SRI LANKA SHUTS DOWN MAIN PAY TV OPERATORS

UNCLAS SECTION 01 OF 02 COLOMBO 001142 SIPDIS MCC FOR D NASSIRY AND E BURKE STATE PLEASE PASS TO USTR GENEVA FOR USTR SIPDIS SENSITIVE E.O 12958: N/A TAGS: ECON EFIN ETRD ECPS SCVL CE SUBJECT: SRI LANKA SHUTS DOWN MAIN PAY TV OPERATORS ¶1. (U) Summary: A sudden clampdown on two of the biggest companies offering pay TV services in Sri Lanka has caused distress to investors and thousands of subscribers. The initial reason for the closure of the first operator was an alleged but still unproven connection to the Liberation Tigers of Tamil Eelam (LTTE),a US-designated foreign terrorist organization. Later it was revealed that only one of the satellite and cable operatorshad proper licenses. This led to a court order to close all such operators, but resulted in only one additional company being closed down. The President has since ordered the regulators to take action to license the operators and regulate the industry, but pay TV services to thousands remain dark. End Summary. LTTE CONNECTIONS ALLEGED ¶2. (U) The clampdown on pay TV operators started on June 6, with the closure of CBN, a leading satellite TV operator, by the Criminal Investigation Department of the Police (CID) which was investigating allegations of aiding LTTE transmissions. While the CID has yet to prove that CBN was aiding LTTE transmissions, it now appears these allegations may have arisen because both the CBN and LTTE using the same satellite (Panamasat 12) for their operations. "PROPER" LICENSES ¶3. During a court proceeding in mid-June, it was revealed that of the four large cable or satellite operators in Sri Lanka (CBN, LBN, SAT net and Multivision),only Multivision, had "proper" authorization to operate these services. As a result, these operators were ordered to cease operations. The CID has not been able to stop the services of SAT net as it is broadcasting directly from India to customers. Multivision, which uses microwave frequencies issued by the Telecommunications Regulatory Commission of Sri Lanka (TRCSL) and not via satellite or cable, had already obtained the required licenses. Affected operators have sought legal intervention to restart operations. Their cases are in progress in the Court of Appeal and lower courts. THE RUMORS: OTHER REASONS FOR THE SHUTDOWN? ¶4. (U) The rumors that have emerged around the sudden suspension of satellite/cable services include business rivalries and the intention to give unfair advantage to a politically connected operator or operators. However, the official line remains the allegations over CBN aiding the LTTE and the absence of licenses. ¶5. (U) According to the TRCSL, the operators who download from satellites and distribute via cable or satellite, have been operating on external gateway operator licenses provided by the TRCSL for international telephony purposes. But in order to distribute media via satellite or cable service, they are also required to obtain separate licenses from the TRCSL and the Media Ministry. FOREIGN INVESTMENTS LEFT IN THE DARK ¶6. (U) If there were problems regarding the licences, it is surprising that authorities took so long to act against these pre-approved foreign investments. CBN has been in operation for about one year and LBN for several years. Both appeared to be operating as legitimate, well established businesses. They have publicly advertised their services and re-broadcast government-owned channels on their networks. ¶7. (SBU) Both companies are also approved by the Board of Investment (BOI),the investment promotion agency of the Government. The companies say they had provided details of their operations to the BOI prior to approval. Nevertheless, BOI has remained silent, not appearing interested in assisting their "BOI companies." During the July 4 Embassy event, EconOff asked Lakshman Watawala, Chairman of the BOI about BOI's interest in such matters. He dismissed the question, noting that the closures were caused by a different ministry. DISREGARD FOR LOSS TO CONSUMERS ¶8. (U) The satellite/cable operators provide access to more than 50 COLOMBO 00001142 002 OF 002 foreign channels including BBC, CNN, HBO, Star plus and National Geography covering a range of subjects including foreign news, movies, sports, children's programs, educational programs, music and fashion. The sudden suspense of these services has deprived over 30,000 subscribers access to these paid services - with no apparent concern about consumers' loss. ¶9. (U) Meanwhile, the President ordered in late June that the TRCSL take required steps to register all operators and regulate the industry. In response, the TRCSL has recently invited cable and satellite networks to apply for licenses. However, it is difficult to predict how soon the required licenses would be issued, when court cases may be resolved and whether operators will be allowed to resume business. ¶10. (SBU) Comment: The unraveling of the pay TV licensing issue is exemplary of the mismanagement and lack of foresight found in Sri Lankan regulatory offices. It also illuminates how the Sri Lankan regulatory environment is severely affected by the lack of published and available policies. Sri Lanka needs to establish effective, transparent, and fair governance institutions that will facilitate investment and ensure a fair deal for customers. Further, these closures might reflect the power wielded by the current political regime and its allies, calling into question their regard for consumer interests and investor confidence. ENTWISTLE