Trai allows 4% hike in cable prices

MUMBAI: The Telecom Regulatory Authority of India (Trai) has allowed an inflation-linked four per cent annual hike in cable TV prices (exclusive of taxes) with effect from 1 January 2006. This will be exactly a year after the broadcast and cable regulator had put a ceiling of seven per cent hike on cable TV prices.

Trai issued an Amendment order today to give effect to the inflation adjustment on the cable prices. "The new rates will be applicable for the payments to be made by consumers, cable operators, multi system operators (MSOs) for the month of January 2006," the regulator said.

Trai has used the Whole Sale Price Index (WPI) to determine the inflation adjustment rate. "On the basis of analysis done by us, the inflation adjustment works out to four per cent," Trai said.

The regulator had conducted the first periodical review for inflation adjustment during November 2004 and a notification was issued on 1.12.2004. It provided for an increase of seven per cent over the ceiling cable charges (excluding taxes) prevailing as on 26.12.2003. This increase was made effective from 1 January 2005.

Clarifying the rate hike, Trai said, "The total percentage increase on account of inflation (taking into account both the seven per cent increase permitted w.e.f. 1 January, 2005 and the proposed increase of four per cent w.e.f. 1 January, 2006) would work out to 11.28 per cent (seven per cent + four per cent + four per cent on seven per cent) when calculated with reference to ceiling cable charges (exclusive of taxes) prevailing as on 26 December, 2003."

Citing an example, the statement further said that if the cable charges (exclusive of taxes) prevailing as on 26 December, 2003 was Rs 200 per month, the increase in absolute terms on account of inflation adjustment at the permitted rates of seven per cent w.e.f. 1 January, 2005 and four per cent w.e.f. 1 January, 2006 would work out to Rs 22.56 - [(7/100x200) + (4/100x200) + (4/100x14)]. The total cable bill per month as per this example would work out to Rs 222.56 (200+14.00+8.00+0.56).

The actual extent of increase in absolute terms with reference to ceiling cable charges as on 26 December, 2003 would vary from case to case depending upon the actual cable charges that prevailed as on 26 December, 2003 in respect of a consumer /cable operator / MSO.

The Authority has separately issued a consultation paper on certain issues relating to tariffs such as provision of channels as separate channels and not as a bouquet, pricing of channels launched after 26.12.2003 and pricing of channels, which migrate from one distributor to another. Decisions on these issues will be taken separately after the consultation process is over, Trai said.

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