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  1. 1. To All Local Cable Operators Subject: Tariff issues for cable TV services in non-CAS Areas- Format for submission of information to facilitate the consultation process Sir, The Hon’ble Supreme Court vide its order dated 13th May, 2009 has directed The Telecom Regulatory Authority of India (TRAI) to carry out a de novo tariff exercise for cable TV services in non-CAS areas. 2. In order to carry out this exercise, TRAI solicits your cooperation in supplying the information requested in the format attached to this letter. You are requested to download the format and provide information to TRAI on or before 1700 hours on Monday 17th August, 2009. Please use extra sheets where requested (or if required by you) to submit the information. The duly filled format should be submitted by email to bcs@trai.gov.in. Please provide the required information in two copies. The first copy should be provided in Acrobat PDF or any other un-editable format. The second copy should be submitted in an editable Microsoft Word or Microsoft Excel format to enable us to process this information in electronic form. The Hon’ble Supreme court in the said order has also directed all the stakeholders to co-operate with TRAI in this exercise. We request your cooperation in providing this information in time. 3. TRAI understands that some of the information to be supplied could be sensitive in nature. Such data as you desire will be kept confidential and will be used for the purpose of this exercise by TRAI. You may please indicate the data that is to be kept confidential. 4. TRAI has appointed M/s Ernst & Young to assist TRAI in this exercise. Ms. Chanpreet Arora, Manager, M/s Ernst & Young (EY) may contact you in this regard. Format for submission of information: Local Cable Operators 7th August 2009 Tariff issues for cable TV services in non-CAS Areas Page 1 of 17
  2. 2. 5. If you require any help or clarification regarding any item in the format, please do not hesitate to contact us at the following: Phone: +91 11 23218918/23237922 Fax: +91 11 2322 0442 Email: bcs@trai.gov.in or trai.noncas@gmail.com (please indicate “Information regarding Tariff issues for Cable TV Services in Non-CAS Areas” in the subject line of your email) 6. Given the limited time frame to complete this exercise, we look forward to your prompt reply. Thanking You, Yours faithfully, (Subodh Kumar Gupta) Advisor (B&CS) August 07, 2009 Format for submission of information: Local Cable Operator Format for submission of information: Local Cable Operators 7th August 2009 Tariff issues for cable TV services in non-CAS Areas Page 2 of 17
  3. 3. Name of the LCO: ___________________________ Registration Number: ___________________________ City: ___________________________ Name of Contact Person: ___________________________ Designation: ___________________________ Date of filling questionnaire: ___________________________ I. Business Model Please provide us the following information so we can understand your business better: 1. General Information # Information Area 2006-07 2007-08 2008-09 1.1 Which MSO have you been receiving signals from? 1.2 Reason for change in the MSO (if applicable) 1.3 Has the network been digitalized? 1.4 How did you fund the digitalization? Was it paid for by the MSO? 1.5 Number of channels visible on your network 1.6 Number of pay channels Number of FTA channels 1.7 Number of digital channels Number of analog channels 1.8 Number of local cable channels by MSO Number of local cable channels by you 1.9 Availability of value-added services (Y/N), if yes please specify _____________ _____________ 1.10 Total Number of Households 1.11 Within these households, what is the total Number of Connections1 - Addressable - Non-Addressable 2. Audited Results and Annual Reports for the company’s operations for FY2006-07, FY 2007-08 and FY 2008-09 or from the year of existence (if less than three years). In case this information is not available then please provide proprietors profit and loss/ balance sheet that shows income and profits from providing cable services 3. Profitability and Returns # Information Area 2006-07 2007-08 2008-09 3.1 EBITDA Margin 1 Connections = Subscribers Format for submission of information: Local Cable Operators 7th August 2009 Tariff issues for cable TV services in non-CAS Areas Page 3 of 17
  4. 4. 3.2 EBIT 3.3 PAT 3.4 Capital Expenditure Undertaken 3.5 ROCE 3.6 ROI 4. Ownership Structure 4.1 Please provide details of the owners of the company/firm: Name/Entities and their addresses; Percentage Stake of each owner _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________ 4.2 If you have received any investments in the last three years from any MSO, please provide details of the same. - Nature of investment - Rights and Obligations of the MSO ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ 4.3 Do you have a 20% or more stake in the following sectors? Please tick as applicable and specify the name of the entities owned, % stake and other relevant details. □ Television Broadcast__________________________________ Please specify the total number of channels operated by the parent___________________ □ Distribution – MSO_________________________________________________________ Please specify reach of MSO network (number of connections2)______________________ Please specify markets of presence ______________________ □ Distribution – LCO, other than your company_______________________________________________ Please specify reach of LCO network (number of connections)_______________________ Please specify markets of presence ______________________ □ Distribution – DTH__________________________________________________________ Please specify reach of DTH network (number of connections) ______________________ Please specify markets of presence ______________________ □ Distribution – IPTV_________________________________________________________ Please specify reach of IPTV network (number of connections) ______________________ Please specify markets of presence ______________________ □ Any other broadcasting and distribution related sectors_____________________________ Please specify ______________________ 2 Connections = subscribers Format for submission of information: Local Cable Operators 7th August 2009 Tariff issues for cable TV services in non-CAS Areas Page 4 of 17
  5. 5. 4.3 Do any of your share holders who have 20% or more stake in your company have 20% or more stake in the following sectors? Please tick as applicable and specify the name of the entities owned, % stake and other relevant details. □ Television Broadcast __________________________________ Please specify the total number of channels operated by the parent___________________ □ Distribution – MSO_________________________________________________________ Please specify reach of MSO network (number of connections3)______________________ Please specify markets of presence ______________________ □ Distribution – LCO, other than your company___________________________________________________ Please specify reach of LCO network (number of connections)_______________________ Please specify markets of presence ______________________ □ Distribution – DTH__________________________________________________________ Please specify reach of DTH network (number of connections) ______________________ Please specify markets of presence ______________________ □ Distribution – IPTV_________________________________________________________ Please specify reach of IPTV network (number of connections) ______________________ Please specify markets of presence ______________________ □ Any other broadcasting and distribution related sectors_____________________________ Please specify 3 Connections = subscribers Format for submission of information: Local Cable Operators 7th August 2009 Tariff issues for cable TV services in non-CAS Areas Page 5 of 17
  6. 6. 5. Pricing Please indicate the price by bouquet/ a la carte channel that you pay to the MSO # Name of Constituent 2006-07 2007-08 2008-09 bouquet channels A. Total B. Number c. Effective A. Total B. Number c. Effective A. Total B. Number c. Effective (or (if value paid of price per value paid of price per value paid of price per channel if applicable) to MSO connections channel to MSO connections channel to MSO connections channel bought (lumpsum) declared to A/B (lumpsum) declared to A/B (lumpsum) declared to A/B separately) the MSO the MSO the MSO Please use extra sheets if required Format for submission of information: Local Cable Operators 7th August 2009 Tariff issues for cable TV services in non-CAS Areas Page 6 of 17
  7. 7. Please indicate the price by bouquet/ a la channel that you charge to the subscriber # Name of Constituent 2006-07 2007-08 2008-09 bouquet channels A. Total B. Number c. Effective A. Total B. Number c. Effective A. Total B. Number c. Effective (or (if value of price per value of price per value of price per channel if applicable) collected connections channel collected connections channel collected connections channel bought from that you A/B from that you A/B from that you A/B separately) subscribers collect subscribers collect subscribers collect (lumpsum) revenue for (lumpsum) revenue for (lumpsum) revenue for Please use extra sheets if required Format for submission of information: Local Cable Operators 7th August 2009 Tariff issues for cable TV services in non-CAS Areas Page 7 of 17
  8. 8. 6. Revenue # Information Area 2006-07 2007-08 2008-09 6.1 Total Revenue4 6.2 Subscription Revenue Please provide further details as requested in Appendix A (i) Number of connections for which subscription revenue is negotiated with the MSO - Digital - Analog (ii) Average revenue per connection (ARPU) collected by you from the subscriber (exclusive of all taxes) Basic services (FTA pack) - Pay channels (iii) Average revenue per connection (ARPU) collected by you from the subscriber (exclusive of all taxes) - Basic services (FTA pack) - Pay channels 6.3 Carriage and Placement Fee Please provide further details as requested in Appendix B (i) Share in carriage fee received from MSO (ii) Share in placement fee received from MSO 6.4 Advertising Revenues earned from own channels 6.5 Any other revenue (please specify) (i) (ii) 4 Total Revenue is the income from all sources including the total subscription revenue collected by you from the subscribers, any carriage or placement fee shared with you by the MSO, revenue from advertising on local channels and any other sources of revenue Format for submission of information: Local Cable Operators 7th August 2009 Tariff issues for cable TV services in non-CAS Areas Page 8 of 17
  9. 9. 7. Operating Costs # Information Area 2006-07 2007-08 2008-09 7 Total Operating Costs5 (note please apportion manpower costs to the relevant functional cost) 7.1 Programming Costs/Share of subscription revenues paid to the MSO (i) Number of pay channels purchased from MSO (ii) Total number of pay channels visible on your network (iii) Any variation between pay channels purchased and transmitted (i) and (ii) 7.2 Technology and Transmission Costs (please provide a break-up) Dishfarm, Servers, Cabling etc. 7.3 Customer Servicing Costs (i) Call centre (ii) Technical and repairs team (iii) Other 7.4 Local channel content costs 7.5 Any Other Costs 5 Total Operating Costs include all the costs of your business that relate to providing cable services to your subscribers including technology and transmission costs, content-related costs and any other costs Format for submission of information: Local Cable Operators 7th August 2009 Tariff issues for cable TV services in non-CAS Areas Page 9 of 17
  10. 10. II. Factors Affecting Key Receivables/ Pay-outs from the Distribution Supply Chain Competition 1. Where are you present? Please tick as applicable. □ TAM City □ aMap City □ Non-TAM and Non-aMap City 2. What is the level of competition in your industry? - How many localities do you service? _________________________ - On average, how many LCOs are present in the localities that you service_________________ - Have any of your customers switched to other platforms? Please tick as applicable and elaborate on the reasons. □ Digital Cable ________% Reason: __________________________________ □ DTH ______________% Reason: __________________________________ □ IPTV ______________% Reason: __________________________________ □ Other Cable operator ______________% Reason: __________________________________ Subscription Revenue 3. How do you fix the price to be paid to the MSO for various channels/ bouquets? Please tick as applicable and elaborate. □ Revenue share Benefits: _______________________________ □ Minimum guarantee Benefits: _______________________________ □ Lump sum payment Benefits: _______________________________ □ Other factors, please specify __________________________ Benefits: _______________________________ 4. How do you decide the number of connections for which subscription revenue will be paid? Please tick as applicable. □ Audited subscriber base of the LCO □ Negotiation □ Other factors, please specify __________________________ 5. During negotiations, does the MSO provide discounts related to any of the following? Please tick as applicable. □ Fewer number of households to be delivered by you than you actually collected □ Lower rate per channel □ Other discounts, please specify __________________________ Format for submission of information: Local Cable Operators 7th August 2009 Tariff issues for cable TV services in non-CAS Areas Page 10 of 17
  11. 11. Format for submission of information: Local Cable Operators 7th August 2009 Tariff issues for cable TV services in non-CAS Areas Page 11 of 17
  12. 12. 6. What is the reason for offering these discounts? Please elaborate. ___________________________________________________________________________________ ___________________________________________________________________________________ 7. What factors influence the bargaining power of your network vs. the MSO’s network in these types of negotiations? Please elaborate. ___________________________________________________________________________________ ___________________________________________________________________________________ 8. How do you assure the MSO that your network has transparency in its operations and that the estimated subscriber base is accurate? ___________________________________________________________________________________ ___________________________________________________________________________________ ___________________________________________________________________________________ ___________________________________________________________________________________ 9. What efforts have you made to encourage addressability and increase visibility for other stakeholders (MSO, broadcaster) with regard to your subscriber base? Please tick as applicable. □ Maintain logs of all subscriber data □ Hire independent audit agencies to authenticate your claim □ Allow monitoring teams of other stakeholders to inspect you network □ Other measure __________________________ Share in Carriage and Placement Fee collected by MSOs 10. Does the MSO share any amount of the carriage and placement fee with you? Please tick as applicable and elaborate. □ No □ Yes, how much (please provide absolute value or % share) __________________________ 11. How is the share decided? __________________________________________________________________________________ __________________________________________________________________________________ 12. When carriage and placement fee is being negotiated, which of the following applies? Please tick as applicable. □ MSO conducts negotiations on behalf of the LCOs with the broadcaster □ MSO facilitates negotiations between broadcaster and you (LCO) □ Broadcaster negotiates directly with you (LCO) □ Any other, please specify ______________________________ 13. How do you assure the MSO that the carriage and placement norms committed by him during negotiations with broadcasters are being followed? Please tick all that apply. □ Report back to MSO (through logs) □ Hire independent auditors to report back to MSO □ MSO’s team monitors the situation □ Other stake holder’s team monitors the situation. Which stakeholder, _____________________ Format for submission of information: Local Cable Operators 7th August 2009 Tariff issues for cable TV services in non-CAS Areas Page 12 of 17
  13. 13. □ Other metric __________________________ Content Costs 14. How do you decide which channels to take from the MSO? ___________________________________________________________________________________ ___________________________________________________________________________________ ___________________________________________________________________________________ ___________________________________________________________________________________ 15. How do you purchase channels from the MSO? Please tick as applicable and elaborate on the benefits of each method □ Revenue share Benefits: _______________________________ □ Minimum guarantee Benefits: _______________________________ □ Lump sum payment Benefits: _______________________________ □ Other factors, please specify __________________________ Benefits: _______________________________ 16. Are there any instances in which you have purchased a channel as part of a bouquet but not transmitted it? Please tick as applicable. □ Yes, why __________________________ □ No __________________________ Format for submission of information: Local Cable Operators 7th August 2009 Tariff issues for cable TV services in non-CAS Areas Page 13 of 17
  14. 14. III. Challenges Faced in the Current Market Conditions 1. Highlight the key businesses issues related to distribution that the business is dealing with today? Please elaborate on the perceived cause of this issue and impact on your business operations. ___________________________________________________________________________________ ___________________________________________________________________________________ ___________________________________________________________________________________ ___________________________________________________________________________________ 2. What key market constraints (outside the influence of the individual companies) impact business operations? Please tick as applicable and elaborate. □ Regulation, please give specific instances: ____________________________________________________________________________ ____________________________________________________________________________ □ Market Practices prevalent in the business amongst other stakeholders. Please provide specific actions: ____________________________________________________________________________ ____________________________________________________________________________ IV. Proposed Solutions 1. Do you believe that technology can help improve the current market conditions and create more value for all stake holders? Please tick as applicable and elaborate why or why not. □ No __________________________ □ Yes _________________________ 2. What kind of technology investments do you want to undertake? ___________________________________________________________________________________ ___________________________________________________________________________________ 3. How do you intend to fund these investments? ___________________________________________________________________________________ ___________________________________________________________________________________ 4. What are your expectations from other stakeholders in the value chain? □ MSO __________________________ □ Broadcaster __________________________ □ Consumer __________________________ □ Aggregator __________________________ 5. How can this be operationalised? ___________________________________________________________________________________ ___________________________________________________________________________________ 6. What resources can you and your stakeholder group commit in the future for improving the current market conditions? ___________________________________________________________________________________ ___________________________________________________________________________________ Format for submission of information: Local Cable Operators 7th August 2009 Tariff issues for cable TV services in non-CAS Areas Page 14 of 17
  15. 15. 7. What is the desired level of intervention from the TRAI? Please tick as applicable and tick all that apply. Tariff Regime □ Case for forbearance If yes, what checks & balances do you recommend: ____________________________________________________________________________ □ Regulate carriage/placement fee- If yes, through what mechanism ____________________________________________________________________________ □ Tariff Regulation: Mechanisms for determining subscription at a wholesale and retail level If yes, through what mechanism ____________________________________________________________________________ Non-Tariff Related □ Digitization If yes, through what mechanism ____________________________________________________________________________ □ Any other factor ____________________________________________________________________________ Format for submission of information: Local Cable Operators 7th August 2009 Tariff issues for cable TV services in non-CAS Areas Page 15 of 17
  16. 16. Appendix A: Details of Subscription Revenue Collected by you and paid to MSOs Please provide us details of the various localities that you are present in, the ARPU per connection, number of subscribers and revenue share agreements with MSO # Name of Name of 2006-07 2007-08 2008-09 Locality MSO A B AXB=C D A B AXB=C D A B AXB=C D _________ _________ _________ __________ _________ _________ _________ __________ _________ _________ _________ __________ providing Number of ARPU Total Subscription Number of ARPU Total Subscription Number of ARPU Total Subscription the Signal connections collected by Subscription Revenues connections collected by Subscription Revenues connections collected by Subscription Revenues that you you from the Revenues passed onto that you you from the Revenues passed onto that you you from the Revenues passed onto collect subscriber the MSO collect subscriber the MSO collect subscriber the MSO revenue for (exclusive of revenue for (exclusive of revenue for (exclusive of taxes) taxes) taxes) Format for submission of information: Local Cable Operators 7th August 2009 Tariff issues for cable TV services in non-CAS Areas Page 16 of 17
  17. 17. Appendix B: Details of Carriage and Placement Fee Collected from Broadcasters and Paid to LCOs We would like the extent to which carriage and placement fee is passed on to you # Channel Genre Network 2006-07 2007-08 2008-09 / Owner Carriage Carriage Band Carriage Carriage Band Carriage Carriage Band and and Placement and and Placement and and Placement Placement Placement of the Placement Placement of the Placement Placement of the Fee paid by Fee paid to Channel Fee paid by Fee paid to Channel Fee paid by Fee paid to Channel the you – either (P,C,S,UHF the you – either (P,C,S,UHF the you – either (P,C,S,UHF Broadcaster by MSO or or VHF) Broadcaster by MSO or or VHF) Broadcaster by MSO or or VHF) to the MSO directly by to the MSO directly by to the MSO directly by Broadcaster Broadcaster Broadcaster Format for submission of information: Local Cable Operators 7th August 2009 Tariff issues for cable TV services in non-CAS Areas Page 17 of 17

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