Thursday, 10 April 2014

TRAI allows 27.5% hike in Channel Rates

The Telecom Regulatory Authority of India (TRAI) on 31st March 2014 through a notification of the Tariff Order namely the “Telecommunication (Broadcasting and Cable) Services (Second) Tariff (Eleventh Amendment) Order, 2014”, has allowed 27.5% inflation linked hike in the tariff ceilings. These revisions are applicable both at the wholesale and retail levels. 
Based on the rise in the wholesale price index (WPI) over the last five years and considering the other relevant factors, the Authority has brought an overall 27.5% inflation hike. However, the Authority is of the view that a hike to the tune of 27.5% in a single go would not be appropriate for the market and the consumers to adjust to. Therefore, the Authority has prescribed this hike to be implemented in two installments. The first installment of 15% shall be effective from 1st April 2014. The second installment for the remaining inflation linked increase shall be made effective from 1st January 2015 which shall be notified subsequently. This is expected to give enough and reasonable time to all the stakeholders to adjust to these hikes.

No increase (on grounds of inflation) has been allowed for the past five years, for the reason issue was pending before the Supreme Court. The Eighth Amendment to the Tariff Order was challenged by several service providers vide appeal Nos. 10(c) to 15(c) of 2007 in the Hon’ble Telecom Disputes Settlement and Appellate Tribunal (TDSAT) which, in its judgment dated 15th January 2009, struck down the said amendment to the tariff order. On TRAI’s appeal (CA no. 829-833 of 2009 TRAI Vs Set Discovery and Ors), Hon’ble Supreme Court, in its interim order dated 13th May 2009, stayed the said Hon’ble TDSAT judgment and directed the Authority to carry out de novo tariff determination exercise and submit a report to it. The Authority carried out the exercise and submitted the same in the Hon’ble Supreme Court on 21st July 2010. In this report, a draft tariff order was also attached which, amongst others, had a provision for 9% inflation linked hike in the tariff ceilings. 
In this background, the Authority approached the Hon’ble Supreme Court and filed an Interlocutory Application (I.A.) Nos. 71-75 of 2014 in CA no. 829-833 of 2009 in the case of TRAI Vs Set Discovery and Ors, and sought permission of the Hon’ble Court to review the Tariff Order. The Hon’ble Supreme Court allowed the TRAI and in its order dated 28th February 2014 held as under: 
“On going through the averments in these applications, the Appellate Authority is permitted to review the tariff ceiling to make adjustment for inflation and notify the same, in exercise of its powers conferred under section 11(2) of the TRAI Act, 1997.”


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