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Rationalise FDI caps in television distribution

Written by: Staff

New Delhi, Jul 23: In an attempt to give a fillip to the Indian TV industry, business chamber FICCI has urged rationalisation of Foreign Direct Investment (FDI) caps in television distribution and news and non-news content, besides a review of industry norms to usher in convergence.

Other key elements of the FICCI package include digitalisation of TV networks, easing of policies and regulation for uplinking of channels and framing of cross-media ownership rules.

According to the Federation of Indian Chambers of Commerce and Industry (FICCI) submission to the Planning Commission for inclusion in the 11th Plan Approach Paper, the TV sector currently lacks a consistent and uniform media policy for foreign investment.

Some of the inconsistencies include different caps in FDI in various segments.

For instance, in television distribution, 49 per cent FDI is allowed in Direct To Home (DTH) with strategic FDI only at 20 per cent. In Cable, India citizens can have a ownership of 49 per cent.

In content news, television and Print is 26 per cent, Radio-Nil, while for content non-news, television and Print is 100 per cent and Radio 20 per cent (only portfolio).

According to the chamber, these caps need to be rationalised.

FICCI has pointed out that convergence of technologies, services and markets is the emerging paradigm around which the communication industry is centered.

Advancement of technology has blurred the line between the telecom, broadcasting services and networks eg IPTV, broadband, spectrum and allocation for both broadcasting and telecom services.

Any regulation must recognise these factors.

Further, given the increasing convergence of Telecom, Internet, and Cable&Satellite industries, there is an urgent need to review the policies governing the sector.

Regulation should facilitate fair competition between players, competing platforms and multiple technologies in the carriage segment and let the markets decide the technology and platforms of choice.

This has also been recommended by the Telecom Regulatory Authority of India (TRAI) in its consultative note.

FICCI has noted that the content side is independent of the carriage and should be largely self-regulated. The Ministry of Information&Broadcasting has set up a committee to draft a Broadcasting Code and Guidelines, and it will lend its support to the code. The chamber has also suggested that conversion to digitalisation should be made mandatory and not left on a completely voluntary basis. A clear time frame needs to be defined for transition to digital.

The Licensing process should be made stringent to filter out non serious players eg. net worth, proper declaration of subscriber base, area of operation etc. Fiscal incentives such as waiver of service and entertainment tax, income tax holiday, etc. should be provided to operators for transition to digital, and price regulation for digital cable providers should be discontinued, since digital players will typically bundle video, voice and Internet services.

At present, India does not have a national digital policy or plan. The cable industry is largely unorganised, fragmented and provides analogue services to customers. Cable operators in India are not regarded as an industry and the existing regulatory and policy framework for the cable industry is quite inadequate.

There are several advantages of digitisation, according to FICCI including freeing of analog spectrum, which can then either be auctioned by the government to private players or be used by defence/emergency services, superior picture and sound quality, substantial increase in the number of channels thus increasing choice for viewers, interactivity on the channels, Electronic Programming Guide, new services such as telephony, pay-per-view, video-on-demand and e-commerce.

Internet can be possible using digital networks, infrastructure set-up for digitaliation can be leveraged for rolling out addressability, and there can be a reduction in piracy.

FICCI has pointed out that the government should also look at establishing India as an uplinking (of satellite channels) hub by easing the existing policies/regulations for uplinking of channels and setting up teleports/hubs. India can be made the regional hub for channels being beamed in the region. Today, Singapore is one of most popular destinations for setting up teleports/hubs.

The government, notes FICCI, has been mulling over evolving cross-media ownership rules for which even a public draft has not been evolved as yet. Most sectoral policy documents, allowing foreign investment are in-built, with a compliance clause to such rules, as and when they are drafted. However, in the absence of any draft rules or an established time frame for evolution of such rules, it hampers the long-term investment strategy of the potential foreign investor.


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