TDSAT SEMINAR DISPUTE RESOLUTION AND REDRESSAL OF CONSUMER GRIEVANCES IN BROADCASTING SECTOR (March 13, 2010)

1. TDSAT SEMINAR DISPUTE RESOLUTION AND REDRESSAL OF CONSUMER GRIEVANCES IN BROADCASTING SECTOR (March 13, 2010) Presented by: A. Mohan Executive Vice President Zee Network, India amohan@siti.esselgroup.com

2. This presentation depicts the personal views of the speaker and should not be treated as the views of the Company.

3. INDIA – one of the largest media market • 500+ television channels; 600m viewers : 2x the population of United States • 100m+ newspaper circulation across 50,000+ editions : Next only to China • 3.5bn movie tickets sold annually for 1000+ movies : 2.5x the size of the second largest market • 87m Cable and Satellite homes :Next only to USA and China Sources : IDFC/SSKI - India Entertainment & Media - February 2010 - Nikhil Vora / BhushanGajaria / SwatiNangalia

4. BROADCASTING VS TELECOMMUNICATION • Three fastest means of communications: • Tele-communication • Tele-vision • ?????

5. WHAT WE PROVIDE • We, provide you content on 365 days a year on 24X7 basis. • Broadcasters are required to invest heavily in acquisition / procurement of content which inter-alia include: • News & Current Affairs content disseminating news, views & infotainment, business affairs. • Entertainment programmes such as serials, quiz shows, celebrity shows, talent hunts. • Movies rights. • Religious content. • Events Rights & Sports Broadcasting rights. • Huge expenditure on setting-up broadcast facilities, uplinking teleports & leasing transponder space on satellites to effect delivery of channels to distributors of channels. • Rate regulation and price controls distort the market and lead to a misallocation of resources. • Artificially low prices deter any further investment in new Channels and programming, affecting consumer choice and creating a shortage of quality channels and variety in programming. • A Myth - Channel prices are quite high and need regulation.- Newspaper example • ARPU in India – $3.5 - $ 4 - lowest in the world (Vs $ 65 in US)* • Regulator needs to balance “equity” and “consumer interest”. *WIPO Report dt.30/11/2009

6. Projected growth of Indian Television Industry 2009-2013 Sources : Industry estimates and PWC analysis; PWC – Indian Entertainment and Media Outlook 2009

7. Subscriber Break-Up FY09 Subscriber Break-Up FY15E Source : Industry, Elara Securities Research Elara Capital – Cable & Satellite Industries – Future is digital – Media & Entertainment 19 November, 2009

8. Sources: Group M, KPMG Interviews, KPMG Analysis

9. Sources: Group M, KPMG Interviews, KPMG Analysis

10. ANALOGUE VALUE CHAIN FAVOURS LCO Due to lack of addressability, forced to sell negotiated lump sum rather than at a fair rate per end subscriber. However, advertisement revenue has been their relief. Clutter of MSOs Too many suppliers of the same content targeting max 1-2 LCOs per area. Forced to resort to undercutting in order to widen subscriber base. Monopoly in their areas of operation. Easy substitution of content from one MSO with content from another. Hence high bargaining power with MSOs Have to bear monopoly at the last mile leading to inferior quality services and monopolistic LCOs. Dissatisfaction with Analogue cable. Eager for an alternative. Broadcasters Multiple Multi-System Operators 6,000 Local Cable Operators 60,000 Households 90 Million Source : Elara Securities Research Elara Capital – Cable & Satellite Industries – Future is digital – Media & Entertainment 19 November, 2009

11. REVENUE LEAKAGES Distribution of Revenues 80m C&S homes X USD4/ Month Average ARPU = USD 3.8 bn(Rs.17,100 Cr.) Annual cable collection • Unorganised nature of cable distribution; 7,000 MSOs and 40,000 LCOs • Cash transaction • Lack of addressability – analogue • distribution _ Broadcaster’s share USD 500M (Rs.2,250 Cr.) USD 500M (Rs.2,250 Cr.) MSOs and DTH operator’s shares USD 2.8 bn (Rs.12,600 Cr.) LEAKAGE Sources : IDFC/SSKI - India Entertainment & Media - February 2010 - Nikhil Vora / Bhushan Gajaria / Swati Nangalia

12. Cost of Piracy in 2009 – US$ 1280 million (Rs. 5,760 Cr.) • Continued rapid growth in market size – US$5.3 billion (Rs.23,850 Cr.) – 20% up in 2008 • Piracy levels up 7% although actual piracy cost up 12% due to increased ARPU and currency movements • Grey market for cable operators is the biggest factor • With nearly $1.3 billion (Rs.5,850 Cr.) of revenue leakage in India continues to be the largest monetary contributor in Asia Individual illegal connections US$ 22 million (Rs. 99 Cr.) Indian grey market US$ 1258 million (Rs. 5,661 Cr.) Digital Deployment, Asia-Pacific, Pay-TV, Industry Study, November 2009

13. 2006-09 – digitization remained a ‘concept’ What has gone wrong for the cable industry? • MSOs not funded for seeding STB • Execution a failure - high resistance from LCOs • Lack of political will • Consumer Psyche – If digital is mandated, why not switch to DTH, a professionally managed service Mandated CAS in notified areas • Lack of funds to subsidize customer acquisition • DTH industry funded to the tune of USD4bn-5bn • Subsidies on DTH as high as Rs2500-3000 per connection • Absence of clear cut road map and lack of regulations Voluntary digitization 13

14. TODAY (Convergence of services, networks & devices) YESTERDAY (Silos into the home) FUTURE - MULTIPLE LAYERS OF CONVERGENCE

15. Most affected Broadcaster Dispute MSO Channel(s) Switch off Dispute LCO Dispute Most affected Subscriber

16. DISPUTES LCO • Service Quality • Price discrimination • Limited choice of channels • Interruption in cable services • Change in channel placements • No effective consumer redressal system • No value for money • Non availability of channel guides Subscriber

17. DISPUTES MSO • Non disclosure of complete subscriber base by LCO. • Piracy of signals/Inserting advertisements. • Non payment of subscription fees. • Non renewal of service agreements. • Frequent change in loyalty of the LCOs i.e. migration from one MSO to another leaving subscription dues/arrears. • Resistance to adapt themselves to changing technology. LCO

18. DISPUTES Broadcaster • Subscriber base. • Territory issue – transmission in unauthorised areas. • Digital Transmission without paying any additional subscription. • Non payment of subscription fees. • Non renewal of service agreements. • Alleged unreasonable clauses in service agreements. • Piracy of signals/violation of copyrights. • Resistance to adapt to changing technology. • Limited bandwidth capacity. • Change in channel placements. • Interruption of cable services at their own. • Undue advantage of regulations. • Compliance cost. MSO

19. SOLUTIONS OF DISPUTES DIGITALISATION WITH ADDRESSABILITY

20. SOLUTIONS LCO • Written agreement in place between the LCO & consumer. (QSR for CAS and Non-CAS areas) • Subscription fee receipts to be issued by the LCO. (Tariff Order dt.4/10/07 – Cl.4B & Cl.9 of QSR) • LCO providing technical support at the time of any cable breakdown (QSR dt.24/2/09). • 21 days notice for discontinuation of channel(s). • LCO providing complete channel guides. • LCO upgrading their network & improving the quality of services (Cl.18 of QSR). • Local body to be authorized for settlement of disputes. (TRAI recommendations) • Discourage monopoly and encourage healthy competition. Subscriber

21. SOLUTIONS MSO • Maintaining contractual agreement with LCOs. (Interconnection Regulations/Agreements) • MSO maintaining detailed records of subscriber base served by the LCO. (Interconnection Regulations – SLR) • Appointing independent piracy check agencies. • MSOs facilitating LCOs to help them in investing in better infrastructure. • MSO coordinating with local bodies to shoulder the accountability of consumer complaints (QSR). • Digitalisation. LCO

22. SOLUTIONS Broadcaster • MSO maintaining a record of number of franchisees served & their individual HH connections through a transparent system. (Interconnection Regulations – SLR) • Timely payment & renewal of agreement. (Interconnection Regulations – SLR) • Appointing independent piracy check agencies. • Broadcaster providing relevant information. • Joint public awareness campaigns on the channel list, new programmes etc. • Both should encourage healthy competition. • Digitalisation MSO

23. Section 14A of TRAI Act provides as under: • The Central Governmentor a State Governmentor a local authorityorany personmay make an application to the Appellate Tribunal for adjudication of any dispute referred to in clause (a) of Section 14. • TheCentral Governmentor aState Governmentor alocal authority or any personaggrieved by any direction, decision or order made by the Authority may prefer an appeal to the Appellate Tribunal.

24. Broadcasting Services – categorized as Essential Services “Cable broadcasting may not be an essential commodity in the sense that it is not an item of food without which one cannot survive, yet looking to the figures of TV viewership in this country its importance cannot be underestimated. Available figures suggest a TV viewership of 68 million for the whole country. This shows that television viewing has almost attained the status of an essential service in this country.” Hon’ble TDSAT in its judgment dt. 27/02/2007 in Case of Set Discovery Vs. TRAI & others has observed as under:

27. Three fastest means of communications: • Tele-communication • Tele-vision • ?????