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All eyes on SC as Madras HC adjourns tariff order case till 19 Jan

MUMBAI: The Madras High Court has adjourned Star India and Vijay TV’s petition challenging the Telecom Regulatory Authority of India’s (TRAI) draft tariff order to 19 January as the latter’s special leave petition (SLP) in the Supreme Court is listed for hearing on 16 January.

TRAI has filed an SLP in the apex court challenging the Madras High Court’s interim order directing it to maintain status quo. The regulator has contended that the tariff order is still in draft stage and the final order is yet to be issued.

Since the apex court is hearing the matter on 16 January, the Madras High Court adjourned the hearing in the matter. The interim order directing TRAI to maintain status quo will continue until 19 January.

Meanwhile, the Union government has come out in support of TRAI, stating that the regulator is within its rights to issue a tariff order for TV channels. It has also stated that the proposed tariff order is not in violation of the Copyright Act.

In the last hearing on 23 December, the division bench of the Madras High Court had asked Additional Solicitor General G Rajagopalan to file the central government’s response to the issue of TRAI’s jurisdiction to lay down prices.

Star and Vijay TV counsel P Chidambaram argued before the bench that TRAI had overstretched its jurisdiction by fixing price of the content.

They also said that the tariff fixing exercise is violation of the Copyright Act, which deals with all aspects of exploitation and monetisation of content.

TRAI in its reply to the Madras High Court has stated that the petition filed by Star India and Vijay TV are non-maintainable as the tariff order is still in draft stage. It also stated that the Madras High Court doesn’t have the jurisdiction to hear this matter.

As reported by TelevisionPost.com, the authority had issued its draft tariff order and interconnection regulation in October. It had sought stakeholders’ comments on the recommendations to make them more robust. The draft tariff order and regulations had followed an extensive consultation process by the authority involving all stakeholders.

What has rattled broadcasters like Star is TRAI’s suggestion of adopting distribution model for TV channels in which broadcasters fix the maximum retail price (MRP) within the price cap set by TRAI for selling directly to the subscribers. High-definition (HD) channels are also under price cap; however, premium channels have been excluded from price cap under the proposed new regime.

As per the genre caps prescribed by TRAI, sports channels have the highest price ceiling at Rs 19. General entertainment channels have a price ceiling of Rs 12. The ceiling for movie channels is Rs 10. Kids and infotainment channel can’t be priced above Rs 7 and 9 respectively. The cap on news channels is Rs 5 while that for devotional channels it is Rs 3. The cost of an HD channel cannot exceed three times the cost of a corresponding SD channel.

The distribution platform operators (DPOs) will just act as intermediaries in providing TV channels to consumers. Under the proposed new regime, DPOs will get a rental fee from the customers of up to Rs 130 for providing 100 SD channels Rs 20 for extra 25 channels in bundles or lots.

Additionally, the distribution platforms will get 20% fee from the broadcasters for collection and remittance of pay channel revenue. Thus, rental fee and distribution are the major revenue streams for DPOs besides carriage fee.

Unlike in the current regime, the DPOs will not get any share of the subscription fee received as subscribers will pay based on the maximum retail price (MRP) published by the broadcaster.

To level the playing field, TRAI has also regulated the carriage fee by capping it at 20 paisa per channel per subscriber per month. Further, the carriage fee amount will decrease with increase in subscription.

Broadcasters will not have to pay carriage fee if the subscription of the channel is more than or equal to 20% of the subscriber base. The distributors of TV channels may offer discounts on the carriage fee rate declared by them not exceeding 35% of the rate of the carriage fee declared.

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