The downside of proposing TV channel auctions
Telecom and broadcast regulator, the Telecom Regulatory Authority of India (Trai) has given a 18 January deadline to various stakeholders in the broadcasting industry for their comments on the feasibility of an auction process for satellite television channels. TV channels now need uplinking and downlinking licences from the information and broadcasting ministry to operate. (These cost between Rs2 lakh and Rs15 lakh per annum per channel depending on the kind of permit required.)
According to a 20 December Mint report, at the behest of the ministry, Trai decided to consult the industry stakeholders on the possibility of auctioning satellite television channels on the lines of private FM radio, in an attempt to enhance revenue for the government. It floated a consultation paper titled Issues relating to Uplinking and Downlinking of Television Channels in India and said that the idea was to relook at the existing guidelines as they were are more than five years old.
According to the Mint report, Trai said “MIB has…stated that keeping in view the change in technology, market scenarios, and the lesson learnt in the last few years of their operations, there is a need to review/amend some of the provisions of these guidelines to ensure healthy growth of the broadcasting sector.”
Private satellite TV broadcasters are none too pleased with the proposal. On condition of anonymity, broadcast sector executives say that they will oppose the move to auction satellite TV spectrum. They claim that examples of countries auctioning TV channel licences are hard to find. And in countries, like Greece, where an attempt has been made to auction satellite TV spectrum, broadcasters have protested and slammed the process as an attempt to control media, according to a Reuters report.
“We are in a state of shock as auctioning will pose a risk to the future of business and increase the cost of doing business,” says a broadcast industry executive, requesting anonymity. Another TV channel official adds that Trai seeking comments on a proposal to auction TV permits on the lines of FM radio and telecom makes little sense. “In the latter case, the auction is for bandwidth which is a scarce natural resource, unlike for TV channels where it is amply available since it is man-made and not in the control of Indian government, as channels can also buy bandwidth from private and foreign satellite operators,” he says.
To be sure, satellite orbits are granted by the ITU (International Telecommunication Union), which is a specialized UN agency, and satellites are launched not just by nations but by private foreign operators as well. As mentioned earlier, satellite spectrum is not a scarce resource unlike terrestrial spectrum which is a natural resource and used by FM radio and telecom firms.
If the government goes ahead and implements the proposal to auction TV channel licences, the industry will see the smaller operators disappear. The fear is that only the bigger broadcasting corporations may be able to survive. “Basically, there will be artificial entry barriers which is an indirect way to stifle media freedom,” said one of the two broadcast industry executives.
The move, in a way, shows that the government is keen to pare down the total number of channels in the country—a process that should ideally be left to the market forces. “The country is so vast and varied. And if the broadcasters are having problems, they will shut down their businesses on their own. There is no need for the government to intervene,” said the executive.
In fact, the auction of TV licences will also affect the larger corporations. For instance, let’s take a network like Star India which operates 60 channels. If the auction process is implemented, Star may also have to rationalize the number of channels it runs as the cost of operating all the channels will spiral, making the business unviable.
Media experts argue that this is no way to help a young industry which is yet to realize its full potential. The government should instead act as an enabler for the Indian media and entertainment industry to achieve scale and to access new markets to generate more revenue.
India can, in fact, become the global broadcast and teleport hub of the world. “That’s the reason when the uplinking and downlinking guidelines were reviewed, a separate class of licences was introduced to allow foreign companies to come to India and uplink TV channels for viewing only in foreign countries,” said the broadcast sector executive, adding that when Hong Kong was taken over by China, a lot of media companies migrated from Hong Kong to Singapore. “India, with its favourable geographical location, size, scale and availability of human resource (both creative and technical), could use this opportunity to allow foreign broadcasters to uplink their channels from India. We failed then and we may fail again. Lot of foreign companies will shut channels and uplink those channels from other countries. This means loss of employment, revenue and value creation,” he said.
For news channels, the move could also threaten media pluralism.
Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff.
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