SC asks Madras HC to decide on broadcast tariff matter within a month

MUMBAI: The Supreme Court has today asked the Madras High Court to decide on the Telecom Regulatory Authority of India’s (TRAI) tariff order and interconnection regulation for the broadcasting sector within a month.

If the Madras High Court fails to pronounce the judgement in the matter within a month, the Supreme Court will take a decision on the matter.

When the matter came up before Justice Adarsh Kumar Goel and Justice Rohinton Fali Nariman, the bench stated that the Madras High Court should be allowed to hear the matter as the apex court, in any case, will be seized of the matter in July.

Since there is enough time left between now and July, the bench said that the HC should decide on the matter within a month.

However, TRAI counsel and Additional Solicitor General (ASG) Tushar Mehta raised the apprehension that the matter will once again get delayed like it happened earlier.

At this point, the bench said that the TRAI can always come back to the apex court if there is a delay in pronouncing judgement. The bench assured that the SC will take a final decision on the matter if the Madras HC fails to do it in a month’s time.

“It is not disputed that the judgment has been given by the Division Bench of the Madras High Court but the two judges have taken a conflicting views and the matter stands referred to a third Judge. In view of above we request the third Judge to decide the matter as far as possible within one month from the date of receipt of copy of this order,” the SC said in its order.

“We make it clear that this order is being passed in view of the fact that the matter has been pending for quite some time and the interim order is in operation.
In view of order passed in M.A.NO.513 of 2018 and M.A. NO.520 of 2018, no order is necessary at this stage. The transfer petitions are accordingly disposed of.”

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.