Trai initiates Cas tariff regime relook

NEW DELHI: Broadcasters are already beaming with the Telecom Regulatory Authority of India issuing a consultation paper on revisiting the tariff regime in non-Cas areas, stating that the previous order is already two years old and there have been several developments, including the coming of DTH, IPTV and other platforms.

One area where the broadcasters would surely look to benefit is the upward revision of 4 per cent additional increase in price that was to come into effect from 1 January last year, with the basic objective of evolving a methodology to compensate for the increase in costs, but which had been stayed by TDSAT, the sector tribunal.

The paper says that TDSAT has now allowed Trai to take this issue up and if necessary fix new upward scaling of prices, as the previous order had remained under stay for almost one year, and even if TDSAT now vacates the stay, it would be impossible for the broadcasters to recover their dues.

Trai has said that the paper, which was issued today, also takes into consideration of the experiences of all the stakeholders during the past two years of control regime, which had been imposed because the market place had not matured for competition to settle the pricing by itself.

Broadcasters said this is a welcome state as the issue had been relegated to the backburners for too long. However, they did not envisage a common front of broadcasters emerging to give a unified presentation, though there would be obvious similarities of views on issues of common concern.

"The costing of content is admittedly a very complex exercise and if it had been possible to work out a standard representative cost of a channel the annual review could have been possible on the basis of such cost itself," the paper says.

It adds: "In this manner the objective of preventing whimsical price increases in cable TV, which was at that time largely monopolistic in the absence of DTH, was facilitated.

"In regard to the increase allowed on account of inflation, there can be arguments that the ceiling charges fixed by TRAI were not based on cost but on historical prices. Therefore, the increase on account of inflation to cable bills, which is not based on cost, is incorrect."

Trai has outlined the basic issue for consultation as follow:

  • In view of the facts that there are questions of effectiveness of the existing tariff regime, and because that there have been developments over the last two years leading to increased competition from other alternative platforms, should there be a total forbearance of tariff in regard to non-CAS areas?

  • In the event that answer to (I) is ‘yes‘, is there a need for providing checks and balances and if so what specific measures would you suggest from the point of view of providing protection to the subscribers?

  • In case forbearance as an option is not advisable,

  • a) Should the existing ceiling on cable charges payable by the cablesubscriber to Cable Operator, Cable Operator to MSO and MSO to broadcasters as prevailing on 26.12.2003 be allowed to continue for non-CAS areas with adjustments on an annual basis for inflation based on wholesale price indices as done presently?

    • If the existing approach for inflation adjustment based on wholesale price indices is not appropriate, would the method of indexing used for determining cost of assets for the purpose of capital gains tax be an appropriate method?

    • If not what other alternative methods would you like to suggest? (Explain in detail the method and with sample working and cite international practices if any).

    • In case of the option at (III) (a) is considered should the reference date for determining the ceiling on cable charges be shifted to 1.1.2007 instead of the existing reference date of 26.12.03, and then permitting changes thereafter for new channels and annual inflation adjustment etc?

    • Can the existing regime be replaced by prescribing a overall ceiling on monthly cable charges (exclusive of taxes) payable at the level of the end consumers? If this is to be done, how would the following aspects relating to such an approach, in the light of observations in paras 2.20 to 2.27 be dealt with:

    • Whether the overall ceiling on monthly cable charges can be determined in the manner indicated in para 2.27? Is there any other method of arriving at the specified ceiling on monthly cable charges and what that method should be?

    • Should there be a single overall ceiling on monthly cable charge or should there be different ceilings separately for metros, urban areas and non-urban areas? If so what should that ceiling be in respect of each such category of areas and how such ceiling should be arrived at?

    • What should be the yardstick or basis for categorization of areas into metros, urban and semi urban areas?

    • Should the overall ceiling on monthly cable charges be accompanied by a prescription of a minimum number of FTA channels and pay channels? Would the suggestion contained in para 2.26 be acceptable?

    • If yes what would be the appropriate number of channels separately for FTA and Pay that should be specified?

    • If such overall ceilings are fixed, then how and at what periodicity should this be reviewed, in view of various market developments that may come about ?

    • An appropriate methodology for factoring in the impact of such market development in the overall ceiling may also be suggested.

    • "In the event of the proposal at IV (a) above being considered what method should be adopted in respect of tariff determination in regard to cable charges payable by MSO to broadcaster and Cable Operator to the MSO?

    • Can the tariff determination be left to the market forces?

    • In view of the fact that even in non-CAS areas, the transmission of channels from the broadcaster to the MSO is in ‘addressable" format, would it be advisable allow a-la carte choice for MSOs in the context of observations contained in para 2.25? If so, what should be the elements of such tariff regulation at wholesale level?

    • Should the decisions be different in respect of the residual category of commercial cable subscribers (other than those for whom there is forbearance in terms of tariff amendment orders of 21st November 2006) or the decision applicable to the ordinary cable subscribers should be made applicable to them as well

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