TRAI open house today on Interconnection Regulations & DAS Audit Manual

The Telecom Regulatory Authority of India (TRAI) is set to hold an Open House Discussion (OHD) today, on December 5, to review the consultation paper regarding the audit-related provisions of the Interconnection Regulations, 2017, and the Digital Addressable Systems (DAS) Audit Manual.

This consultation paper was initially issued on August 9, 2024, and stakeholders were invited to submit their responses by September 6. Subsequently, counter-comments were accepted until September 20. Today, the OHD will review stakeholder feedback and potential revisions to the existing audit regulations.

A key issue under consideration is Clause 15(1) of the Interconnection Regulations, 2017, which pertains to the audit requirements for Distribution Platform Operators (DPOs). According to this provision, DPOs must conduct an annual audit of their systems, with the audits being performed by TRAI-empanelled auditors.

The objective behind this regulation is to ensure transparency and accountability within the DPOs’ operations, allowing for regulatory oversight and compliance with the stipulated standards. This clause is seen as a vital tool for upholding industry standards and ensuring that DPOs adhere to regulatory requirements.

However, TRAI has posed the question to stakeholders whether Clause 15(1) should be retained or removed. This has sparked a wide range of responses from various industry players, including major stakeholders such as IBDF (Indian Broadcasting Federation), AIDCF (All India Digital Cable Federation), DEN Network, GTPL Hathway, Dish TV, and others. The responses highlight the differing perspectives within the industry on the efficacy and fairness of the provision.

DPOs and Direct-to-Home (DTH) operators largely support the retention of Clause 15(1), asserting that the provision strikes a fair balance between regulatory oversight and operational flexibility.

They argue that the annual audit by TRAI-empanelled auditors has played an essential role in ensuring that the DPOs operate transparently and that the continuation of this requirement is necessary to maintain industry standards.

DTH operators have further suggested that if a broadcaster is dissatisfied with the results of an annual audit conducted by a DPO, any subsequent audit should also be carried out exclusively by TRAI-empanelled auditors, not by the broadcasters themselves. This would ensure impartiality and avoid any potential conflicts of interest that could arise if broadcasters were given the sole right to audit DPOs.

On the other hand, broadcasters have raised concerns about the potential for "subscriber underreporting" by DPOs, which they claim leads to significant financial losses. They have suggested that they should be granted the primary right to audit DPOs, particularly in cases where they suspect that underreporting is occurring.

Broadcasters contend that they should be able to verify the accuracy of subscriber counts directly, as they are the primary content providers and their revenue is closely tied to subscriber numbers.

The cable industry has also called on TRAI to take stronger action against DPOs that fail to conduct their audits in compliance with the regulations. Some stakeholders in the cable sector have proposed penalties for non-compliant DPOs, emphasizing the need for enforcement mechanisms that would ensure that all operators adhere to the auditing requirements.

However, they also argue that broadcasters should share in the responsibility of ensuring compliance, suggesting that broadcasters who supply signals to non-compliant DPOs should face penalties of up to Rs 10 lakh. This would create an additional layer of accountability, making broadcasters more invested in ensuring that DPOs meet the necessary standards.

Further, stakeholders have suggested that broadcasters should not be allowed to challenge the results of audits conducted by TRAI-empanelled auditors without providing valid justifications.

This would help avoid unnecessary delays and disputes that could disrupt services for consumers. In this context, the cable industry has called for a more robust dispute resolution mechanism that would allow conflicts to be resolved swiftly and fairly, without affecting the delivery of services to subscribers.

One of the most significant concerns raised in the consultation is the lack of clarity about the effectiveness of the enforcement of Clause 15(1) over the past five years.

AIDCF, for example, pointed out that, while the regulation mandates audits, there has been little transparency from TRAI regarding the steps it has taken to ensure compliance. The Federation has questioned whether the regulation has been effectively implemented and has urged TRAI to share information on which DPOs have failed to comply with the audit requirements.

AIDCF has also advocated for stronger enforcement of the regulations, suggesting that broadcasters should be prohibited from supplying signals to DPOs that have been declared non-compliant with Regulation 15(1). The Federation has emphasized that this should be strictly adhered to, ensuring that DPOs that fail to meet regulatory standards are held accountable.

In conclusion, the OHD today is expected to focus on balancing the interests of DPOs, broadcasters, and consumers while ensuring the transparency and fairness of the regulatory framework governing the industry.