SC takes up TRAI tariff order matter for quicker disposal

MUMBAI: The Supreme Court will hear the matter pertaining to the Telecom Regulatory Authority of India’s (TRAI) tariff order and interconnection regulation on 12 March.

The TRAI had in February filed an application before the Supreme Court seeking to vacate the order that directed the regulator to maintain status quo till the matter is before the Supreme Court.

The application was filed as the Madras High Court had not pronounced the judgement in the matter even after reserving in August 2017.

However, the Madras High Court bench of Chief Justice Indira Banerjee and Justice M Sundar passed a split verdict in the matter on 2 March. With the bench unable to pass a conclusive judgement, the matter was further referred to a third bench for taking a decision on the matter.

In a brief hearing today, the apex court was apprised of the Madras High Court. The TRAI contended that the apex court should hear the matter as the Madras High Court judgement was inconclusive.

The apex court agreed to the TRAI’s request and posted the matter for hearing on 12 March. This means that the Madras High Court will not hear the matter as the Supreme Court is seized of the matter.

Meanwhile, the apex court was also informed that the Model Interconnect Agreement (MIA) and the Standard Interconnect Agreement (SIA) forming part of the regulation have been challenged by the Cable Operators Welfare Association in the Kerala High Court. The matter is still pending before the HC and no interim order has been passed.

The TRAI had notified the tariff order and interconnection regulation for the broadcasting sector on 3 March 2017. However, Star India and Vijay Television had challenged the TRAI’s tariff order and regulation in the consultation stage in December 2016.

Star and Vijay had challenged TRAI’s tariff order and interconnection regulation, arguing that the regulator did not have any jurisdiction to do so. After hearing all the parties, the Madras HC reserved its judgement on 31 July.

The judgement was only delivered on 2 March after the TRAI moved the Supreme Court. While Justice Sundar allowed Star and Vijay TV’s petitions challenging the tariff order and the regulations, the Chief Justice gave a dissenting judgement.

In May 2017, the Supreme Court had stayed TRAI’s tariff order and interconnection regulation until the Madras High Court decided on the broadcaster’s petition challenging the regulator’s powers to fix tariff for TV content.

The apex court had also directed the HC to conclude the matter in four weeks with a day-to-day hearing while listing the matter for 12 June.

The bench of Justice Pinaki Chandra Ghose and Justice Rohinton Fali Nariman had stayed the tariff order and interconnection regulation matter after the TRAI counsel submitted that the new regime would come into effect from 1 September 2017.

The TRAI tariff order and interconnection regulation as 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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