Trai: MSOs only have to build capacity for 500 channels

New Delhi: Telecom Regulatory Authority of India on Friday asserted that the Tariff Order for Digital Addressable Systems (DAS) had not ‘mandated‘ that multi-system operators (MSOs) must carry 500 television channels, but merely suggested they ‘create the physical capacity‘ to be able to do so.

Meet Malhotra, senior counsel for TRAI, stated before the Telecom Disputes Settlement and Appellate Tribunal (Tdsat) that it was also erroneous to say that there had been no application of mind or no study for fixing the ceilings or revenue sharing in the Tariff Order. ‘We do not need a detailed study to move from CAS to DAS‘, he added.

He reiterated during the hearing challenging the Tariff Order that no revenue share had been kept for broadcasters in the basic service tier of Rs 100 for 100 television channels as they were free to air and it was only the MSOs who had to download them and retransmit them to the local cable operators. The revenue share therefore was decided in the ratio of 55:45. In the case of the bouquet of a mix of pay and FTA channels, the maximum rate prescribed was Rs 150 with a revenue sharing of 65:35 between MSOs and LCOs. The MSO would work out his own terms with the broadcaster.

He also said that carriage and placement fee had a place in conditional access system because of bandwidth constraints and since channels sought placement in prime bands, but there is no such constraint in DAS as all channels will be arranged genre wise.

Since digitization uses compression, more channels can be carried, which he described as ‘optimal use of technology to bring a vast pool‘. Carriage fee is also been removed as it creates needless competition, he added.

When he sought to argue that the law did not say anywhere that carriage would not be payable if the MSO approached the broadcaster, Navin Chawla who had represented Delhi Distribution Company intervened to say that that the ‘must carry‘ made it mandatory for an MSO to get a channel that the subscriber asked for.

He added that the Statement of Objects and Reasons to the amendment of the Cable TV Networks (Regulation) Act 1995 itself had referred to creating a basic service tier and was not something that TRAI had thought of on its own.

Furthermore, he said that the law was clear that pay channels could be brought in by TRAI into its tiers if the Central Government was satisfied.

He also supported TRAI‘s stand in its defence of the 2010 Tariff Order, which TDSAT had struck down and against which TRAI‘s appeal was pending in the Supreme Court. He said that the wholesale price at which broadcasters and MSOs were now agreeing was in the range of Rs twenty.

Referring to constant comparisons to direct-to-home, he said the Cable Act did not cover DTH. There was therefore no logic in claims of similar revenue. Referring to the argument that there was no reference to broadcaster in the BST or the upper tier, he said even the licences given to DTH platforms did not have any mention to the broadcaster as the two worked out their own revenue sharing. In fact, he claimed that DTH was shaky in the face of DAS and the operators were therefore offering all kinds of incentives.

Malhotra said there appeared to be ‘too much transparency for the stakeholders to handle‘ in the Tariff Order. But he said that the Tariff should be allowed to work for some time and TRAI and the Government would themselves make changes if they are considered necessary.

When he claimed that some pan-Indian MSOs had already accepted the Tariff Order, counsel C S Vaidyanathan who had represented Digicable said these belonged to broadcasters.

Malhotra will conclude his arguments on 17 September.

Earlier, counsel Soumitra Ghose Chaudhuri on behalf of LCO Udaya Shankar Roy Chowdhury claimed that LCOs would also have to spend huge sums to upgrade their systems just as the MSOs had to do. This upgradation would work out to about Rs 1500 per subscriber, whereas the Tariff Order gave only Rs 45 in the BST.

In the higher tariff of Rs 150, the LCO and MSO stand to lose even more money if a subscriber chose to take only pay channels and no FTA channels.

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