Sunil Jain: Watch this broadcast

RATIONAL EXPECTATIONS

Within a few hours of your reading this, the Telecom Dispute Settlement and Appellate Tribunal (TDSAT) will have to take penal action against a company that is owned by the brother of Telecom Minister Dayanidhi Maran, a man to whom both the telecom regulator (Trai) and the appellate tribunal are linked in an administrative sense. Apart from this, the company at whose behest this will be done, Tata Sky Ltd, is a company over whose fortunes Maran has a considerable say""in terms of various clearances his ministry has to give to players in the direct-to-home space. If ever there was a situation of a potential conflict of interest, it is this one. So how the matter is dealt with will be watched keenly, now and in the months ahead. Indeed, there are several other judgments, by the courts and the TDSAT, in recent weeks, which will change the way the country's broadcast industry is run.

But the Tata Sky judgment first. Sometime last year, Tata Sky approached Sun TV (Maran's brother's company) and asked Sun for the feed for some of its (Tata Sky's) channels. Sun, however, said Tata Sky would have to buy all its 20 channels, not just a few. There was then a discussion over whether Sun was offering others the channels as a bouquet or on an a-la-carte basis""Sun said the former was true while Tata Sky presented evidence to the contrary. As an interim measure, the TDSAT ruled that Sun would have to give Tata Sky the channels it wanted. When Sun refused to do so, Tata Sky went back to the TDSAT, which gave Sun three days to comply. This got extended by a few days due to the various holidays but today is the day when the TDSAT has to act""it can penalise Sun up to Rs 2 lakh a day or can take more stringent action in exactly the way a civil court can when its orders are disobeyed.

It is not just Sun that is testing the waters and trying to control the competition in this manner though the law is very clear""broadcasters (such as Sun, Star TV, Zee TV and so on) just have to provide their channels to anyone who wants to carry them and at a price whose ceiling has been capped by Trai at Rs 5 a channel. The TDSAT delivered a judgment in the Tata Sky versus various Zee group firms on March 31, where Tata Sky wanted the feed of various Zee channels. While Tata Sky wanted 19 channels that were clubbed together in two bouquets by the Zee group, the group firms said they had 32 channels and Tata Sky would have to buy all of them. During the course of the hearing the TDSAT concluded that at the time Tata Sky complained, the Zee group firms it was negotiating with had the rights to only the 19 channels Tata Sky wanted. So the TDSAT didn't go into whether Tata Sky would have to buy all 32 channels instead of just 19, but it pointed out that it was unreasonable to expect a DTH operator to buy all channels""this would increase not just the payment to be made to the broadcaster, but would also require more transponder space, which was both expensive and in short supply.

This, though, contradicts what the TDSAT had ruled in the past. In ASC (Dish TV) versus Star India, it ruled, on July 14, 2006, that DTH firms had to buy all the channels a broadcaster had to offer""in this case, Star, which has a relationship with Tata Sky, said it would not sell just one bouquet to the Zee Group's Dish TV but the latter would have to buy another bouquet of channels as well! The matter, presumably, will be decided by Trai, which has a consultation paper out on the matter right now.

Another case involving Star was ruled upon by the Supreme Court just last week, which is somewhat similar. In this case, Star appointed a firm in Agra called Moon Network as the sole and exclusive distributor in Agra for various channels owned by it. When another company, Sea TV Network, approached Star for its feed, it was told to get the feed from Moon. But since Moon was a competitor, Sea refused to take the feed from it. The judgment ruled the quality of feed that Sea would get from Star would be far superior to the one it would get from Moon; and since Moon was a competitor to Sea, this made things worse. While ruling in Sea's favour, the Supreme Court said broadcasters (like Star, Zee, etc) were free to appoint their agents but these agents could not be part of their networks. This has important implications for broadcasters that have very deep relationships with MSOs.

The last, and ongoing, piece of the broadcasting mess is the pricing of each channel. After examining the costs and revenue stream of various players, Trai ruled no channel could charge more than Rs 5 per month. This was challenged at the TDSAT by the broadcasters but was turned down. The broadcasters are now in the Delhi High Court arguing their channels are, like newspapers, covered under Section 19(1)(a) of the Constitution, which deals with freedom of expression, and so putting a ceiling on their prices is tantamount to curbing their freedom of expression. Don't switch off, the show's just got interesting.

suniljain@business-standard.com