Intervenors present their argument in TRAI broadcast tariff matter

MUMBAI: Following the Supreme Court diktat to take a decision on the Telecom Regulatory Authority of India’s (TRAI) broadcast tariff matter within a month, the Madras High Court has begun hearing the matter from the first week of April.

The matter is being heard by the division bench of Justice MM Sundresh.

The main parties in the matter Star India, Vijay Television, and TRAI have presented their arguments while the intervenors All India Digital Cable Federation (AIDCF), Indian Broadcasting Foundation (IBF), and direct to home (DTH) operator Videocon d2h are presenting their arguments.

Star and Vijay have challenged the TRAI’s jurisdiction to fix tariff for content as the same is covered under the Copyright Act. The regulator has contended that the fixation of tariff for telecom and broadcasting is well within its domain.

Appearing for Videocon d2h, senior counsel G Masilamani argued in favour of TRAI stating that the tariff order and the regulation would give consumers a choice to opt for channels of their choice at affordable price.

The AIDCF has also made its arguments.

TRAI senior counsel P Wilson that the new tariff order was introduced to prevent illusory pricing of a-la-carte channels as broadcasters were force feeding consumers with larger bouquets.

In March, the Supreme Court had asked the Madras High Court to decide on the TRAI’s tariff order and interconnection regulation for the broadcasting sector within a month. The apex court had also stated that it take a decision on the matter within a month if Madras High Court doesn’t take a decision in the one month time frame.

The TRAI had in February filed transfer petition in SC citing following a delay by the Madras HC to pronounce the judgement even after reserving it in July 2017.

Subsequently, the Madras HC pronounced the judgement on 2 March with Justice Sundar allowing Star India and Vijay Television’s plea to quash the tariff order and interconnection regulation while Chief Justice Indira Banerjee gave a dissenting judgement to Justice Sundar’s order.

However, the Chief Justice had held that the clause putting a cap of 15% to the discount on the MRP of a bouquet is arbitrary. She said that the said provision is not enforceable.

The matter will now be placed before the next available Judge in order of seniority for the nomination of the Judge before whom the matter may be placed.

Star and Vijay had pleaded that the tariff order and the interconnection regulation must be aside since many provisions of the tariff order and the regulation are unconstitutional and ultra vires the provisions of the TRAI Act, 1997. The two had also contended that the TRAI doesn’t have the authority to decide on the tariff for TV content.

The HC had delivered the judgement after almost seven months of being reserved. In May, the apex court had directed the Madras High Court to conclude the matter within four weeks with a day to day hearing.

The TRAI tariff order and interconnection regulation has huge ramifications for the broadcasting sector as a whole.

The tariff order has mandated that every broadcaster has to declare the maximum retail price (MRP) of TV channels which has been capped at Rs 19. However, premium and high definition (HD) are out of the purview of the price cap. The free to air (FTA) and pay channels cannot be bundled. Similarly, high definition (HD) and standard definition (SD) channels cannot be part of the same bouquet.

In order to reduce the dispute between broadcasters and distribution platform operators (DPOs), the tariff order had separated content and carriage by prescribing a network capacity fee to be paid by the subscribers for the network capacity provided by the broadcaster.

DPOs can charge a maximum fixed amount of up to Rs 130/- per month, excluding taxes, from its subscribers towards its distribution network cost to carry 100 SD channels. Subscribers will have to pay Rs 20 per month excluding taxes for additional network capacity in bundles or lots of 25 SD channels.

In order to ensure that prices of the a-la-carte channels are kept reasonable, the maximum discount permissible in the formation of a bouquet has been capped at 15%. The bouquets offered by the broadcasters to subscribers cannot be altered by DPOs.

In the interconnection regulation, the TRAI has capped the carriage fee for SD channels at 20 paise per channel per subscriber per month and 40 paise for HD channels.

Broadcasters will not have to pay carriage to the DPOs for a channel if it is subscribed by 20% or more subscribers in a target market.

For channels with a subscription of 5% or less the carriage payable will be equal to the rate of carriage fee per channel per subscriber per month.

If the subscription of the channel is more than 5-10% then the carriage fee will be 0.75 times of the rate of carriage fee of the active subscriber base of the DPO.

The carriage fee for channels with subscription between 10-15% will be 0.5 multiplied the rate of carriage fee. Channels that have been subscribed by 15-20% of the DPOs subscriber base in a target market will have to pay carriage at the rate of 0.25 x rate of carriage fee.

Further, broadcasters can provide a discount of 30% on a bouquet of channels including 15% at the wholesale level and further 15% at the retail level.

Another key provision in the regulation is the prescription of a revenue share of 55:45 between multi system operators (MSOs) and local cable operators (LCOs) for the network capacity fee in case they fail to arrive at a mutual agreement.

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