TDSAT upholds Rs 5 tariff by Trai, imposes costs on ESPN Star and Set Discovery

NEW DELHI: The Telecom Disputes Settlement Appellate Tribunal (TDSAT) today upheld the tariff of Rs 5 per channel fixed by Telecom Regulatory Authority of India (Trai) against which three broadcasters had appealed. It also imposed a cost of Rs 50,000 for each of the broadcasters in favour of the sector regulator.

In its pronouncement on the appeal filed by Set Discovery, ESPN Star Sports (Singapore) and ESPN Software India, TDSAT held that the case was devoid of merit, and thus the appellants are liable to pay costs, totaling Rs 150,000, to Trai, which had proved its case.

In a related development, some of the respondents in the case that includes Trai, Indus Ind Media and Communications Limited, and Hathway Cable & Datacom Private Limited, have filed a Caveat in the Supreme Court, since the broadcasters are most likely to appeal against the TDSAT order in the apex court.

While giving its ruling, TDSAT said that the broadcasters had themselves said that 70 to 80 per cent of their revenues come from advertisements, and the bench noted that "at various fora", it has been argued by the broadcasters that they also generate revenue through sub-licensing and through fees paid by consumers in sending SMSs to the channels.

It held that the same broadcasters had said that due to underdeclaration by LCOs and MSOs, they get only 20 per cent of the subscription revenue actually generated.

The tribunal noted that under the Cas regime, wherever Cas has been implemented, there is no longer a question of underdeclaration, and therefore, data on subscription revenue is 100 per cent.

In this situation, whereas the broadcasters were - as they themselves said - earning only 20 per cent from subscription, the Trai order on Interconnection gave them 45 per cent, which is a sea change.

Hence, going by the arguments of the broadcasters themselves, the case is devoid of merit and liable for dismissal, with a cost of Rs 50,000 per appellant.

The tribunal, comprising the full bench of chairperson Arun Kumar, and members DP Sehgal and Vinod Vaish, made the following observations:

"We have carefully considered the procedure undertaken by Trai for conducting the exercise. We have also considered the justification for the regulation. We find that the approach of Trai in regulating the CAS regime at its introductory stage in the notified areas is fully justified.

"We find nothing wrong in the process undertaken by the Authority. In this connection we note that the Trai was conscious of its difficulties and the problems which it had to face while conducting the exercise.

"It was a virgin field and the Chennai model could not serve as a good guide. The exercise was complex and it was made all the more difficult by the non-cooperative attitude of the broadcasters. In the given circumstances, Trai, in our view, has acted fairly by balancing the competing interests.

"The Authority has promised to revisit the issue, including consideration of deregulation if the circumstances so warrant. The experience to be gained after introduction of CAS would enable it to reconsider everything.

"This being a transitory phase, the appellants ought to have had patience and ought to have waited till Trai was able to revisit the issue. The hurry on their part to raise the issue before this Tribunal was not necessary.

"We also cannot help observing that the broadcasters are either unmindful of the fact that they stand to gain in the CAS regime or they are intentionally feigning lack of knowledge of this fact.

"To say the least, they have not been fair in placing their case before us. We find no merit in these appeals. They are liable to be dismissed. We order accordingly. Appellants will bear the costs of the Respondent, Trai which we quantify at Rs 50,000/- for each appeal. Costs are awarded only in favour of Trai," the TDSAT order concluded.

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