Despite SC's verdict, Trai tariff order issue shifts to Delhi HC

The plea of the DTH operators speaks about how the framework or mechanism laid out by Trai is not sustainable
Legal issues pertaining to the recent tariff order by the Telecom Regulatory Authority of India (Trai) haven’t ceased, despite the Supreme Court verdict on Tuesday to Star India’s plea.

Action now shifts to the Delhi High Court, where direct-to-home (DTH) operators have challenged the order, said people in the legal industry aware of the matter. The court will hear a plea on November 12 by these companies asking for relief against what they term a “stringent regulation” by Trai. 

The plea, according to the people, speaks about how the framework or mechanism laid out by Trai, to package channels and their overall pricing, is not sustainable.

Trai has strict guidelines on channels that can be packaged in a bouquet and the price to be offered per channel, which should not be more than Rs 19 (per channel). In addition, channels that do not have a subscriber base of 5 per cent (of the viewership universe) cannot be carried in a bouquet, so as to prevent consumers being dumped with what they do not want to see, said experts tracking the matter.

Trai has also asked DTH operators to provide proper customer care centres, where consumer grievances can be handled effectively. DTH players have also been asked to provide proper timelines to consumers in the event of a complaint.

“The challenge (by DTH operators) is mainly on the basis of quality of service to be provided as laid out in the Trai order, which they (DTH players) say is not workable,” said Kunal Tandon, an independent lawyer and legal expert. 

“In a sense, the battle now shifts from a broadcaster-centric issue to a DTH-centric one, even though Discovery Networks (which runs the Discovery channel) has also challenged the regulation and tariff order (in court),” he said.

Even as DTH operators await the verdict from the Delhi High Court, media industry sources have said Star India is expected to come out with its reference interconnect offer (RIO) after the Supreme Court order on Tuesday.

Star was the only broadcaster that had resisted from providing its RIO, which details the number of channels in its bouquet, their pricing, and which channels will be part of the bouquet. Sony Pictures Networks India, which runs Sony Entertainment Television (among other channels), Zee Entertainment Enterprises (which has ZEE TV), and Viacom18 (which has Colors channel), had all come out with their respective RIOs in the last few months.

RIOs, under Trai regulations, have to be provided by both the broadcaster and the distributor, which means both DTH operators and multi-system operators (MSOs), said experts. While broadcasters can only enforce their RIOs once DTH operators and MSOs have agreed to its terms, the latter too will have to come out with RIOs in the event of a new channel or channels being added by broadcasters, indicating how they will package it within the existing bouquet. 

“With no bouquet channel being priced above Rs 19, it could negatively impact subscription revenue of broadcasters given such a price cap. Smaller and niche channels that do not have a large subscriber base may not be carried at all, impacting their business. The average revenue per user for a base of 100 channels could also move up, impacting subscription revenue from price-sensitive markets that were added following phase three and phase four digitisation,” said Karan Taurani, vice-president (research) at Elara Capital. 

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