Madras HC upholds TRAI tariff order, regulation for broadcasting sector


MUMBAI: In a setback for Star India, the Madras High Court has upheld the Telecom Regulatory Authority of India’s (TRAI) tariff order and interconnection regulation for the broadcasting sector.

The bench of Justice Sundresh, the third judge who was hearing the matter after the High Court had given a split verdict in March, has upheld the chief justice Indira Banerjee’s order allowing the tariff order and the interconnection regulation.

Star wanted the order to be suspended for four weeks. The TRAI made a statement that it will maintain status quo for two weeks. Star India is likely to challenge the Madras High Court order in the Supreme Court.

While upholding the tariff order and the regulation, the bench noted that the same doesn’t interfere with content. It also stated that TRAI is well within its power to come out with the tariff order and the interconnection regulation for the broadcasting sector.

Star India and Vijay Television had challenged the validity of TRAI’s tariff order and interconnection regulation contending that the regulator doesn’t have the power to regulate the pricing for TV content as the same is governed by the Copyright Act.

The bench had reserved the judgement on 26 April.

In March, the Madras HC had delivered a split verdict in the matter 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.

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

Following the split verdict, the Supreme Court had directed the Madras High Court to conclude the matter in four weeks. The Madras High Court began hearing the matter in early April and concluded it by 26 April.

It is pertinent to note that the TRAI’s quality of service (QoS) regulation have been challenged by direct to home (DTH) operators Tata Sky and Airtel Digital TV in Delhi High Court.

The Delhi High Court was awaiting the Madras High Court to give order before taking up the matter. The matter is listed for hearing on 19 July.

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 by 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.