 200 per home, or Rs 64,000 crore for the 80 million cable homes. The “enormous amount of investment” required for upgrading the cable networks justifies revising the 49 per cent limit fixed long before digitisation was on the horizon, said TRAI.

The Cable Operators Federation of India has, however, expressed disappointment. Ms Roop Sharma, President, fears a buy out of last mile operators by FDI flushed MSOs, and says thousands of last mile operators will be jobless while MSOs monopolise the business.

Acknowledging that news and current affairs channels were considered more sensitive given their power to influence public opinion and bearing on security of the State, TRAI has argued that raising FI limits would not result in a transfer of “management or editorial control” to foreign entities. A better safeguard against subversive content could be ensured through monitoring and regulation through content code, suggests TRAI. News and current affairs channels uplinked from abroad are not subjected to any foreign investment limits, it points out.

Mr K.V.L. Narayan Rao, CEO, NDTV said, “We welcome the recommendations and hope that it comes through.”

Keeping in line with its recommendations for television news channels, the regulator has also revised the limits for FM Radio broadcasters up to 49 per cent. News currently banned on FM radio, is expected to be allowed soon following a February TRAI recommendation. The recommendations on satellite radio have, however, been reserved, since TRAI is currently examining the proposed draft policy guidelines for the same.

The regulator has looked into FDI caps dividing the sector into carriage services and content services. In its announcement today, TRAI has maintained it earlier recommendations for the satellite-based cable TV platform, Headend In The Sky, DTH and Teleport. Their recommended FI limit, including of FDI, stands at 74 per cent as does that of mobile television.

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