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TDSAT sets aside TRAI’s 27.5% inflation-linked tariff hike
MUMBAI: In an order that is set to have ramifications for content deals, the Telecom Disputes Settlement & Appellate Tribunal (TDSAT) has set aside the Telecom Regulatory Authority of India’s (TRAI) 27.5 per cent inflation-linked tariff hike for non-addressable system.
The broadcasters will now have to refund the additional amount they have collected from distribution platforms as a result of the tariff hike.
Dish TV CEO RC Venkateish said the judgement was extremely positive from a distribution platform’s perspective.
“The broadcasters have to refund the extra amount they have collected from the platforms on account of the tariff hike. We expect to get a sizeable amount in refund from broadcasters from whom we were taking channels on a la carte,” Venkateish stated.
However, broadcasters are expected to challenge this judgment in the Supreme Court.
It may be recalled that TRAI had allowed a 15 per cent hike from 1 April 2014. The second instalment of 12.5 per cent tariff hike came into effect from 1 January 2015.
The tariff hike was challenged by the Centre for Transforming India, Home Cable Network, Lucknow 9 Cable Network, Good Media News, Sikkim Digital Network and Cable Combine Communication Siliguri.
In an interim order passed on 29 May 2014, the tribunal had directed all stakeholders to keep a separate account with regard to the collections based on the order.
In case the appeals are successful, the individual subscribers making any excess payment in terms of the order will be entitled to adjustments for the succeeding months from the respective LCOs/MSOs.
Similarly, the local cable operators (LCOs) will be entitled to adjustments from the multi-system operators (MSOs), while the MSOs will be eligible for adjustments from the broadcasters, the tribunal had stated.
Why TDSAT set aside the tariff hike
TDSAT questioned the justification for giving a 27.5 per cent hike in non-conditional access system (non-CAS) areas. It also noted that the agreements being entered in digital addressable system (DAS) areas were at rates far lower than the prescribed ceiling of 42 per cent of non-CAS areas.
On TRAI counsel Saket Singh’s argument that in case of non-CAS areas there is large under declaration of the subscriber base, the tribunal wondered whether by allowing further hike in the ceiling to the extent of 27.5 per cent would encourage further under declaration.
The tribunal also noted that DAS tariffs being linked to the non-CAS areas will increase automatically in these areas even though there is no under declaration.
“To our mind, the remedy of higher ceiling in non-CAS areas to compensate for the under declaration of subscribers and a further inflationary hike in the same, appears worse than the disease,” the tribunal said in its order.
TRAI in its report to the Supreme Court had said that DAS implementation would lead to an effective resolution of the wholesale tariff issue as the reason for not bringing a completely new tariff at the wholesale level in non-CAS areas.
The tribunal added that TRAI has not considered the large amount of data available with it in the form of the interconnect agreements for both DAS and non-DAS for proper tariff fixation.
According to the tribunal, the actual agreements being executed in the DAS areas were not only on a different basis, but also at rates far below the ceilings fixed. The same would be the case in non-DAS areas.
“In any case, we cannot find any justification in the action of TRAI in not considering the agreements for these areas. If these agreements were also being executed at rates below the ceilings fixed, where was the need to give further inflationary hikes? We are not saying that this is the case. All that we are saying is that when TRAI was asked to conduct the exercise de novo, the least that it could have done was to consider all the relevant data available with it rather than follow the past practice citing lack of data,” the tribunal observed.
TDSAT calls for a comprehensive tariff order
Reiterating its earlier demand, the tribunal asked TRAI to have a fresh look at the various tariff orders in a holistic manner and come out with a comprehensive tariff order in supersession of all the earlier tariff orders.
The tribunal maintained that the regulator must take inputs from various stakeholders and give a reasoned order for accepting or rejecting the same while carrying out the exercise.
The tribunal also asked TRAI to consider differentiating between content, which is of a monopolistic nature, as against that shown by other channels, besides classifying the content into premium and basic tiers.
It also said that the authority must identify the major cost components so that an increase or decrease in such costs may be suitably factored while working out the inflationary hikes.
“Increase in costs of such components as may be available in indexes such as WPI, GDP deflator, etc. can then be applied,” it stated.
While working out the tariffs, the effort should be to encourage a correct declaration of subscriber line report (SLR).