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HomeArticlesRegulationsTRAI has created a level playing field between Broadcasters and consumers
Monday, 12 November 2018 11:36

TRAI has created a level playing field between Broadcasters and consumers

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The bench noted that the Copyright Act is meant to protect the proprietary interest of the owner. The interest of the end user or consumer is not the focus of the Copyright Act at all.

The order further said: “Once the relative scope of both the enactments is understood as above, there can be no difficulty in stating that the two Acts operate in different fields. We do not find on a reading of the impugned Regulation as well as the Tariff Order made that TRAI has transgressed into copyright land.”

On 30 October 2018, a long drawn case had finally come to an end when the Supreme Court upheld the Telecom Regulatory Authority of India’s (TRAI) tariff order and interconnection regulation while trashing the Star India’s appeal challenging the Madras High Court order which had upheld the TRAI tariff order and interconnection regulation.

As reported earlier, on 11 October, the SC had reserved the judgement in the matter after hearing the arguments from all the parties involved. The civil appeal filed by Star India and Vijay Television challenging the Madras High Court order allowing the TRAI tariff order and interconnect regulation was admitted on 20 July by the Supreme Court.

TRAI tariff order, interconnection regulations, and quality of service (QoS) norms had already come into effect from 3 July. By issuing the deadline, TRAI had stated it has complied with the judicial mandates as the Madras High Court has upheld the tariff order and the interconnection regulations.

TRAI, therefore, had directed all the service providers to comply with all the provisions of the regulations and tariff order afresh.While major broadcasters had already uploaded their RIOs on their websites, Star India was yet to file its reference interconnect offer (RIO) declaring MRP and bouquet rates. 

Star has challenged TRAI’s jurisdiction to frame the tariff order contending that the exploitation of intellectual property (IP) rights are covered under Copyright Act. The broadcaster has also challenged the TRAI press release informing about the implementation of the regulatory framework from 3 July.

The Madras High Court had in an order on 23 May upheld chief justice Indira Banerjee’s order allowing the TRAI’s tariff order and the interconnection regulation for the TV broadcasting sector.

SC judgement: 

The SC has written 123-page order and its two-member bench of Justice Fali Rohinton Nariman and Justice Navin Sinha stated that the TRAI Act must prevail over the Copyright Act to the extent that it protects the property rights of broadcasters.

The bench said: “We are, therefore, of the view that, to the extent royalties/compensation payable to the broadcasters under the Copyright Act are regulated in public interest by TRAI under the TRAI Act, the former shall give way to the latter.”

The bench noted that the Copyright Act is meant to protect the proprietary interest of the owner. The interest of the end user or consumer is not the focus of the Copyright Act at all.

The order further said: “Once the relative scope of both the enactments is understood as above, there can be no difficulty in stating that the two Acts operate in different fields. We do not find on a reading of the impugned Regulation as well as the Tariff Order made that TRAI has transgressed into copyright land.”

Therefore, the bench contended that the tariff order and the regulation have to be viewed with the lens of a regulatory authority which is to provide a level playing field between broadcaster and subscriber.

The bench also noted that the broadcaster is free to provide whatever content he chooses for the TV channels that he chooses to transmit to the ultimate consumer. The broadcasters are free to price their TV channels so long as they are non-discriminatory and do not otherwise have the effect of unreasonably restricting the choice of a subscriber to choose bouquet or a-la-carte channels as has been held hereinabove.

The bench observed: “We are satisfied that the impugned Regulation and Tariff Order have been passed by a regulatory authority after applying its mind to the objections of the various stakeholders involved after which the Regulation and Tariff Order have been laid down which have, by and large, been initially acceded to by the broadcasters themselves.”

What are the new rules?  

The broadcasters, as per the Telecommunication (Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff Order, 2017, have to declare the MRP and nature of channels within 60 days; distribution platform operators (DPOs) have to declare network capacity fee and distribution retail price (DRP) within 180 days and reporting by broadcasters within 120 days.

As per the Telecommunication (Broadcasting and Cable) Interconnection (Addressable Systems) Regulations, 2017, the broadcasters must publish Reference Interconnect Offer (RIO) within 60 days; Publication of Reference Interconnect Offer (RIO) by DPOs within 60 days and signing of the interconnection agreements within 150 days.

Under the Telecommunication (Broadcasting and Cable) Services Standards of Quality of Service and Consumer Protection (Addressable Systems) Regulations, 2017, subscribers have to migrate to the new framework within 180 days, the establishment of customer care centre, website, consumer care channel and publication of manual of practice within 120 days.

Channel & bouquet rates to be followed: 

As per TRAI’s tariff order, there must be a uniform maximum retail price for each TV channel at ` 19. The authority has stipulated that a television channel, which is individually priced at more than `19/- cannot be included in a bouquet and can only be offered on an individual/ a-la-carte/ stand-alone basis.

The tariff order said the price of a bouquet of television channels shall not be less than 85% of the sum of a-la-carte prices of television channels comprised in the bouquet.The sum of discount on television channels and the distribution fee paid by broadcasters to a distributor of television channels cannot exceed 35% of the maximum retail price of the television channel.

Also, television channels cannot be priced differently for different distribution platforms. Channels of one broadcaster cannot be offered by another broadcaster in their bouquet of television channels, even after obtaining due authorisation.

According to tariff order, promotional schemes: (i) can only be offered on a-la-carte prices for offering television channels and not on bouquet prices, (ii) cannot exceed 90 days at a time, and (iii) can be offered only twice in a year.

High definition (HD) and standard definition (SD) channels cannot be in the same bouquet of television channels. Similarly, pay channels and free to air (FTA) channels cannot be in the same bouquet.

In the interconnection regulation, the regulator has capped the carriage fees for SD channels at 20 paisa per channel per subscriber per month and 40 paisa for HD channels.

TRAI tariff order also offers 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. Broadcasters will not have to pay carriage to distribution platform operators (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 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.

On the lines of ‘must provide’ clause for broadcasters, the authority has also made it obligatory for DPOs to carry the channels of broadcasters through a ‘must carry’ clause on first come first serve basis. For spare capacity, DPOs have an obligation to allocate every alternate channel capacity in sequential manner from the pending list.

TRAI, in order to ensure that DPOs are not forced to carry non-popular channels, has allowed DPOs to discontinue a TV channel that has less than 5% subscription in the relevant geographical area in preceding six consecutive months. The DPO, in its discretion, could refuse to grant further access to the channel for a period of one year.

Industry Reactions: 

Overall, the general reactions of the TV broadcasting industry about the apex court order have been good and positive. While the All India Digital Cable Federation (AIDCF) has called it a landmark ruling and said it is a beginning of a new era in the broadcasting sector and also the end of a long wait for the new framework.

Enthused with victory, TRAI Chairman RS Sharma said through his tweet, “Historic judgement! A big win for consumers, their choice and transparency!!”

Mrs Roop Sharma, President COFI has expressed her satisfaction at the order and said that although it has come after a long time, the industry has a regulated environment to progress. “ I hope the LCO’s interest will now be looked after by the government considering that they provide the most important part of the business, ‘the last Mile’ connectivity. The tariff order to a great extent is what we demanded in our response to TRAI’s consultation paper on Digitisation in 2012, she added.

Broadcasters have also welcomed the SC order as many of them had already started the implementation much before the order came.

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