TV industry worried as piracy of channels rises 300% under new regulatory framework

Leading broadcasters and Multi-System Operators (MSOs) say there is a three-fold rise in piracy of TV channels after the new regulatory framework was implemented, leaving them worried about its impact on their coffers and the lack of legal provisions and intent by the government to fight piracy.

A prominent broadcaster CNBC-TV18.com spoke to said they had filed more than 200 complaints since February with authorised officers, intimating the Ministry of Information and Broadcasting (MIB) and telecom regulator Trai, but no action has been taken till date. “There has been a 300 percent increase of unauthorised transmission reported since the NTO was implemented from February 2019. The mode of piracies are unauthorised transmission, providing analogue signals, undeclared CAS-SMS system, dual Local Channel Number (LCN), and networks showing cricket series in violation of the SC order,” said a senior executive from the broadcaster, citing anonymity.

The rise in channel piracy by 300 percent since the NTO came into effect was corroborated by several broadcasters and distribution operators that CNBC-TV18.com spoke to.

“Earlier we dealt with piracy cases on a limited basis, now it has risen more than three-fold. Across the country, MSOs are mushrooming as they have begun to realise there is profitable business to be made through piracy of channels. It is spreading like wildfire, and is killing legitimate players like us,” said a senior executive from a large-scale MSO who did not wish to be named due to the sensitivity of the matter.

Madhya Pradesh, Telangana, Andhra Pradesh and Gujarat emerged as the top states for piracy of TV channels.

“Unfavourable economics of the new regulatory framework is the primary reason why piracy has surged. On one hand, rising consumer cable bills and the subsequent loss of customers is incentivising MSOs to pirate TV channels. In parallel, LCOs are receiving a smaller share of earnings than before, but are expected to invest in sophisticated billing systems and higher manpower to service customer requests. This reduced earning is pushing LCOs to resort to piracy,” said Shivangi Mittal, Associate, Koan Advisory.

Adverse economics on one hand, the lack of legal armour on the other, is another reason for unabated piracy.

Senior legal executives from two popular broadcasters say the new regulatory framework has not only failed to protect content creators, rather it has clamped down on their powers to exercise control, leading to rampant abuse of the new system. For one, neither the Cable Television Networks (Regulation) Act, 1995 nor the Telecommunication (Broadcasting And Cable) Services Interconnection (Addressable Systems) Regulations, 2017 (Interconnect Regulations 2017) define piracy, let alone carry provisions on anti-piracy. This leads to grievances being addressed by the Copyright Act, 1957, which falls squarely short of dealing with piracy, which is a criminal offence.

To make matters worse, the Interconnect Regulations 2017 have scrimped upon broadcasters’ powers to withhold signals from DPOs. Under the ‘Must Provide Principle’ of the Interconnect Regulations, it is obligatory for broadcasters to provide TV signals to Distribution Platform Operators (DPOs) within 60 days from the date of receipt of request from the service provider and within 30 days of signing the interconnection agreement. Broadcasters have argued that even in cases where DPOs have repeatedly defaulted on payments or indulged in piracy, they have been legally bound to provide signals to them.

The Interconnect Regulations also permit broadcasters to conduct an audit on suspect cable operators only once a year. During the time the audit is commissioned, a broadcaster cannot receive any payments from the operator. This greatly reduces the incentive for broadcasters to commit to audits and gives a free hand to piracy, argue broadcasters.

Broadcasters and MSOs say the MRP-based regime introduced under the new regulatory framework has resulted in new ways to pirate TV channels.

Let us first understand how transmission of channels takes place. In India, a broadcaster supplies an Integrated Receiver Decoder (IRD) to a DPO to receive and decode the encrypted signals of its channels. The distributor then decrypts the channel authorised by the broadcaster. The decrypted signals of the channel are then re-encrypted by the DPO (as required by law and contract) and distributed to its subscribers directly (DTH) or through a LCO. A subscriber is authorised to watch channels through the Subscriber Management System (SMS) and the Conditional Access System (CAS). The SMS communicates with the DPO’s CAS to activate the channel on a subscriber’s Set Top Box (STB).

Next, let us see how piracy has evolved under the NTO.

Under the earlier fixed-fee deal system, broadcasters and DPOs would agree on an annual sum that the distributor would need to pay to air the broadcasters’ channels. If the distributor disagreed on the fee, he would resort to piracy through either of these methods:

This generally occurs when a broadcaster shuts down signals of its channels to a DPO due to non-payment of dues. The defaulting DPO colludes with another distributor to transmit unauthorised signals of their channel by swapping the Integrated Receiver Decoders or feeding channels from the abetting distributor’s IRD.

According to the Digital Addressable Systems Regulations, it is mandatory for cable operators to distribute channels only in encrypted form which ensures accountability in the CAS and the SMS of the number of subscribers viewing a channel.

When a channel is distributed in an unencrypted form, the number of subscribers receiving such a channel will not be reflected in the CAS-SMS system of the DPO. As a result, such subscribers will not be reported by the DPO to the broadcaster, amounting to under-declaration which cannot be identified through audits. This under-declaration leads to loss of revenue to broadcasters and the government loses the ability to tax the DPO.

Several DPOs use multiple CAS-SMS systems to activate channels on a subscriber’s STB. However, the DPO does not declare all the CAS-SMS systems deployed by them. Again, this leads to under-reporting of subscribers to broadcasters and loss of revenues.

According to TRAI regulations, TV channels distributed by authorised DPOs cannot be redistributed by other unauthorised DPOs. However, due to lack of standardisation on the insertion of the DPO’s watermark, or the DPO’s STBs being compromised, there have been instances where pirates install DTH/IPTV STBs in their control room and retransmit unauthorised channels. This mode of piracy is rampant when sports broadcasters share the live signals of the sporting events of ‘national importance’ under the Sports Act, 2007.

While piracy has increased using these existing methods, new modes of piracy have been detected under the new tariff regime.

Every pay channel is assigned a Logical Channel Number (LCN) on which it airs. In the case of dual LCN, the channel is listed in two frequencies or in two different genres. The DPO leaves the channel in an unencrypted mode in one frequency/ genre (airing it on a local channel) to hide its subscriber base, leading to loss of revenue to broadcasters.

Every STB distributed by the DPO needs to have a Unique ID. A cardless STB’s unique ID is its Unique Authorization Number (UAN). A UAN can represent only one STB /subscriber. Cable piracy through cloning occurs when one UAN representing one STB/subscriber is duplicated across multiple STBs/subscribers. This leads to piracy of channels and under-reporting of subscribers.

In both online and offline markets, illegal STBs are widely available. These STBs decrypt channels by extracting the ‘decryption keys’ from legitimate STBs of the DPOs. The keys are then updated on servers and delivered through internet to the illicit Free-To-Air STBs. This hacking of STBs compromises the DPO’s CAS system /STBs. Unfortunately, DPOs are yet to upgrade their systems to prevent such decryption and do not take steps to resolve such illegitimate extraction of encryption keys.

In 2012, the government began the digital switch-over across India, with analogue TV signals being switched off and replaced by encrypted digital signals. Under the NTO, however, cases of analogue TV transmissions have resurfaced, across both, metros and tier 1-4 cities, in violation of the Digital Addressable System Regulations.

When CNBC-TV18.com contacted Roop Sharma, President, Cable Operators Federation of India, she slammed claims of piracy surging under NTO. “Earlier, broadcasters forced their channels upon customers through bouquets. Under the new transparent regime, broadcasters realised there is very little or no demand for their channels. With subscription revenues falling, broadcasters are drumming up a hue and cry over piracy of their channels. When there is no demand for their channels and consequently STBs, why would anybody want to pirate their channels?” argued Sharma.

When questioned about the various modes in which piracy was taking place, Sharma said, “The Integrated Receiver Decoders used by DPOs are either provided by the broadcasters or have been sourced as per specifications issued by the broadcasters. So where is the question of illicit boxes?”

Perhaps the biggest setback for broadcasters and MSOs threatened by piracy is the government’s lack of will to fight the menace. For one, as pointed out earlier, neither the Cable Television Network, 1995 nor the Interconnect Regulations, 2017 have given a definition to what piracy constitutes and are bereft of any provisions to fight the same. While the new regulatory framework was expected to help curb piracy, experts say the government is unlikely to accept it has fallen short on this objective.

“The government is under tremendous pressure with subscribers falling drastically under the NTO. To accept that there is massive manipulation of the CAS–SMS system under the NTO, which has led to under-declaration of subscribers would be a hard slap in the face,” said a noted media advocate who requested anonymity.

The redressal mechanism is mired in tangles, say broadcasters and MSOs. Under Section 18 of the Cable Television Network Act, 1995, no court can take cognisance of any offence punishable under this Act except upon a written complaint made an authorised officer. An authorised officer is the district magistrate, a sub-divisional magistrate, or the commissioner of police.

“In most cases, authorised officers are district collectors. Their primary duty is revenue collections and dealing with piracy complaints is their last priority. In the case of sub-divisional magistrate, most are unfortunately not even literate; to expect them to understand the intricacies of piracy is out of the question. When matters go to the police, piracy complaints feature at the bottom of their action list as the system is overburdened by other criminal offences,” said the advocate quoted earlier.

That apart, cable operators are known to enjoy significant political power, with close affiliations to local politicians and the police. Taking action against them therefore, becomes perilous.

There is silence from the government's quarters too. Broadcasters and MSOs say complaints sent to authorised officers are also shared with the MIB and Trai. But no response is forthcoming from either, with both the ministry and the regulator passing the buck to each other.

When contacted, a senior MIB official said: “I am not aware of the incidence of piracy. However, this is under Trai’s jurisdiction.”

CNBC-TV18.com’s attempts to reach Trai regulator RS Sharma did not elicit a response. A detailed questionnaire sent to MIB and Trai did not receive a response till the time of this article being published.

The rampant piracy of channels under the NTO has lead to under-declaration of the number of subscribers, non-payment of subscription fee owed to the broadcasters and tax evasion, say broadcasters.

“This not only negatively impacts a broadcaster’s ability to invest in acquisition and production of content, but also hampers legitimate monetisation of properties invested into by broadcasters,” said the senior executive quoted at the beginning.

Add to that the rising costs of tackling piracy. One of the legal executives quoted earlier said piracy costs for the broadcaster he was associated with has gone up six times since the implementation of the NTO.

According to a report released by the Cable and Satellite Broadcasting Association of Asia (CASBAA) in 2011, signal piracy losses in India alone stood at USD 1.4 billion a year. The losses today would be much more, given the advances in broadcast signal distribution devices and the speed at which unauthorised broadcast channels can be transmitted via the internet. The loss to the coffers of broadcasters and MSOs in turn translates to losses to the government exchequer. It may also be linked to illegal and/or criminal activities such as money laundering and violation of tax and foreign exchange regulations.

This also points to the alarming fact that no official data on signal piracy is available for the years after 2011, despite the fact that the move to digital addressable systems and the implementation of the new regulatory framework was expected to tackle piracy in a holistic manner. So why has the government not commissioned a study on the same?

Broadcasters and MSOs say the need of the hour is to recognise attempts to transmit or retransmit unauthorised broadcast of TV channels as ‘piracy’ under the Cable TV Networks (Regulation) Act, 1995. Actions considered to be cable piracy should include unauthorized/ undisclosed transmission and re-transmission of broadcast signals.

Broadcasters say strict anti-piracy provisions need to be stipulated with immediate effect, with fines, penalties and imprisonment in line with criminal offences.  The law should also take steps to ban hacking devices, which are widely used today to pirate through the internet.

At the end of it, only the government’s firm intent and subsequent actions to fight piracy will uphold the legitimacy the new regulatory framework sought to establish.

*Name changed upon request