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TRAI not the forum for audit disputes, DTH operator Sun Direct slams draft rules
While TRAI proposed exempting smaller distributors with under 30,000 active subscribers from mandatory audits, Sun Direct said such exemptions could distort market fairness and create a non-uniform compliance regime.
Sun Direct’s objections is the proposed requirement for distributors to audit their addressable systems—such as Subscriber Management Systems (SMS), Conditional Access Systems (CAS), and Digital Rights Management (DRM)—annually and share reports with broadcasters by September 30. (Image Source: Wikipedia)
Amid growing friction between broadcasters and distributors over compliance norms, Sun Direct TV Pvt. Ltd. has pushed back against TRAI’s draft audit rules, asserting that the regulator should not act as an adjudicator in audit-related disputes.
The DTH major said audit disagreements fall squarely within the remit of the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) and warned that TRAI’s proposed powers to entertain such matters and permit special audits could set a precedent for regulatory overreach and complicate the DTH sector’s operational framework.
Sun Direct has raised strong objections to the Telecom Regulatory Authority of India’s (TRAI) Draft Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) (Seventh Amendment) Regulations, 2025. The company warned that several of the proposed provisions could create significant operational, financial, and confidentiality challenges for large-scale DTH platforms.
Sun Direct’s objections is the proposed requirement for distributors to audit their addressable systems—such as Subscriber Management Systems (SMS), Conditional Access Systems (CAS), and Digital Rights Management (DRM)—annually and share reports with broadcasters by September 30.
The company said this deadline is unrealistic since DTH operators handle millions of transactions and must also meet other statutory obligations, including GST and income tax filings. It suggested extending the audit submission date to December 31 to allow accurate reconciliation and error-free reporting.
Sun Direct also opposed the proposal mandating audits by TRAI-empanelled auditors or M/s Broadcast Engineering Consultants India Limited (BECIL), calling it redundant and restrictive. The company said the industry already employs qualified auditors governed by the Institute of Chartered Accountants of India’s Code of Ethics. Naming specific institutions adds no safeguard, limits flexibility, and could raise costs.
The DTH provider objected to the requirement of informing broadcasters 30 days in advance about the audit schedule and auditor name, citing confidentiality and operational risks. Sun Direct said such disclosure to commercial counterparts compromises independence, and that the existing obligation to share certified audit reports already ensures transparency.
Another controversial clause allows broadcasters to send representatives to attend distributor audits. Sun Direct warned this would expose proprietary subscriber data and internal systems to competitors, undermining confidentiality and system integrity. The operator said TRAI-authorised auditors already ensure transparency and objectivity, making broadcaster participation unnecessary.
While TRAI proposed exempting smaller distributors with under 30,000 active subscribers from mandatory audits, Sun Direct said such exemptions could distort market fairness and create a non-uniform compliance regime. Transparency, it argued, should apply equally across all distributors to prevent subscriber under-reporting and revenue leakage.
Sun Direct also objected to provisions requiring auditors to provide unspecified “additional information or certifications” to TRAI as and when directed. The company said this creates open-ended compliance obligations and administrative uncertainty, making it hard to plan audits effectively.
The DTH operator further criticised retrospective application of audit requirements to past unaudited periods. Retrieving and verifying legacy data, it said, would be highly complex and resource-intensive, especially since earlier regulations did not mandate retrospective audits. Such a clause, Sun Direct added, would contradict established regulatory principles and risk duplicative audits.
The company raised alarm over the proposal to change the audit period from a “calendar year” to a “financial year.” Sun Direct said its entire billing and reporting systems are aligned to the calendar year, and enforcing a financial year cycle would require costly IT re-engineering and could overload administrative resources during tax filing season.
In its submission, Sun Direct also addressed clauses related to dispute resolution. The draft allows broadcasters to raise discrepancies, demand re-examination by auditors, and escalate unresolved issues to TRAI. The operator said these timelines—seven days for distributors to respond and 30 days for auditors—are too rigid and fail to account for the time required to analyse complex data. It added that second-level escalations to TRAI should be limited to material discrepancies, as TRAI is not empowered to adjudicate such disputes; they fall under the Telecom Disputes Settlement and Appellate Tribunal (TDSAT).
Sun Direct opposed clauses allowing broadcasters to commission special audits or take unilateral steps if the distributor fails to submit reports on time. It argued that such provisions unfairly shift responsibility and cost burdens, potentially incentivising delays. The company also objected to giving broadcasters the power to disconnect television signals in cases of technical non-compliance, describing it as an “unacceptable transfer of punitive power” that could lead to large-scale consumer blackouts.
On technical reforms, Sun Direct criticised new infrastructure-sharing requirements that compel DTH operators using shared SMS, CAS, or DRM systems to maintain separate instances for each distributor. The company said its current architecture already ensures secure logical data partitioning and encryption, and forcing physical separation would impose massive, unnecessary capital expenditure that would ultimately burden consumers.
The operator also challenged TRAI’s draft provision on watermarking and logo visibility. The proposed rule requires the infrastructure provider to insert network logos at the encoder end and restricts infrastructure seekers—such as DTH operators—to providing logos via set-top boxes or middleware, allowing only two visible logos (broadcaster and last-mile distributor). Sun Direct argued that this limits its brand visibility, weakens piracy deterrence, and undermines operational flexibility. It urged TRAI to make DTH network logos mandatorily visible alongside broadcaster logos.
Sun Direct said it supports regulatory transparency but believes several proposed amendments could “introduce significant operational, financial, and confidentiality challenges.” The company urged TRAI to adopt a balanced and practical approach that safeguards large-scale DTH operations and proprietary data while achieving audit transparency goals.
The submission highlights ongoing tensions between broadcasters, distributors, and the regulator as the broadcasting ecosystem faces tighter compliance norms. Industry executives say TRAI’s final decision on the draft regulations will likely shape future cost structures, data-sharing obligations, and market relationships within India’s pay-TV sector.
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