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Madras HC directs TRAI to maintain status quo on draft tariff order

MUMBAI: Madras High Court has ordered the Telecom Regulatory Authority of India (TRAI) to maintain status quo on its draft tariff order and interconnect regulations following an appeal filed by Star India and its subsidiary Vijay Television.

Represented by senior counsel P Chidambaram, Star and Vijay argued that TRAI had overstretched its jurisdiction by fixing price of content. Chidambaram also contended that the tariff fixing exercise was a violation of the Copyright Act, which deals with all aspects of exploitation and monetisation of content.

The division bench of Madras High Court asked Additional Solicitor General G Rajagopalan to file the Centre’s response to the issue of TRAI’s jurisdiction to regulate prices.

The case has been adjourned until 12 January.

The matter is related to TRAI’s draft tariff order and interconnect regulations issued in October. The authority had sought stakeholders’ comments on its recommendations. The draft tariff order and regulations had followed an extensive consultation process involving all stakeholders.

What rattled broadcasters like Star was TRAI’s suggestion to adopt a 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, these 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 cap of Rs 12 while the ceiling for movie channels is Rs 10. Kids and infotainment channels cannot be priced above Rs 7 and 9 respectively. The cap on news channels is Rs 5 while that for devotional channels is Rs 3. The cost of an HD channel cannot exceed three times the cost of a corresponding SD channel.

Distribution platform operators (DPOs) will 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 standard-definition (SD) channels and Rs 20 for extra 25 channels in bundles or lots.

Additionally, the DPOs will get 20% distribution 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 the current regime, the DPOs will not get any share from the subscription fee as subscribers will pay based on the MRP published by the broadcaster.

To create a level playing field, TRAI 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 an increase in subscription.

Broadcasters don’t have to pay any 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.