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TDSAT sets aside TRAI’s DTH tariff order for CPE

MUMBAI: The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) has set aside the Telecom Regulatory Authority of India’s (TRAI) tariff order prescribing standard tariff package (STP) for consumer premises equipment (CPE) for direct-to-home (DTH) services.

While setting aside the tariff order, the tribunal made it clear that it will be open to the TRAI to issue a fresh tariff order after taking into consideration the inputs provided by the appellants and addressing the issues raised by them.

DTH operators Dish TV and Videocon d2h had challenged the Telecommunication (Broadcasting and Cable) Services (6th) (The Direct-to- Home Services) Tariff Order, 2013 (No 2 of 2013) dated 27 May 2013 issued by TRAI.

As per the tariff order, DTH service providers can offer CPE for a rent of Rs 71.75 per month if the security deposit is Rs 500 and Rs 65.50 if the security deposit is Rs 1,000.

The appellants contended that TRAI has no jurisdiction to fix the tariff for the supply of STBs and even if it had such powers to fix the tariff or rental for STBs, it has not been exercised lawfully, reasonably and in a non-arbitrary manner and after considering the relevant matters which are required to be considered in price fixation.

They further argued that no basis has been given for arriving at the price of STBs and issues raised by them have not been addressed.

The tribunal said that some elements of the cost of CPE have not been taken into account and issues raised by the appellants have not been fully addressed by the respondent while passing the impugned tariff order and, therefore, the same is untenable.

While noting that CPE seems to have been equated with STB in the tariff order, it pointed out that the definition of CPE has certain elements in addition to the STB. It is not clear whether the cost of such elements, which include dish antennas, LNBF, cables, connectors and the viewing card, have been considered by the TRAI in the tariff order, it stated.

The cost of electronic items is falling, but there is no mention of the fluctuation in foreign exchange rates which has been on the upside lately, the TRAI stated. The TRAI has recorded the factum of subsidiary, but there is no mention how the cost of this subsidy will be financed, the tribunal added.

Reacting to the regulator’s stand that the DTH operators are offering the services in a bundled form and can spread its costs on the bundled services which include the programming service, the tribunal said that there is an apparent contradiction in the above stand and the main objective of the tariff order is commercial interoperability.

In other words, if a subscriber is not satisfied with the service of an operator or wants to change the operator due to any reason, it is not stuck with the cost of the CPE; it can return the CPE and get its security back at any time.

The tribunal maintained that one way to address this issue can be to permit the DTH operators to supply recovered/refurbished CPE under the standard tariff order and the subscribers may not insist on new CPE if they want this tariff.

However, it clarified that this is just one example and the TRAI is free to address the various issues as it may deem fit.

Dish TV counsel Aman Lekhi submitted that any service, unlike the STBs, is by very definition intangible in nature and would have no physical characteristics. He argued that for a service, no transfer of possession or ownership takes place when it is sold. The STBs have physical characteristics, the ownership of which gets transferred to the consumers on sale, and are, therefore, goods and not services.

Lekhi submitted that the impugned tariff order imposes an additional condition in the form of commercial interoperability, which is in addition to the licence condition of technical interoperability in the DTH licence conditions.

He submitted that the TRAI has to ensure compliance with the licence conditions and it can make recommendations to the licensor (MIB) on the conditions of the licence, but TRAI cannot issue orders modifying or imposing additional licence conditions. The impugned tariff order is doing indirectly what cannot be done directly, Lekhi contended.

Videocon d2h counsel S Ganesh also submitted that the STBs are ‘goods’ and do not form part of ‘service’. He questioned the existence of powers of TRAI to fix the tariff or the rental for ‘goods’. He argued that STBs can as well be sold by a third party for which no licence is required and TRAI would have no power to regulate the price of that.

He further submitted that as per Clause 4 of the impugned tariff order, it becomes mandatory for a DTH service provider to supply CPE which TRAI cannot do as it cannot ask the telecom licensee to engage in an activity which is not part of the licensed activity. He argued that the STBs being goods like the handsets do not form part of the services.

TRAI counsel Saket Singh, however, argued that delivery of TV signals by a DTH operator is not possible without the STBs. The CPE including STBs are, therefore, part of the services which is an integrated whole and cannot work as standalone services without STBs.

Singh, relying on the judgment of the tribunal in Tamil Nadu Progressive Consumer Center vs The Ministry of Information & Broadcasting, submitted that as there was no technical compatibility between STBs being used by different DTH service providers, the impugned tariff order provides for commercial interoperability and an exit route to the subscribers not satisfied with the service of a particular operator.

The tribunal noted that STB has a direct connection and is inextricably linked to the delivery of service, and no delivery of service is possible without it. A vanilla STB can only be used to decompress and decode the signals for viewing on a TV and has no other standalone value in the hands of the subscriber.

There being no technical interoperability between the STBs provided by different service providers, the same has to be compulsorily taken from the DTH operator as part of the DTH service and is, therefore, part and parcel of the service provided by the DTH operators, it added.

That being the case, the respondent TRAI has jurisdiction under Section 11 of the TRAI Act to regulate the tariff of the same along with other elements of CPE, the tribunal stated.

Both Lekhi and Ganesh submitted that the price of STB is subsidised by the service providers. This is recovered from the subscriber in the form of subscription fees. TRAI has wrongly fixed the tariff of STB on the basis of such subsidised price of one DTH operator, they argued.

The TRAI counsel submitted that the tariff order under challenge is for a vanilla STB and the appellants are free to fix the tariff for premium STBs. He argued that a similar tariff order in case of multi-system operators (MSOs) in digital addressable system (DAS) areas, where the price of an STB was taken as Rs 1,750, is in force and even in the present case, only two out of the six DTH operators have challenged the same.