Madras HC to deliver judgement in broadcast tariff matter in two weeks

MUMBAI: The Madras High Court will pronounce its verdict in the Telecom Regulatory Authority of India’s (TRAI) broadcast tariff order and interconnection regulation matter in two weeks.

The pleadings in the matter have been completed. The division bench of Justice MM Sundresh started hearing the matter from early April.

On Thursday, Star India counsel Abhishek Manu Singhvi completed his argument while TRAI also completed its rejoinder.

Star India, the main petitioner in the matter, wanted to file a written submission which was permitted by the division bench. Both TRAI and Star can file their written submissions by 2 May.

Earlier, the Madras HC had delivered a split verdict in the matter on 2 March and had referred the matter to a third judge. Justice Sundar had allowed 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.

Following the split verdict, the Supreme Court had asked the HC to conclude the matter in four weeks.

As the third judge, Justice Sundresh will only decide if the tariff order and the regulation is intra vires or ultra vires the TRAI Act.

The judge can upheld one of the judgements with his own logic.

It is expected that the matter will land in Supreme Court once the third judge delivers the verdict.

Star, Vijay Television, Indian Broadcasting Foundation (IBF), and News Broadcasters Association (NBA) are against the TRAI tariff order and regional while All India Digital Cable Federation and Videocon d2h are supporting the TRAI.

Star and Vijay had challenged the TRAI’s tariff order and regulation contending that the same 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 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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