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TDSAT refuses to go into channel pricing issue

MUMBAI: The channel rates in Digital Addressable System (DAS) will continue to be 42 per cent of non-CAS (Conditional Access System), as prescribed by the Supreme Court in its 16 December 2010 judgement that allowed the direct-to-home (DTH) operators to increase the price of channels.

The multi-system operators (MSOs) had filed a petition in TDSAT against TRAI’s (Telecom Regulatory Authority of India) tariff order and inter-connect regulation contending that the regulation remains silent on the tariff to be paid by the subscribers.

The MSOs had contended that the tariff order cannot be sustained as the TRAI has not fixed the maximum retail price. They also alleged that the regulator has discriminated with MSOs vis-a-vis DTH operators by not fixing the retail tariff.

Unlike CAS regime, wherein the regulator had specifically laid down the upper limit of the rate that broadcasters can charge subscribers, the DAS tariff order does not contain any regulation on retail price of the channels.

Hearing the petition filed by MSOs, the TDSAT said it will not go into the issue as the matter is pending in Supreme Court, which will take a final call in the matter.

TRAI counsel Meet Malhotra told the tribunal that getting into a “cost based exercise in respect of channel pricing will not end in any meaningful result”.

He also pointed out that the broadcasters had challenged the legality of fixing the retail price of channels at Rs 5 for CAS. The tribunal had at that time upheld the TRAI’s order to put a price cap.

In that backdrop, the tribunal questioned the regulator as to why it has failed to carry out the exercise on retail tariff particularly when it has conducted such an exercise in the past and even took it to its logical conclusion by fixing the price limit for channels.

To this, the TRAI counsel said that there was no need for further transparency in bringing about the tariff order as the retail price is fixed by MSOs and not broadcasters.

He also stated that although the regulator had fixed the channel price in CAS, the exercise was not undertaken for DAS keeping in mind the difficulties to fix MRP based on the content costs which may be levied on the broadcasters.

The tribunal was of the view that the authority being a statutory body should not have contended that the exercise is difficult. It also advised the TRAI to look into the matter at a later stage.

The TRAI counsel also said that the broadcasters have been subject to regulation from time to time. He also pointed out that the MSOs are resorting to similar tactics employed by the broadcasters when CAS was being rolled out.

As per the TRAI tariff order, the MSOs are free to decide the packaging of the channels offered to the subscribers from the bouquet of channels provided to it by the broadcaster.

However, if the MSO only offers certain channels of a bouquet provided to it by the broadcaster resulting in different subscriber base for different channels, the payment to the broadcaster for such bouquet shall be calculated on the basis of the subscriber base for that channel of the bouquet which has highest subscriber base.

The MSOs can fix the retail tariff and also package and price offerings. However, the sum of the a la carte rates of channels, forming part of a bouquet, should not exceed 1.5 times the rate of the bouquet. Further, the a la carte rate of any channel shall not exceed three times the average channel rate of the bouquet.