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Broadcasters can enter into tripartite agreement under TRAI’s new tariff order for commercial subs

MUMBAI: In its two new tariff orders for addressable and non-addressable areas related to commercial subscribers, the Telecom Regulatory Authority of India (TRAI) has allowed broadcasters to enter into tripartite agreements with the commercial subscribers and the distribution platforms like DTH and cable TV networks.

But it is TRAI’s definition of the term ‘commercial subscribers’ that has caught the attention of the broadcasters. The regulator has  decided that the subscribers who charge their clients separately to use the TV services, amounting to commercial exploitation of TV services to earn revenues out of it from their clients, shall be classified as ‘commercial subscribers’. It is the ‘type of usage’ of TV signals by the subscriber and not the subscriber’s ‘place of usage of signals’ that should define the term ‘commercial subscribers’. Incidentally, hotels do not charge their clients separately  for usage of TV services.

TRAI has also prescribed total forbearance of tariff at the wholesale and retail levels for commercial subscribers.

The broadcasters have been mandated to offer their channels/bouquets of channels for commercial subscribers on non-discriminatory terms and conditions.

In the amended tariff orders notified by TRAI today, broadcasters are required to file their tripartite agreements with the authority within 30 days of entering into such contracts.

Why TRAI has allowed tripartite agreements relating to supply of signals of TV channels to the commercial subscribers?

TRAI said that broadcasters have been given options to have tripartite agreements with commercial subscribers and distribution platforms keeping in view that they own the copyrights of the content and only the distribution platforms can provide the TV signals as per the ‘Policy Guidelines for Down-linking of Television Channels’.

Furthermore, the nature and scale of exploitation of TV services can be very different from case to case. Hence, this flexibility to the broadcasters.

The authority has retained the provision that mandates distribution platforms to provide TV signals to commercial subscribers in accordance with ‘Policy Guidelines for Up-linking/Down-linking of Television Channels’.

The authority had issued a consultation paper in July after its earlier tariff orders were set aside by the Telecom Disputes Settlement & Appellate Tribunal (TDSAT) in March.

While setting aside the amended tariff order, the tribunal had asked the authority to undertake a fresh exercise on a completely clean slate and issue fresh tariff orders within six months.

The Indian Broadcasting Foundation (IBF) challenged the amended tariff order on the ground that the tariff order treats as equal groups of subscribers that are inherently unequal and are so recognised in their different definitions in the tariff orders.

The authority said that the distribution of TV services to commercial subscribers would be streamlined and made available to them at competitive rates with the coming into force of the regulatory framework for commercial subscribers.

It also said that it would balance the interests of all the stakeholders in the value chain and bring in transparency in the business transactions.

Definition of ordinary and commercial subscribers

TRAI has decided that the subscribers who charge their clients separately to use the TV services, which amounts to commercial exploitation of TV services to earn revenues from clients, shall be classified as ‘commercial subscribers’. All other subscribers shall be classified as ‘ordinary subscribers’.

TRAI is of the view that the basic criteria for classification of subscribers should be whether the TV services, irrespective of its place of provisioning, are being commercially exploited by the subscriber to earn revenues by charging separately for such services. In other words, the criteria for classification of subscribers should be the ‘type of usage’ of TV signals by the subscriber and not the subscriber’s ‘place of usage of signals’.

Broadcasters were of the view that ‘type of usage’ of the TV services as well as the ‘place of usage’ of the TV services should be the criteria for classification of subscribers.

Tariff forbearance

The authority has permitted forbearance in pricing at the wholesale level to broadcasters for commercial subscribers. The distribution platforms can enter into agreements with broadcasters to declare retail tariff for commercial subscribers.

It also said that there is no need for any tariff differentiation and involvement of broadcasters in the determination of tariff at the retail level except for commercial subscribers as defined in the tariff order.

TRAI said that there are adequate provisions in regulation as far as misuse of TV signal is concerned, and any case of misuse of signal shall be dealt with according to extant rules. It said that the existing framework is adequate to address the concerns of all the stakeholders in the value chain.

Signals to be provided through distribution platforms

While allowing broadcasters to have tripartite agreements with commercial subscribers and distribution platforms, TRAI made it clear that signal can only be given through distribution platforms.

The authority noted that as per the ‘Policy Guidelines for Down-linking of Television Channels’, broadcasters will have to provide satellite TV channel signal reception decoders only to distribution platforms under different guidelines.

31 March 2014 ceiling

TRAI also pointed out that in the tariff order for non-addressable areas, the reference date for prescribing ceilings of cable TV charges have been fixed as 31 March 2014, the day from when its 27.5 per cent hike had come into effect for non-addressable areas.

It is pertinent to note that the TDSAT had set aside the inflation-linked 27.5 per cent tariff hike provided by the authority to broadcasters. The tribunal’s order was subsequently challenged by the broadcasters in the Supreme Court, which refused to stay the order.

It also directed distribution platforms not to seek refund from broadcasters for the extra amount they have collected pursuant to the hike. The authority was asked to conduct fresh tariff exercise based on the directions given by the TDSAT.