Trai's Tariff Order is faulty, MSOs tell Tdsat

NEW DELHI: The multi-system operators (MSOs) today said it was erroneous on the part of the Telecom Regulatory Authority of India (Trai) to contend that they could earn their revenue from carriage fee and other services provided by them.

Counsel C S Vaidyanathan and Arun Kathpalia on behalf of Digicable Networks and C. Aryama Sundaram on behalf of Indusind Media & Communications Ltd (IMCL) told the Telecom Disputes Settlement and Arbitration Tribunal (Tdsat) that the Trai Tariff order was clear an MSO approaching a broadcaster to get a channel on demand will not be entitled to get carriage fee.

Concluding the arguments he had commenced yesterday, Vaidyanathan said the MSOs were all for the digital addressable system but after sorting out the ‘unworkable problems’.

According to the Trai tariff order, charges collected from the subscription in the basic service tier (BST) of 100 free to air television channels (FTA) for Rs 100 will be in the ratio of 55:45 and that of paid channels or bouquet of paid channels will be a maximum of Rs 150 and shall be shared in the ratio of 65:35 between MSO and the local cable operator (LCO) respectively.

Sundaram said the Tariff order was clear in placing obligations only on the MSO, while there was nothing of this kind on the broadcaster or the LCOs.

While supporting the arguments of Vaidyanathan, Sundaram said that the MSO will make just one and a half times above what the broadcaster pays him, but he will have to share this with the LCO. Thus, the MSO will end up paying from his pocket to meet the demands of the LCOs as well as the broadcasters.

As an example, he said that he will have to pay around Rs 100 to the broadcaster and Rs 52.50 to the LCO out of the Rs 150 for the bouquet of paid and FTA TV channels. The 65:35 ratio was unworkable as the MSO would have to pay out of pocket.

He said a tariff order should mean fixing of tariff, but all that Trai had done was to fix a ceiling for the BST and for the bouquet of paid and FTA channels.
The provision for carriage fee in the Tariff order becomes unworkable when read with the Interconnect Order, he said. Furthermore, he said the Tariff order had also forbidden any placement fee.

He said that Trai had mandated that an MSO will have to make arrangements for 500 channels, and the MSO could only do this by spending hugely on technology.

There were around 300 FTA channels and, therefore, even the BST would be different for every consumer, with the result that different combinations will have to be made.

He also wondered why Trai had not fixed any rate for the broadcaster to pay as carriage fee, noting that this will mean that a broadcaster can give the same content at different rates for MSO, DTH, and IPTV.

The Trai Act was clear that under Section 11(2), the sector regulator should fix the tariff and not merely give a ceiling or a revenue sharing formula.

He said clearly there was non application of mind in the explanatory memorandum to the Tariff Order, and he also said there was clearly no study or research for fixing the formula.

Kathpalia said there was also fear of monopoly as two broadcasters had joined together to set up their own cartel distribution with vertical interest in some MSOs Thus, there was no level playing field for the MSOs.

Arguments will continue tomorrow as Tdsat also has to hear further arguments on behalf of Digicable and a petition by Delhi Distribution Company, New Delhi.

Also read:

Trai Tariff Order not based on any study or rationale: Counsel

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