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Broadcasters say NO to TRAI’s New Tariff Order

January 23, 2020

By Lucy Rana and Meril Mathew Joy

Telecom Regulatory Authority of India (TRAI) released Telecommunication (Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff (Second Amendment) Order, 2020 (hereinafter New Tariff Order 2020 or NTO) with the major highlights that ‘Distribution Platform Operators (DPOs) is now required to offer 200 channels for the Network Capacity Fee (NCF) of up-to Rs. 130/- in addition to channels mandated by the Government, resulting in offering 226 channels to the subscriber at the NCF’.[1]

THE NEW TARIFF ORDER 2020

This amendment aims to comfort the consumers/ subscribers to access more channels at lower subscription price. The mandatory channels (declared by Ministry of Information and Broadcasting) will not be covered under the additional 200 channels to be offered, in fact the 200 channels are in addition to the mandatory channels. The TRAI has further clarified that DPOs cannot make Basic Service Tier (BST) bouquet and the consumers are empowered to choose any 200 channels, i.e. pay or Free-To-Air (FTA) channels or bouquet(s) of paychannels or bouquet(s) of paychannels or any combination of their choice apart from mandatory channels of government. With New Tariff Order 2020, the TRAI has notified the following amendments:[2] From which the takeaway pointers are mentioned as under.

  1. That the broadcaster needs to comply with the following conditions:[3]
  2. That in no case the sum of a-la-carte rates of the pay channels (MRP) forming part of a bouquet exceed one and half (1 ½ ) times the rate of the bouquet of which such pay channels are a part;
  3. That in no case the a-la-carte rates of each pay channel (MRP), forming part of a bouquet, shall exceed three (3) times the average rate of a pay channel of the bouquet of which such pay channel is a part.
  4. MRP of a pay channel shall not exceed the MRP of any bouquet consisting of that channel.
  5. The price cap of pay channel for inclusion in bouquet is reduced from Rs. 19/- to Rs. 12/-,
  6. The cap does not alter the flexibility of broadcasters to price their channels.
  7. The number of bouquets of pay channels not to exceed the number of pay channels offered.
  8. Number of SD channels provided within the NCF of Rs. 130/- per month to increase from 100 to 200.
  9. DPOs to have flexibility of declaring different NCFs for varying geographical areas within its service area.
  10. DPOs have the flexibility of offering promotional schemes at par with Broadcasters.
  11. DPOs can offer discounts on NCF and Distributor Retail Prices (DRP) in cases of long term subscriptions i.e. 6 months and above.
  12. Discounts on NCFs for multi TV homes.
  13. DPOs not to charge more than 40% of declared NCF on every additional TV for 2nd TV connection and onwards in a multi TV home.
  14. DPOs should allow multi TV home subscriber to choose different set of channels for each TV connection.

The TRAI Chairman R.S. Sharma in a recent press conference in Delhi said “The purpose of NTO always was to ensure transparency and non-discrimination. We just felt a few things were either left out or distorted in the earlier provision and the idea was to straighten those out, provide more content to the consumer at the same price.”[4]

THE BROADCASTERS DILEMA

With the new tariff order notified, the broadcasters are required to publish revised MRP of channel and bouquet on their website by January 15, 2020 and for Distribution Platform Operators by January 30, 2020. [5] The restriction on the broadcasters for determining the MRP and inclusion of additional 200 channels within the existing NCF of INR 130, has forced the broadcasters to move to the High Court to settle the dispute over the amendment.

The petition was filed by Indian Broadcasting Foundation (IBF) along with Film and Television Producers Guild of India, Zee Entertainment Enterprises Limited, Sony Pictures Networks, Disney Board, Asianet Star Communication and Star India, challenging the amendments notified by TRAI.

The petition filed has focused mainly on the argument that the amendment such as reduction of price cap etc., has no reasonable justification and TRAI has no valid observation to make these amendments. Additionally, the common contentions by the petitioner are:[6]

  1. That the restriction encroaches the fundamental right guaranteed to the petitioner under Article 19 1 (a) (to freedom of speech and expression); and
  2. That the restriction encroaches the fundamental right guaranteed to the petitioner under Article 19(1)(g) (to practise any profession, or to carry on any occupation, trade or business).
  • That the new tariff order tries to interfere with the way broadcasters have been doing business and also affects them negatively.
  1. That the tariff implemented in 2019 was a recent act by TRAI and the broadcasters were in the process of adjusting with the changes brought by 2019 notification.

CONCLUSION

It appears that the New Tariff Order has left a bad taste in the mouth of broadcasters. The broadcasters have further voiced their concern stating that the said new order will impact the growth of the sector adversely and would cause further revenue erosion of niche English channels. In the first phase of NTO last year, revenues of English entertainment channels have already seen a sharp decline reaching almost 50%. [7]Advertisers are confused owing to the sway of consumers choice and are having a tough time selecting advertising channels, which is also causing general entertainment channels to be impacted adversely in terms of revenue.

Whereas TRAI officials have said that they are open to discussion on the subject. Although, the broadcasters are of the opinion that the time for discussion reasonably should be prior to the implementation of the order, and thus have resorted to legal proceedings. The implementation of the NTO for the broadcasters and other cable service providers is from January 01, 2020 onwards, however, consumers will be able to avail the benefits as per the amended provisions from March 01, 2020.

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[1] Available at https://main.trai.gov.in/sites/default/files/Regulation_Tariff_Order_01012020.pdf

[2] Id.

[3] Id.

[4] Available at https://www.livemint.com/industry/telecom/hc-to-hear-plea-against-trai-s-amended-tariff-order-today-11578940107777.html

[5] Available at https://www.barandbench.com/news/litigation/television-broadcasters-move-bombay-hc-against-trai-revised-tariff-order

[6] Available at https://www.thehindu.com/news/cities/mumbai/bombay-hc-refuses-to-grant-ad-interim-relief-to-broadcasters/article30570525.ece

[7] Available on: https://www.businesstoday.in/opinion/perspective/trai-new-tariff-order-to-take-a-toll-on-reach-and-revenue-of-niche-sports-channels/story/393129.html

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