Business Standard

<b>Rahul Khullar:</b> Setting the pitch right

The government needs to focus on some fundamental issues to develop the media and entertainment industry

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Rahul Khullar
The media and entertainment sector is a Rs 1.2-lakh-crore industry. Television accounts for about 46 per cent, the print media about 26 per cent and films 12.5 per cent. Various reports since 2012 have stated that it can grow at 15 to 20 per cent per annum. It is also a large employer. It is, therefore, surprising that the sector seems to have escaped the government's attention. Even if legislation is ruled out, there is still an agenda on which action should be taken. Here's what can be done.

Digitisation of cable television is a clear priority: It provides better service to the consumer, it is the quickest way to deliver broadband in urban settings and it prepares India for convergence. Digitisation is being closely watched by foreign investors as it will provide a more balanced distribution of income amongst the broadcasters (content providers), multiple system operators (infrastructure providers), and last-mile operators. And parliamentary legislation is in place. One of the most regrettable decisions of the present government was to postpone digitisation by two years. As a priority, the Ministry of Information and Broadcasting (MIB) must now increase the pressure. A clear message must be transmitted that the 2016 dates are final. Leave aside all else, this will pave the way for freeing up the pricing of content. The co-existence of the analogue and digital systems compels compliance with a Supreme Court (SC) ruling, which leads to regulation of pricing. Liberating the pricing of content has done wonders for this sector the world over. Why should India be behind?

 

Bizarrely, the MIB issues licences that have no provision for extension/renewal. For instance, DTH (direct to home) licensees get permission to operate for 10 years. The outcome: Corporates are left to the tender mercies of MIB mandarins. The Telecom Regulatory Authority of India's (Trai) recommendations on an entirely new licensing scheme were issued in July 2014. These rationalised licensing practices and also addressed the licence fee issue to bring the sector on a par with telecom (both use spectrum). Most of this is straightforward and can be implemented in three months. Then why don't we?

FM radio licensing has the same bizarre characteristic - namely, no provision for renewal or extension. An FM operator has to transition from one phase to the next under a new licence. There are other problems: The space between two frequency spots of spectrum has been frozen at 800 KHz for over a decade. The regulator has repeatedly argued that this can be reduced to 400 KHz. It would vastly augment the number of radio spots that can be put to use. The Wireless Planning and Coordination wing in the Department of Telecommunications has been "studying" the issue for over five years. Inaction on spacing only creates artificial scarcity, escalating auction prices in premier locations. To what end?

The auction held in 2015 primarily enabled existing licence holders to migrate to Phase III. That took four years. FM radio is not about earning revenue for the government; it is a means to expand outreach and provide entertainment and information. The same holds true for community radio (CR) stations; in addition, CR stations serve local communities. Most class "B", "C" and "D" cities and remote locations still have no FM coverage. The regulator recommended measures to overhaul the licensing regime and expand coverage. Reserve prices for these cities/towns have been available with the MIB for close to a year. We should expand the number of radio spots by reducing spacing and conduct the auction immediately.

Taxation of platforms for content delivery does not yield a level-playing field. The liability covers the Centre (service tax) and the states (entertainment tax) and levies such as set-top box charges. There are large variations across and within states. In some cases, like online delivery, legal liability has not yet been tested. All in all, it is a mess. Remit the matter to the Trai to make recommendations on unifying rates and rationalising levies.

Media ownership and regulation have been major issues to which attention has been drawn by the media itself. Takeover of news channels by conglomerates is another disconcerting trend. Content regulation is broken. The Press Council of India is stacked with people from the print media and has no teeth to enforce its writ. Content regulation in the electronic medium is weak. News channel regulation is voluntary.

One thing is absolutely clear: Under no circumstances should the government be associated with content regulation. That does not mean we cannot improve on what we have. Appoint a commission chaired by a former SC judge to look at content regulation for all media and make recommendations. That could lay the foundation for legislative changes in the future.

Another issue hanging fire is the use of airwaves by the government. In the case of the Cricket Association of Bengal, the SC ruled that the government had no business using the airwaves other than for a sole exemption, a public broadcaster. And yet, state governments run TV/cable channels, politicians (or surrogates) run news channels. The top court's ruling was the basis for setting up Prasar Bharati. The Trai sent the MIB two sets of recommendations, five years apart, drawing attention to the court ruling. But government indecision rules. This is not good for our democracy and the longer we let it linger, the worse will be the damage.

The MIB has been in the news for all the wrong reasons. Enormous energy has been frittered away on the Film and Television Institute of India episode. Now the Central Board of Film Certification is in the eye of a storm. Political capital has been squandered; now, focus on what needs to get done to develop the industry.

The author is ex-chairman, Telecom Regulatory Authority of India

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First Published: Jan 06 2016 | 9:46 PM IST

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