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Demystifying TDSAT’s order in Star-Taj TV vs Hathway case

MUMBAI: The protracted legal battle between Hathway Cable & Datacom on the one side and Star India and Taj Television on the other has finally concluded with the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) passing an elaborate order that will govern the way business is conducted between the three parties, at least in the short term.

The tribunal’s order can be divided into two parts—the first part is whether reference interconnect offer (RIO) can be applied retrospectively and at what rates should Hathway pay outstanding dues to Star India and Taj TV. The second part is whether Hathway was being discriminated by big broadcasters like Star India and Zee Entertainment Enterprises Ltd (ZEEL) vis-à-vis its nearest competitor.

RIO can’t be applied retrospectively

On the retrospective RIO part, the tribunal has stated that Clause 5.16 of digital addressable system (DAS) regulation has no application in a case where after expiry of an agreement parties enter into a new agreement, the basis of which is completely different from the basis on which the previous agreement was founded.

The tribunal has directed Hathway and Star to execute an interconnect agreement based on Star’s Reference Interconnect Offer for Star’s GECs and Star Sports channels by 30 September.

Furthermore, it has directed Taj Television, the agent for ZEEL and Turner channels, to countersign the RIO sent to it by Hathway in case it has not done so. The two parties must execute the agreement by signing the RIO by 30 September.

It has further asked Hathway to pay licence fees at the RIO rates from the date of execution of the RIO-based agreement.

In case Hathway has any objections to any of the clauses in the RIOs of Star or Taj, it may make representations to TRAI. But the clauses under representations would continue to be binding upon it unless and until those are set aside or modified by TRAI, the tribunal said in its order.

For the intervening period between the expiry of the previous agreement and coming into existence of the new RIO-based agreement, Hathway will have to pay Rs 27 cost per subscriber (CPS) for Star’s entertainment and sports. In case of Taj, Hathway will have to pay the licence fee at the rate of Rs 21.50 cost per subscriber.

It may be mentioned here that from 1 October, both Taj and Star channels (including Star Sports) will be available on RIO basis on Hathway. For the period from the date of expiry of the agreement till 30 September, Hathway will pay to Star India at Rs 27 CPS and Rs 21.50 CPS to Taj Television.

The licence fee on CPS basis will be computed by taking into account every set-top box by means of which any Star or Taj channel is viewable. The payments will be made following reconciliation of the accounts and taking into consideration the payments earlier made by Hathway.

Issue of parity

On the issue of parity, the tribunal stated that the conditions of reasonableness, parity, non-exclusiveness and non-discrimination stipulated in Regulation 3 of the DAS regulations commence from the stage a seeker makes request for provision of signals and goes right up to the execution of the agreement followed by the actual provision of signals.

It was reacting to Star India counsel Rakesh Dwivedi’s argument during the course of the hearing that the provisions of Regulation 3 would not apply to the stage before the execution of the interconnect agreement and would apply only after the interconnect agreement was executed between the broadcaster and the MSO.

However, the tribunal stated that will expressly leave open the question as to the extent of freedom of negotiation enjoyed by the provider and the seeker of signals and the extent to which the RIO of the provider limits or expands the area of negotiation.

The tribunal also stated that it is wrong to assume that publication of the RIO on the website satisfies the condition to act non-discriminatingly and besides the RIO, the broadcaster or the MSO (as the case may be) has full freedom of negotiations including the right to not maintain parity and discriminate between comparable seekers of signals.

During the argument, Hathway had charged that it was being unfairly treated by MediaPro, the erstwhile JV between Star DEN and Zee Turner. While Hathway was paying Rs 35 on cost-per-subscriber (CPS) basis, its competitors Siti Cable and DEN were paying only Rs 30.5 CPS.

On the materials on record, there is no escape from the conclusion that the broadcasters Star and Zee, acting through their intermediary MediaPro, provided their channels to DEN at much lower rates and more advantageous terms than to Hathway, the tribunal pointed out.

Also read:

Broadcasters cannot apply RIO retrospectively: TDSAT