21 Sep 2017
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TRAI to examine afresh issues related to commercial subs tariff

MUMBAI: The Telecom Regulatory Authority of India (TRAI) has issued a consultation paper titled ‘Issues related to commercial subscribers’ to examine whether there is a need to classify subscribers of TV services into ordinary and commercial.

TRAI has issued the consultation after the Telecom Disputes Settlement & Appellate Tribunal (TDSAT) set aside the amendments to tariff order and interconnection regulation for commercial subscribers and directed it to issue fresh orders within six months.

In case such classifications are made, then

  • (i) examine various criteria for classification of subscribers of TV services;
  • (ii) examine the need for differential tariffs among different subscriber categories;
  • (iii) examine who should prescribe tariffs for different subscriber categories; and
  • (iv) examine the adequacy of current framework to ensure transparency and accountability across the value chain for commercial subscribers to minimise disputes and conflicts among stakeholders.

TRAI has asked the stakeholders to provide comments by 31 July and counter-comments by 7 August.

The authority has issued the consultation after the Telecom Disputes Settlement & Appellate Tribunal (TDSAT) set aside the amendments to tariff order and interconnection regulation for commercial subscribers and directed it to issue fresh orders within six months.

In the consultation paper, the authority has proposed that TV subscribers can be classified based on any one or more of the possible parameters: (a) Place of viewing TV signal, (b) Type of usage criteria for TV signals, (c) Method of provisioning of such TV signal, (d) Number of TV signal points at such locations, (e) Perceived value of TV signal, and (f) Type of content of TV signal.

Noting that there are no explicit provisions in the existing regulatory framework for retail tariff as far as commercial subscribers are concerned either for addressable or non-addressable systems, the authority said that one possible option could be to leave tariff fixation to the MSOs/LCOs/DTH/ IPTV/ HITS operators as the case may be.

The other way, the authority said, could be to bring out a specific framework on retail tariff for commercial subscribers. This may include, but is not limited to, the following options:

  • (i) Tariffs for commercial subscribers on each type of platform (Cable TV/ DTH/ IPTV/ HITS) are the same as that for ordinary subscribers since the method of provisioning of the TV signal in both cases is same and no extra cost is being incurred to provide the TV signals to a commercial subscriber.
  • However, the counter argument could be that tariff for commercial subscribers cannot be treated on a par with that for the ordinary subscribers as these subscribers utilise the TV services for commercial gains and such gains need to be shared among the stakeholders in line with fair business practice.
  • (ii) Tariffs for commercial subscribers are linked to the tariffs for ordinary subscribers through a formulaic relationship, which may be prescribed between the tariff for commercial subscribers and that for ordinary subscribers. The formula would factor in the fact that commercial subscribers need to be charged extra due to the commercial gains derived by them from the TV services as compared to ordinary subscribers.
  • However, the following issues may have to be considered in this option:
  • (a) Would the extra charges over and above the tariffs for an ordinary subscriber be a fixed amount or an ad valorem factor?
  • (b) How to deal with different kinds of commercial enterprises subscribing to TV services? Should they all be treated in the same manner? Should there be further sub-classification of the different types of commercial establishments? How do you factor in the differences in the size of the establishments of the commercial subscriber and the scale of exploitation of the TV services by the commercial subscriber?
  • (c) How to factor in the differences in the perceived gain from utilisation of the TV services for different commercial subscribers?
  • (iii) Tariffs for commercial subscribers are in no way linked to the tariffs for ordinary subscribers, but some measures are built into the framework to safeguard the interest of commercial subscribers like mandating broadcasters to offer all their channels à la carte and also specify their rates separately for ordinary and commercial subscribers.
  • Similarly, distribution platform operators (DPOs) may also be mandated to offer all channels, available on their platform, on à la carte basis both for ordinary and commercial subscribers. In case channels are also offered in the form of a bouquet of channels, relationship for pricing of such bouquets vis-à-vis the à la carte rate of the channels, forming part of the bouquet, should follow the framework as prescribed for ordinary subscribers by TRAI.
  • (iv) Revenue share model between the commercial subscribers and either MSOs/ DTH/ IPTV/ HITS operators in areas served by addressable systems or MSOs/ LCOs (cable operators) in areas served by non-addressable systems. They may also work out and agree on the revenue share among themselves.
  • However, such an approach is more suitable to take into account the volume of the extent of exploitation of the TV signals by commercial subscribers and other relevant factors to accordingly strike a deal. However, the inherent drawback in this model is that while the TV content belongs to the broadcasters, they do not have a say in negotiations that take place nor can they stake any claim in the revenue share.
  • (v) Any other method suggested by the stakeholders for fixing tariffs for commercial subscribers at wholesale and/or retail levels.

Over and above this, the authority has suggested that the operators must disclose the actual number of commercial subscribers to the broadcasters in order to ensure that a fair share of the revenues earned from the commercial subscribers also accrue to the broadcasters.

TRAI said that one such measure could be to put in place a voluntary disclosure mechanism wherein it is mandated that the nature of the connection (ordinary/commercial) is declared at the time of provisioning itself.

In addition, the total number of such commercial subscribers served may also be required to be intimated to the broadcasters periodically. These details may be required to be rendered to the broadcaster on a need basis or as and when requested.

In case of digital addressable systems, the individual commercial subscriber details need to be populated in the SMS of distribution platform operators along with the type of commercial activity that the TV signal is utilised by that subscriber.

Clik here to read full ConsultationPaper