A guideline to Pemra to amend its 2009 policy

LHC’s  judgment on DTH

Authority’s prime objective is
public interest instead of maximum revenue from DTH licenses

News Analysis

LAHORE: The progressive judgment by a full bench of Lahore High Court declaring that broadcasters are eligible for Direct-to-Home (DTH) Satellite TV licenses is an important guideline to Pemra to correct its policy since 2009 that has retarded growth of Pakistan broadcast industry. 

The retarding impact of Pemra Rules 2009 that barred broadcasters from owning TV distributions networks like Cable & DTH has resulted in almost nil growth of TV channels and non-digitization of  TV Distribution networks.   Globally broadcasters as biggest stakeholder have led modernization and digitization of Cable TV and DTH Networks but Pemra blocked their involvement in 2009. World’s biggest DTH platform and Europe’s biggest DTH platform are both led by broadcast media groups. Pemra introduced this abnormal restriction at the peak of global modernization of TV industry.

Due to benefits of Digital TV technology, the number of Global TV channels doubled to over 40000 between 2007 and 2015 and number of Digital TV subscribers also doubled. In Pakistan, the opposite happened. The consequence of Pemra’s 2009 policy is that Pakistan has achieved less than 10% digitization of its TV networks whereas majority of developing and developed countries have met deadline of universal digitization of TV Distribution networks by 2015. Pemra in 2006 set goal to achieve TV Digitization by 2015 but has miserably failed.  

The benefits of TV digitization are higher number of TV channels, best digital quality of High Definition and Standard Definition TV,  censorship of TV content and viewer feedback.  In 2012, Pemra in a report to Supreme Court conceded its inability to control obscenity due to non-digital TV networks. 

Despite above situation,  Pemra held its auction of three DTH licenses on Nov 23rd 2016 under 2009 Rules without participation of broadcasters. This auction now stands annulled after the landmark judgment of Lahore High Court.  Pemra eulogized the high bids received from top three bidders, which were 2000% more than its DTH license. 

However,  Lahore High Court full bench headed by Justice Ayesha A Malik and comprising Justice Abid Aziz Sheikh and Justice Shahid Karim held that presence of foreign investors and quantity of revenue generation from sale of DTH licenses should not be the prime objective of Pemra.  The learned bench observed that Pemra has to achieve plurality and diversity of content through open access and fair competition by allowing all stakeholders to participate in DTH license bidding. The judgment adds that Pemra has to protect public interest and meet public demand because public is the ultimate beneficiary of DTH technology and all advancements in electronic media.

The learned LHC bench has struck down Rule !3 (3) and (4) , 2009 that barred broadcasters from owning TV distribution licenses and vice versa as these Rules do not meet public interest and objectives of Pemra Ordinance. 

The said Rules were allegedly introduced in 2009  to keep broadcasters dependent on TV distribution networks and exercise indirect control.  Pemra for majority period since its inception in 2002 has been led by police officers and bureaucrats and focus has been to police media than enable its growth. 

The learned bench of Lahore High Court in its judgment observed that Pemra has not been able to launch DTH technology despite a licensing initiative in 2003 for different reasons including litigation that is still pending with the Supreme Court. The Pemra handling of 2003 bidding shows an unfortunate bias towards the Regulatee as two broadcasters who won the 2003 bidding were denied DTH license approval for two years. Pemra law says to decide a license within 100 days.  Even after license approval , the two licensees were not issued a license agreement and their licenses were cancelled six years after bidding.  Pemra took Rs 200 million from both broadcasters in license fees and both companies spent a huge amount in making arrangements to launch DTH project.   Pakistan media market and both broadcasters lost a historic opportunity to launch DTH projects when none existed in South Asia. During the six years when Pemra mishandled DTH licenses of two broadcasters, PTV issued four international tenders to launch DTH when it did not even participate in DTH License bidding of 2003. 

India launched its first DTH in 2004 and Indian DTH services have been selling illegally in Pakistan since then. Indian DTH operators have earned hundreds of millions of dollars through an illegal distribution network in Pakistan. 

In an unfortunate bid to exert control over Pakistan broadcasters , Pemra inadvertently handed over the local DTH market to Indian operators. 

Now that Lahore High Court has corrected this historic policy wrong, it’s a very good opportunity for the new management at Pemra to issue a balanced DTH license award policy after input from all stake holders. For its November 2016 bidding, Pemra pre qualified a number of companies who were newly registered with nil or little experience of broadcast industry and the major focus was to get highest possible bids.  One out of three top bidders in annulled Pemra DTH auction is from Currency Exchange business, another from oil and gas sector and majority of third top bidder is from petroleum sector.  LHC judgment has observed that maximum revenue from DTH licenses should not be Pemra’s prime objective.  .   It’s a well-established fact that public welfare is prime focus of media regulators world over and new DTH policy shall ensure affordable service to largest possible number of viewers. To meet this objective, Pemra should finalize a well thought out and firm pre qualification criteria in new DTH bidding which shall allow only companies to bid who have “ electronic media”  as Core business and with very sound and long standing media credentials.  Pemra main focus should be to ensure that successful bidders would roll out DTH project and provide affordable and quality service during the long-term 10-15 years license period. 

Since broadcasters have already suffered heavily due to Pemra Rules 2009 , the new DTH license policy should provide level playing field to broadcasters. In its last auction, Pemra gave a special exemption to foreign entities to have management control with 49% share holding whereas local broadcasters were totally denied participation in bidding. Pemra cannot afford failure of DTH projects due to illegal penetration of Indian DTH projects and non-digitization of TV Networks in Pakistan and only the most sound and focused DTH operators can fight these odds. 

The observations of learned full bench of Lahore High Court support a balanced DTH policy with involvement of stakeholders. In its judgment, the full bench held that advancement and convergence of technologies and public needs have made horizontal and vertical integration in broadcast industry very desirable. The judges noted that horizontal and vertical integration in broadcast industry is economically efficient and it also means reaching large number of viewers by improving quality of services and use of technological advancements. The learned bench noted that Pemra has already regulated horizontal integration by fixing the number of broadcast TV licenses which can be issued to a media enterprise but had put in a total bar on broadcasters owning TV distribution licenses i.e. vertical integration.  The learned bench noted that by doing so Pemra misunderstood its regulatory functions and objectives of the Ordinance. 

The learned judges added that by restriction under 2009 Rules, two specific media enterprises are denied becoming more efficient and effective in their job. It also means that both the prohibited media enterprises cannot vertically integrate to cut costs or improve efficiency. The learned bench concluded that nothing was placed before them in support of Pemra contention that if broadcasters are allowed to operate DTH license they will cause undue concentration of media ownership.