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TRAI asks broadcasters to comply with tariff orders for CPS deals

MUMBAI: The Telecom Regulatory Authority of India (TRAI) has asked broadcasters to comply with tariff orders for cost-per-subscriber (CPS) deals with distribution platform operators such as multi-system operators (MSOs).

Noting that the CPS deals are nothing but channel bouquets sold at a particular rate, TRAI has asked broadcasters to strictly comply with the provisions of Clause 3C of Tariff Order, 2004 and Clause 4 of Tariff Order, 2010 when entering into deals including CPS deals with distribution platform operators (DPOs).

Clause 3C of Tariff Order, 2014 requires broadcasters to offer their pay channels non-discriminatorily on a la carte basis to MSOs or cable operators.

As per the clause, in case a broadcaster is offering channels in a bouquet to an MSO, then it has to abide by the twin conditions that: (a) the sum of the a la carte rates of the pay channels forming part of such a bouquet shall in no case exceed one and a half times the rate of that bouquet, and (b) the a la carte rates of each pay channel forming part of such a bouquet shall in no case exceed three times the average rate of a pay channel of that bouquet.

On the other hand, Clause 4 of Tariff Order, 2010 states that in case a broadcaster offers channels as part of a bouquet, then the broadcaster will have to specify the rate for each such bouquet of channels.

It further states that the composition of the bouquets offered by the broadcaster should be the same for addressable as well as non-addressable systems. The rate for a bouquet of channels for addressable systems should not be more than 35% of the rate for such bouquet as specified by the broadcaster for non-addressable systems.

The authority issued the direction after examining the interconnection agreements filed by the broadcasters.

It sought clarification from broadcasters on the exact nature of CPS agreements being executed with different DPOs and how CPS agreements comply with the existing regulatory framework, including the provisions of Clause 3C of Tariff Order, 2004. In this respect, it had issued letters to the broadcasters on 1 December 2015.

In their response, the broadcasters stated that under CPS agreements all the channels of a broadcaster were given to a DPO at a single rate per subscriber per month. The DPO made payments to the broadcaster on the basis of the number of set-top boxes (STBs) carrying any or all the channels of the broadcaster irrespective of number of channels of the broadcaster actually selected by subscribers.

The broadcasters further contended that the CPS-based agreements were mutually negotiated interconnection agreements that could not be construed as bouquets of channels and hence did not fall within the realm of a la carte or bouquet offerings. Since CPS agreements did not fall within the category of a la carte or bouquet offerings, such agreements did not contravene the provisions of Clause 3C of Tariff Order 2004, they argued.

The authority, after examining the responses of the broadcasters, concluded that since in the CPS agreements an assortment of distinct channels is being offered together as a group or as a bundle, it is nothing but a bouquet or bouquet of channels.

It also stated that the provisions of the Tariff Orders 2004 and 2010 are applicable to all types of interconnection agreements, including mutually negotiated interconnection agreements between broadcasters and DPOs.

While a broadcaster may offer discounts to DPOs on a la carte rates of its channels or bouquet rates, such discount cannot directly or indirectly contravene the provisions of sub-clause (2) of Clause 3C of Tariff Order, 2004.

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