TRAI Extends Last Date of Receiving Comments on
Digital Addressable Cable TV Systems
The Telecom Regulatory Authority of India (TRAI) released a consultation paper on “Issues related to Implementation of Digital Addressable Cable TV Systems” on 22nd December 2011, inviting written comments from the stakeholders by 16th January 2012 and counter comments by 23rd January 2012.
Broadcasting and Entertainment Industry
The Potential in India & Overseas
Bogged by bandwidth problems, high carriage fees (almost being 35% of the total cost of operating a channel), surplus advertising inventory and surfeit of channels, the Indian broadcasting industry does not present a pretty picture for investors. But Marcel Fenez, Global Entertainment and Media Industry Leader, PricewaterhouseCoopers, believes the industry is poised for an exponential growth despite the market realities. The PwC Media and Entertainment Industry Report forecast a robust 22% year-on-year growth for the Indian broadcast industry.
The biggest issue is actually to do with long-term sustainability of channels. With the process of digitisation progressing as we talk, a broadcaster will not have to deal with distribution hassles such as carriage fees for too long. The broadcasters rather have to cope with high content costs and the challenge of attracting enough advertising and subscription revenue. The biggest issue with advertising is measurement. Advertising grows every year, but at the same time you have different media fighting for eyeballs.
Entertainment Industry in India
Entertainment Industry in India has registered an explosive growth in last two decades making it one of the fastest emerging industries in India. Television itself witnessed its transformation from a single government owned channels to a medium telecasting more than 300 national and regional channels. At present Indian film industry or Bollywood is a perfect combination of entertainment and commercial sector, producing close to thousand movies in a year in various Indian languages. Indian film industry supersedes Hollywood in terms of movie production quantity by more than three times.
As per the recent report by Price Waterhouse Coopers (PwC), Indians are likely to spend more on entertainment in the coming years with a steady growth in their disposable income. And as per the combined survey report by KMPG and FICCI, the entertainment industry in India is expected to expand by 12.5% every year and is likely to reach US$ 20.09 billion by the year 2013.
• Indian film Industry- Indian film industry over the past few years has been receptive towards foreign investments. This has paved way for many international production firms to make their debut in Bollywood along with opening their offices in the country. As per FICCI-KPMG report, Indian film industry is worth US$ 2.11 billion and is likely to witness a 9.1% growth till 2013.
• Indian Television Industry- With the introduction of digital distribution platforms like direct-to-home (DTH) and Mobile TV, Indian television industry has undergone a revolutionary change. As per KPMG and FICCI reports, the Indian television industry is worth US$ 4.63 billion and is estimated to grow by 14.5 per cent during 2009-13. Moreover, by 2013 the television advertising industry is likely to own a share of 41% in the Indian advertising sector, which indicates a steady increase of 2% from the current share of 39%.
• India Music Industry- The latest products in Indian music industry which have increased the industry's revenue generation are the non-physical formats like electronic downloads and ringtones. Currently the Indian music industry worth US$ 149 million and is estimated to touch US$ 164.56 million by 2012.
• India Radio Industry- Radio is the medium of masses reaching out to 99% of Indian population. Over the years it has seen vibrant changes and will see some more in the near future. In the year 2008-09, the government cashed in US$ 11.05 million from private owned radio channels. As per PwC report radio sector is estimated to expand at a CAGR of 19% during 2009-13 from the current US$ 170.87 million.
• Indian Animation Industry- India is fast emerging as an ideal hub for graphics industries such as graphic designing and animation. With the emergence of hi-tech games incorporating 3D effects, companies like Intel and Advanced Micro Devices (AMD) are revising their marketing strategies in India to expand their operations in computing sector. By 2013, the Indian animation industry is likely to grow from the present US$ 362 million to US$ 811.2 million, as per the combined FICCI-KPMG report.
The Ultra High-Definition Technology
UHDTV
Now Takes a Step towards Reality after HD
For gadget gurus everywhere, high definition television is all the rage right now. The United States is giving high definition TV a big push by switching broadcasting standards from the use of analog and digital signals to exclusively digital signals. Although high definition TV (HDTV) can be broadcast through both types of signals, the quality seems to be better with digital, which is generally how the images are broadcast.
But before we move on, let's clarify: Digital TV (DTV) and HDTV don't have the same meanings, even though they're sometimes used interchangeably in casual conversation. DTV refers to the manner in which something is broadcast; HDTV refers to the format it's broadcast in. DTV can also be broadcast through digital signals in other formats, such as standard definition (SDTV). Bringing HDTV to the level of an internationally recognized standard format, from its humble origins a couple of decades back, is still going on. Because the process of developing and marketing new technologies is so lengthy, engineers have already started the task of developing the technology that'll proceed HDTV. This is where ultra-high definition TV comes in.
The International Telecommunications Union (ITU) said recently that Ultra High Definition Television (UHDTV) has taken an important step towards becoming a reality when experts reached an agreement on most of the technical aspects of the new standard. UHDTV marks a leap forward beyond the current standards for High Definition Television (HDTV). The experts, which include scientists and engineers from around the world, have been working together for several years in the ITU Study Group on Broadcasting Service (ITU-R Study Group 6) to jointly develop and agree on the technical specifications. A demonstration of UHDTV was provided by the Japanese public service broadcaster NHK at ITU. The screen displayed a staggering 33 million pixels, compared to a maximum two million pixels for the highest quality HDTV screens on offer today.
In September 2011, a trial UHDTV link was arranged between London and Amsterdam and plans are under way to cover part of the 2012 London Olympic Games in UHDTV for screening at public venues around the world. David Wood, chairman of the concerned ITU Working Party in the Broadcasting Service Study Group, said, “The ‘relationship’ that a viewer has with television viewing is linked to the overall experience of the picture and quality of sound. The extremely high quality of UHDTV will have a definite impact on our lifestyle and on our engagement with the programs we watch."
Christoph Dosch, chairman of the Broadcasting Service Study Group, stated, “UHDTV promises to bring about one of the greatest changes to audio-visual communications and broadcasting in recent decades. Technology is truly at the cusp of transforming how people experience audio-visual communications." ITU secretary-general Hamadoun Touré, looking ahead to the day UHDTV will become a reality, said, “UHDTV will create an immersive experience for viewers and will generate a host of new business and marketing opportunities."
UHDTV's goal is to create a vivid, television-watching experience, where the lines of realism and television are blurred. According to manufacturers, people will watch ultra-high definition TV and feel like they're in the middle of a scene. Now that we've cleared through the mess of monikers and acronyms surrounding TV technology, let's jump into the differences between the various levels of definition, and find out what's so advanced about the UHDTV format.
Reinventing the Television Experience
Navigating an Evolving Media Landscape
Consumers today have more media and communications choices than ever before, and more ways to access them. What they lack however is an intuitive, unified experience that encompasses all of the content, applications and devices they use, wherever they want to use them.
While all the entertainment in the world seems to be available, accessing it means navigating a complex web of devices, networks, billing models, and viewing experiences. Consumers want to know why they cannot get all the content they want across all their devices. As content becomes more accessible, broadcasters and content providers are struggling to find ways to preserve the value of their content.
Meanwhile the consumer appetite for more video over more platforms is insatiable what with today’s media marketplace having entered the age of “more” —more video-capable devices, more video services, and more video traffic than ever before.
The Cisco Visual Networking Index (VNI) predicts more than 12 billion connected IP endpoints worldwide by 2014, with web content and services expanding across TV sets, tablets, game consoles, and other consumer electronics devices.
New devices and services are accelerating growth in Internet video traffic. By 2014, the Cisco VNI forecast projects that online video will make up 91 percent of consumer IP traffic, generating traffic equivalent to 6 billion DVDs per month.
More consumer electronics manufacturers are positioning Internet-connected TVs and other devices as gateways to Internet content, and making significant investments in creating online video and application ecosystems.
At the same time, new over-the-top (OTT) online video services such as Netflix and Hulu are competing for the consumer’s time and discretionary spending, creating a global online video community that now includes more than 1 billion users. Broadcasters and media companies are seeking to capitalize on this trend, embracing new distribution platforms and interactive content.
Navigating an evolving media landscape
The three trends —more devices, more online video services, and more Internet video traffic are changing the media delivery landscape as we know it and creating a growing sense of frustration among consumers, content providers, and service providers.
Service providers face stiff competition, increased churn and increased costs to acquire and retain subscribers. Basic pay-TV services are no longer enough: multi-screen offerings have become a core requirement. Therefore service providers are seeking comprehensive solutions for delivering next generation media entertainment.
They look for solutions that bring together virtually infinite content and applications from pay TV, online, and on-demand sources into a unified, personalized experience that can extend anywhere, across managed or unmanaged networks and devices.
Viacom 18 Media, the equal joint venture between Viacom and Network18, just launched its flagship channel Colors in Canada. The channel, which began its international operations in early 2010, now reaches out to almost 50 countries. Its content is syndicated in over 55 countries to many third party channels in various languages (dubbed and subtitles). B4U, too, has launched B4U Movies and B4U Music on Zuku, a cable network and Star Times, a DTT operator, in East Africa. Both Star Times and Zuku cater to the local Asian community in Kenya, Tanzania, Rwanda, Malawi, Burundi, Entrea, Uganda, Ethiopia, Zambia, and Sudan. UTV Stars, described as the official channel of Bollywood, was launched simultaneously in India and in West Asia on August 19, 2011. UTV had collaborated with telecom operator and TV services provider Etisalat for the channel's launch in West Asia. With this launch, UTV strengthened its presence in the UAE through Etisalat which also showcases UTV Bindass and UTV Movies in the region. Almost all domestic channels in the market are not only aiming to expand their footprints nationwide through focused distribution, but are also stepping outside the domestic borders to tap viewers in other countries.
Outside the Indian Territory
Any channel that forays outside the Indian Territory mainly targets increased subscription revenues. Regions with a substantial Indian population outside India are starved for good Indian content and are willing to pay well for the same. Addressing the Indian diaspora directly brings in additional revenues to the channels.
Zee Entertainment, for instance, reported that in 2010, 19 per cent of its entire revenue came from the international market. It is a very lucrative opportunity. Amid a global economic downturn, Zee Entertainment Enterprises Ltd (Zeel) is looking at a 9 per cent growth from its international business this fiscal. India’s leading broadcasting network overseas will see international income up from advertising, syndication and other operations while subscription revenue will stay almost flat. “Historically, we were very subscription-led. But for the last three years we have developed other revenue streams like mainstream advertising and syndication, which are posting growth. That enabled us to launch many products,” said Zeel international business head Bharat Ranga in an interview with Indiantelevision.com, while refusing to disclose any financials. Zeel had posted an international subscription revenue of Rs 4.09 billion in FY’11, degrowing by 2 per cent over the year-ago period. In the first six months of this fiscal, the company has reported revenue of Rs 1.93 billion. Zeel announces its international subscription revenues, but does not disclose the break-up of its advertising income from India and other markets.
The depreciation of the rupee against the dollar would somewhat help Zeel in the second half, but the economies of UK and Europe still remain terribly stressed. “Europe and UK remains a huge challenge but within this turmoil, the South Asians are somewhat better placed. However, because our competitors sell very cheap or even make free content available, growth is still a challenge,” said Ranga. Zeel launched Zee Café, a hybrid channel, to arrest degrowth in that market. The channel airs cricket and regional fiction shows sub-titled in English, among other lines of content. So will the company launch more channels in global markets? “We are very selective about launching Indian channels in these markets. We launch only when we spot gaps. In UK, we felt that there was a male product gap. We would like to launch when we see that there is an instant market need. We want to first harness the growth of these new launches,” said Ranga. Zeel has also paced up its localisation strategy in global markets, which keeps it far ahead of its rivals. Zee Aflam, for instance, has seen reasonable growth and reached break-even status within three years. Other localization experiments are already on in Malaysia, Russia and, to a limited extent, in France in partnership with Canal. Will Zeel launch local products in more markets? “There are plans in additional markets but we can’t disclose now because it is strategic in nature. We have developed homegrown tools to identify markets,” said Ranga.
Viacom 18 Media, the equal joint venture between Viacom and Network18, just launched its flagship channel Colors in Canada. The channel, which began its international operations in early 2010, now reaches out to almost 50 countries. Its content is syndicated in over 55 countries to many third party channels in various languages (dubbed and subtitles). B4U, too, has launched B4U Movies and B4U Music on Zuku, a cable network and Star Times, a DTT operator, in East Africa. Both Star Times and Zuku cater to the local Asian community in Kenya, Tanzania, Rwanda, Malawi, Burundi, Entrea, Uganda, Ethiopia, Zambia, and Sudan. UTV Stars, described as the official channel of Bollywood, was launched simultaneously in India and in West Asia on August 19, 2011. UTV had collaborated with telecom operator and TV services provider Etisalat for the channel's launch in West Asia. With this launch, UTV strengthened its presence in the UAE through Etisalat which also showcases UTV Bindass and UTV Movies in the region. Almost all domestic channels in the market are not only aiming to expand their footprints nationwide through focused distribution, but are also stepping outside the domestic borders to tap viewers in other countries.
Outside the Indian Territory
Any channel that forays outside the Indian Territory mainly targets increased subscription revenues. Regions with a substantial Indian population outside India are starved for good Indian content and are willing to pay well for the same. Addressing the Indian diaspora directly brings in additional revenues to the channels.
Zee Entertainment, for instance, reported that in 2010, 19 per cent of its entire revenue came from the international market. It is a very lucrative opportunity. Amid a global economic downturn, Zee Entertainment Enterprises Ltd (Zeel) is looking at a 9 per cent growth from its international business this fiscal. India’s leading broadcasting network overseas will see international income up from advertising, syndication and other operations while subscription revenue will stay almost flat. “Historically, we were very subscription-led. But for the last three years we have developed other revenue streams like mainstream advertising and syndication, which are posting growth. That enabled us to launch many products,” said Zeel international business head Bharat Ranga in an interview with Indiantelevision.com, while refusing to disclose any financials. Zeel had posted an international subscription revenue of Rs 4.09 billion in FY’11, degrowing by 2 per cent over the year-ago period. In the first six months of this fiscal, the company has reported revenue of Rs 1.93 billion. Zeel announces its international subscription revenues, but does not disclose the break-up of its advertising income from India and other markets.
The depreciation of the rupee against the dollar would somewhat help Zeel in the second half, but the economies of UK and Europe still remain terribly stressed. “Europe and UK remains a huge challenge but within this turmoil, the South Asians are somewhat better placed. However, because our competitors sell very cheap or even make free content available, growth is still a challenge,” said Ranga. Zeel launched Zee Café, a hybrid channel, to arrest degrowth in that market. The channel airs cricket and regional fiction shows sub-titled in English, among other lines of content. So will the company launch more channels in global markets? “We are very selective about launching Indian channels in these markets. We launch only when we spot gaps. In UK, we felt that there was a male product gap. We would like to launch when we see that there is an instant market need. We want to first harness the growth of these new launches,” said Ranga. Zeel has also paced up its localisation strategy in global markets, which keeps it far ahead of its rivals. Zee Aflam, for instance, has seen reasonable growth and reached break-even status within three years. Other localization experiments are already on in Malaysia, Russia and, to a limited extent, in France in partnership with Canal. Will Zeel launch local products in more markets? “There are plans in additional markets but we can’t disclose now because it is strategic in nature. We have developed homegrown tools to identify markets,” said Ranga.
RIL Makes Mega Deal with Network18
Invests over Rs. 1,500 Crore
Reliance Industries Ltd. (RIL), that had made a big bang entry into communications field with acquisition of 4th generation broadband firm Infotel, has struck a deal that will eventually give it a major equity stake in Network18 Group that operates a string on new media businesses besides e-commerce sites. In the first leg of a multi-tiered transaction, Raghav Bahl-led of Network18 Group is acquiring a string of regional language news besides general entertainment TV channels under Eenadu Group owned by RIL for upto Rs 2,100 crore($395 million).
RIL, that had earlier picked a large stake in the Eenadu Group but had kept it under wraps till now, will indirectly fund this acquisition by bankrolling the promoter group firms through equity convertible debt. In the future this will give it a significant equity stake in Network18 Group, and thereby a large exposure to bustling media sector in India . Besides marking a big bang entry into the media business, the latest deal also brings synergies for RIL's foray into communications sector. Infotel Broad Band Services Limited (Infotel), a subsidiary of RIL, has also entered into a Memorandum of Understanding with TV18 and Network18 for preferential access to all their content for distribution through the 4G broadband network being set up by Infotel. As per the MoU, Infotel will have preferential access to the content of all the media and web properties of Network 18 and its associates and programming and digital content of all the broadcasting channels of TV18 and its associates on a first right basis as a most preferred customer.
RIL expects digital content from entertainment, news, sports, music, weather, education and other genres will be a key driver to increase consumption of broadband. The deal will give RIL a huge exposure in the media business spanning areas such as television, Internet, filmed entertainment, e-commerce, magazines, mobile content and allied businesses including prime properties such as CNBC-TV18, CNN-IBN, MTV, Colors and moneycontrol.com among others. It will also strengthen the group's new media business with a solid content base for the launch of broadband business housed under Infotel.
The deal
Under the agreement, the board of directors of TV18 Broadcast Limited (TV18) approved the acquisition of 100 per cent stake in regional news channels in Hindi namely ETV Uttar Pradesh, ETV Madhya Pradesh, ETV Rajasthan and ETV Bihar and ETV Urdu channel besides 50 per cent stake in general entertainment channels ETV Marathi, ETV Kannada, ETV Bangla, ETV Gujarati and ETV Oriya and 24.50 per cent in ETV Telugu and ETV Telugu News. TV18 will have board and management control of ETV News Channels and ETV non Telugu entertainment channels. The Board has approved an outlay of up to Rs 2,100 crore for this acquisition. Additionally, TV18 has an option to buy the balance 50 per cent interest in ETV non Telugu GEC Channels and additional 24.50 per cent interest of ETV Telugu Channels, currently held by RIL Group.
To fund the acquisition, both Network 18 and TV18 in separate board meetings approved rights issue to the tune of upto Rs 2,700 crore each. Network18, being the promoter and holder of majority equity in TV18, would be subscribing to about Rs 1,400 crore in the rights issue of TV18 – therefore, once this subscription amount is netted out, the net aggregate rights issue of both Network18 and TV18 will result in a fund raising of about Rs 4,000 crore. The contribution of the current promoter entities of Network18 in these twin issues will be about Rs 1,700 crore. Besides subscribing to their full portion, the promoters of Network18 will also reserve the right to subscribe to any unsubscribed public portion of the rights issues.
It is here that RIL would come in to indirectly fund the transaction. Raghav Bahl, the promoter of Network18 and TV18, has disclosed that promoter companies have entered into an arrangement with Independent Media Trust, a trust set up for the benefit of RIL, to secure the funding required for this purpose. Bulk of the promoters contribution to the rights issue would come from an investment trust of RIL that will subscribe to optionally convertible debentures of the promoter entities of the Network18 Group. So even as RIL will have rights to pick a major stake in Network18 group firms in the future, Raghav Bahl as founder and promoter, shall continue to retain management and 51 per cent control over Network18 and 51 per cent control over TV18 through Network18 in the near future. TV18 will utilize the money to repay the existing debt, fund the acquisition of ETV Channels and fund working capital needs. Network18 will utilize the funds raised to repay the existing debt and subscribe to the rights issue of TV18. In a statement Bahl, founder, editor & managing director of Network18, said: “By inducting such a significant amount of equity, our balance sheets will become among the strongest in the industry.”
The Apple model
Will the RIL-Network18 tie-up follow the Apple model and create the perfect synergy between media and technology? One would think so. When Apple launched the iPod in 2000, it sought to sweep the technology and music industries with a single product. A decade down the line, technology has helped music companies earn record revenues, which in turn has kept the content pipeline of good quality music. Apple sought to do something similar with the publishing and TV industries with the iPad launch in 2010. Rather than owning content, it partnered with publishers and TV companies to sell their content through its tabs. Two years down the line, both publishers and broadcasters are happy with the early signs. And Steve Jobs' recently published biography has given life to rumours about the impending launch of Apple TV, which might do to the TV industry what iPod did to the music industry. News reports say Apple is in talks with content producers for a pay per view model for TV content. Rather than subscribing to channels and paying for content which is neither wanted nor watched by viewers, subscribers will have the ability to buy their favourite content off the shelf. In one stroke, this move threatens to shake the foundations of the TV industry that has been built painstakingly over layers and layers of subscription models.
Back home, as part of the RIL-Network18 deal, Infotel Broad Band Services Limited, a subsidiary of RIL, will get preferential access to all Network18 content for distribution through the 4G Broadband Network being set up by it. This includes the content of all the media and web properties of Network18 and its associates as well as programming and digital content of all the broadcasting channels of TV18 and its associates on a first right basis. The combination of a leading TV content provider, with a bouquet of nearly 25 channels, and Infotel will be a significant step in bringing a high quality “live TV” experience to broadband customers across the country. Likewise, Network18's market-leading web portals and e-commerce operations will provide several value-added services to Infotel's broadband subscribers.
Conclusion
Reliance will be hoping to expand the business model with its interplay of telecom and media. When airwave licences were being auctioned in 2008, most telecom companies focused on 3G services as the next logical step in the business evolution. A hitherto unknown company called Infotel Broadband Services quietly picked up pan-India licences for 4G broadband services. What slipped under the radar at that time made the entire telecom industry sit up and take notice when Reliance Industries picked up a majority stake in Infotel a few months later. With 4G being touted as the next big thing in the telecom industry with data speeds in the 50- 100 Mbps range, it has potential to shake up many industries. Throw in high quality content sourced from the Network 18 group of channels and its recent content partnership with UTV - Disney and the picture is complete.
The three ingredients a media product needs to thrive- good quality content, good distribution and easily available hardware for watching - will all be in place. Reliance, through its acquisition of software content and distribution airwaves, aims to seek ownership of the entire value chain. With a pan India 4G licence, Reliance hopes to own both content and delivery hardware and airwaves, thus making it a seamless play which isn't dependent upon any outside forces.
Govt. To Raise FDI in Cable Industry To 74% Expected To Get Early Approval
Government has decided to raise the Foreign Direct Investment (FDI) limit from 49% to 74% in the cable distribution platform. This follows the node given by the Cabinet for implementation of the complete digitization process. A draft note to this effect, prepared by Department of Industrial Policy and Promotion, has already been sent to various ministries for their comments and inputs. They include information and broadcasting ministry and the department of telecommunications.
The latest move will bring smiles to the cable distribution industry. Experts say around Rs 20,000 crore to Rs 25,000 crore will be required for the complete digitalization. “The government’s proposal to raise the FDI in cable from 49 to 74 per cent will open the gates for overseas investments,” notes Ravi Mansukhani, managing director, Hinduja-owned IndusInd Media and Communications. “This will help us raise funds for our requirements.” A KPMG report on the media and entertainment industry says the country had — in 2010 — 103 million cable homes. Of this, 68 million were connected by analogue cables, while 28 million used DTH. Five million switched to digital cable.
In the past few years, digitisation has been mainly driven by consumers switching to DTH, while digital cable is yet to gain momentum. However, domestic cable firms were finding it tough to raise money from home-grown lenders owing to analogue cable distribution services, under-declarations and fractured business practices.
Encourage distribution platforms
This will help distribution platforms and also moot the proposal for uniform FDI cap across various carriage platforms like DTH, IPTV, mobile TV, HITS and cable companies. I&B Ministry sources told that the Telecom Regulatory Authority of India are expected meet the 18-member digitisation Task Force headed by Additional Secretary Rajiv Takru review the progress in digitisation following the notification in this regard. The final recommendations will be placed before the Cabinet.
The sources said that 49 of the proposed 74 per cent will be put under automatic route. The remaining will be through Foreign Investment Promotion Board (FIPB). At present, the current norms for FDI differ on various platforms. For mobile TV, HITS and IPTV, it is 74 per cent, but the permissible foreign investment cap for cable distribution companies is 49 per cent. Of this, up to 20 per cent can be FDI. The balance can be from foreign institutional investors and non-resident Indians among others.
In June 2010, Trai had made suggestions to raise FDI for broadcast carriage services like DTH to 74 per cent. The broadcast sector regulator had also recommended reducing the FDI cap for analogue cable firms from 49 per cent to 26 per cent, but the I&B ministry did not agree to it. This will meant a major increase in the FDI cap in the distribution platforms from 49 per cent to 74 per cent and also enforce a uniform FDI cap across various carriage platforms like DTH, IPTV, Mobile TV, HITS and cable companies. At present, 49 per cent FDI is allowed in cable TV and DTH, while it is 74 per cent in HITS.
The proposed National Telecom Policy (NTP) 2011 is likely to become NTP 2012. This makes NTP 2011 the latest casualty of the stress, skepticism and nervousness being felt by the industry in the shadow of the 2G spectrum scam. The DoT, responding to requests from a wide range of stakeholders - primarily industry associations led by COAI, AUSPI, ACTO and ISPAI including CII, Ficci and Assocham - has agreed to extend the consultation for another month until December 8, 2011.
The industry revealed its nervousness on three counts: New concepts which were not discussed in run up to the draft NTP 2011, potential adverse revenue impact from concepts like spectrum refarming and others and a competitive threat unless issues of convergence and license unification are defined in a transparent manner through public consultation.
Spectrum issues, including reframing, are critical as they impact costs and viability. The industry wants to ascertain that the language in the policy does not in any way entrap the sector into committing massive revenues on account of reframing, or losing spectrum in the 800 and 900 MHz bands when licenses come up for renewal. This aspect has become even more important since the Trai, in its recommendation of November 3, 2011, determined the economic value of reframed spectrum as worth 'few lakh crores'.
The second major issue arises out of a totally new concept that the DoT has introduced - network service operator (NSO) and service delivery operator (SDO) type licenses. This is at odds with the current services specific licensing regime categorized under Unified Access Services (UAS) licenses, NLD (STD), ILD (ISD), and ISP (internet) licenses.
Operators complain that the two new terms, which are roughly equivalent of facilities and non-facilities-based operators, though prevalent in certain parts of the world, were never discussed, and recommended by Traior the outcome of any previous consultation. To include them as a policy mandate without understanding the details, according to the operators, is a 'dangerous leap of faith'. Convergence issues are mentioned in general terms, which, read with the TRAI's recommendations for auctions in the 700 MHz band, restricting it to those who do not hold 800/900 MHz spectrum, could place existing operators at what they believe is a 'possible competitive disadvantage'. Convergence issues could further impact the use of BWA spectrum, which was originally restricted to data only
Finally, there are issues relating to equipment security pertaining to use of language that borders on a quota regime and distortion of market. This is expected to be opposed by global equipment manufacturers, including some who have assembly plants in India. Even service providers have serious stakes, especially since they could be subject to penalties if the indigenization component target in their networks is missed. Operators are also seeking detailed guidelines on security, encryption, lawful intercept, and other related matters - since these issues affect costs on one hand, and become a cause of show cause on the other.
By the time all comments are received and reconciled by the DoT, it could well be the end of December. Cabinet approval could push it further into January/February 2012. On January 1, 2011 the DoT had set a 100-day deadline for NTP 2011.
