Friday, 9 October 2015

TRAI Amends Tariff Orders, directed by the courts

Ever since the process of implementing digitization started, courts have been kept extremely busy. Almost every regulation and Tariff order framed by the Regulator has been challenged in different courts. TDSAT, the sector tribunal gets the maximum load. 
A first glance at the petitions will reveal that many of them are genuine whereas some are filed only to gain time in implementing the regulations. Last month three of the tariff orders were amended by the sector regulator, TRAI on the directions of the courts. 

Tariff Order for Commercial subscribers
On 8 September 2015 TRAI notified two Tariff Amendment Orders (TAO) relating to TV services for commercial subscribers, one applicable for TV services being provided through analog cable TV systems (Non-CAS areas) and the other one applicable for TV services being provided through Digital Addressable cable TV systems (DAS).
These Tariff Amendment Orders have been notified in accordance with the TDSAT's Order dated 9th March, 2015 in the matter of Indian Broadcasting Foundation(IBF) & others Vs TRAI (Appeal No 7(C)/2014). It is expected that with the coming into force of these changes in the regulatory framework for commercial subscribers, distribution of TV services to commercial subscribers would be streamlined and would be available to them at competitive rates. It is also envisaged that it would balance the interests of all the stakeholders in the value chain and bring in complete Transparency in the business transactions.
The salient features of these TAOs are as under:

  • 'Subscriber', "Ordinary subscriber', & 'Commercial subscriber' have been defined.
  • Total forbearance has been prescribed both at the wholesale & retail level with respect to tariffs for Commercial subscribers and the broadcasters have the option to enter into tripartite agreements with the Distribution Platform Operators (DPOs) and the commercial subscribers, if so desired.
  • Broadcasters have been mandated to offer their channels/bouquet of channels for commercial subscribers, on non-discriminatory terms and conditions.
  • The Broadcasters have been mandated to file their tripartite agreements, if such agreement is done with commercial subscribers, with the Authority within 30 days of entering into such agreement.
  • TV Signal to commercial subscribers have to be provided by DPOs only in accordance with "Policy Guidelines for Up-linking/Down-linking of Television Channels"

No sooner the regulator notified these amendments, broadcasters have challenged the Tariff Order in TDSAT again. The Indian Broadcasting Foundation (IBF), Multi Screen Media (MSM), Zee Entertainment Enterprises Ltd (ZEEL) and Viacom18 are the petitioners. The petitions were admitted on 24 September by the tribunal. The broadcasters have sought a stay on the tariff orders. 
The bone of contention is the new definition of a commercial subscriber.
According to TRAI, the subscribers who charge their clients separately to use TV services will be classified as ‘commercial subscribers’. All others will be classified as ordinary subscribers. A commercial subscriber will, thus, be classified depending upon the ‘type of usage’ of TV services rather than the ‘place of usage’ of signals. Unless the commercial subscriber specifically asks a consumer to pay for viewing a broadcast signals it will not be commercial use.
According to sources all the other aspects of the tariff orders like tariff forbearance and allowing broadcasters to do tripartite deals with commercial subscribers and distributions platforms such as DTH and cable TV networks are acceptable to the broadcasters.
However, according to TRAI, if somebody is giving TV service as an amenity, then it is like any other normal customer, which has been upheld by the Supreme Court as well. If somebody charges specifically for that, then it’s the right of the broadcasters and they have an option to charge them which has been provided in the tariff order.
Explaining the rationale, the authority said that broadcasters had been given options to have tripartite agreement with commercial subscribers and distribution platforms, keeping in view that the broadcasters have copyrights of the content and only the distribution platforms can provide the TV signals as per the ‘Policy Guidelines for Down-linking of Television Channels’. 
The authority also prescribed total forbearance of tariff at the wholesale and retail level for commercial subscribers. Furthermore, broadcasters have been mandated to offer their channels/bouquet of channels for commercial subscribers on non-discriminatory terms and conditions. 
The authority has retained the provision that mandates distribution platforms to provide TV signals to commercial subscribers in accordance with the ‘Policy Guidelines for Up-linking/Down-linking of Television Channels’.
While setting aside the earlier tariff order on the subject, the tribunal had asked the authority to undertake a fresh exercise on a completely clean slate and issue fresh tariff orders within six months.
Twin Conditions for distribution of Pay channels amended
On 30th September 2015 The Telecom Regulatory Authority of India (TRAI) has released the draft Telecommunication (Broadcasting and Cable) services (Fourth) (Addressable systems) Tariff (Amendment) order, 2015. amending the ‘Twin Conditions’ prescribed at retail level pricing of TV channels, linking the a-la-carte rates with bouquet rates.
Some platform operators had raised concerns about the implementation of 'Twin Conditions' prescribed in the Tariff (second Amendment) Order dated 20th September 2O13 and had filed an appeal before the TDSAT. The tribunal had disposed off the appeal vide its order dated 13th July, 2015 stating that the Authority would consider the concerns of the appellants and take a final decision on the matter within four months from the date of order.
The draft has added definition of ‘RIO’ and ‘RIO Rates’ as given below:
RIO means a Reference Interconnect Offer published by a service provider specifying terms and conditions on which other service providers may seek interconnection from the service provider making the offer.
RIO Rate means the rate specified by the service provider in its Reference Interconnect Offer.”
Tariff order has also simplified the ‘Twin Conditions’ of relating a-la-carte price of TV channels to bouquet price at the retail level for all distribution platforms including Cable TV, DTH, HITS and IPTV. The new conditions are:
a) The a-la-carte rate of a pay channel forming part of a bouquet shall not exceed two times its RIO rate offered by the broadcaster for addressable systems; and
b) Sum of a-la-carte rates of all the channels in the bouquet shall not exceed three times the bouquet rate.
Since many stakeholders were of the view that deriving the ascribed value, prescribed in the Tariff (Amendment) Order dated 20th September 2013, is too complicated and difficult to implement on the ground, the Authority has proposed a simplified provisions in this draft tariff order which do away with the need to arrive at an ‘ascribed value’. While doing so, the basic relationship between a-la-carte rates of pay channels in a bouquet and the bouquet rates has been retained.
TRAI has further explained that the a-la-carte rates of all the channels offered by the service provider shall be same for all the bouquet of channels formed by the service provider and the rates of each such bouquet must satisfy the conditions specified under clause (a) and clause (b) given above.

These ‘Twin Conditions’ will seek to ensure that:
a. The platform operators retain the flexibility to devise and offer innovative and attractive packages/bouquets of channels by offering discounts over a-la-carte rates of channels forming the bouquet.


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