Regulators

Supreme Court declines to stay TDSAT order cancelling inflation-linked hike

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NEW DELHI: The Supreme Court has declined to stay the order of the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) setting aside the amendments in two tariff orders, which had sought to put an inflation-linked hike of 27.5 per cent on addressable and non-addressable systems.

While listing the appeal for hearing on 1 July, Justice V. Gopala Gowda and Justice C. Nagappan said it would only consider the matter if matters of law were involved.

Earlier, counsel for the Indian Broadcasting Foundation (IBF) and some broadcasters sought stay on the ground of wholesale price index. They also sought to argue that there was consultation prior to issuance of the Telecommunication (Broadcasting & Cable) Services (Second) Tariff (Eleventh Amendment) Order, 2014? and ?The Telecommunication (Broadcasting & Cable) Services (Second) Tariff (Thirteenth Amendment) Order, 2014? and these were not strictly tariff orders.

However, counsel Vivek Sarin and Aman Lekhi for Home Cable Network, the Centre for Transforming India, Lucknow 9 Cable Network, Good Media News India Pvt Ltd, Sikkim Digital Network and Cable Combine Communication Siliguri said that the wholesale price index could not be applied in this case as WPI was applicable to labourers wages or products that were linked to agriculture since the WPI was fixed on the basis of prices of agricultural products

TDSAT chairman Aftab Alam and member Kuldip Singh said in their order dated 28 April that the ?The Telecommunication (Broadcasting & Cable) Services (Second) Tariff (Eleventh Amendment) Order, 2014? and ?The Telecommunication (Broadcasting & Cable) Services (Second) Tariff (Thirteenth Amendment) Order, 2014?] were ?untenable.?

The Tribunal also said it thought the Telecom Regulatory Authority of India (TRAI) ?will be well advised to have a fresh look at the various tariff orders in a holistic manner and come out with a comprehensive tariff order in supersession of all the earlier tariff orders.?

?While doing so, it may consider all the agreements and relevant data available with it. It may consider differentiating between content which is of a monopolistic nature as against that the like of which is shown by other channels also.?

?It may also consider classifying the content into premium and basic tiers. It may identify the major cost components so that increase or decrease in such costs may be suitably factored while working out the inflationary hikes. Increase in costs of such components as may be available in indexes such as WPI, GDP deflator etc. can then be applied. While working out the tariffs, the effort should be to encourage a correct declaration of SLR. While carrying out the exercise, it may take the inputs from various stakeholders and give a reasoned order for accepting or rejecting the same. We want to be amply clear that the above are only some suggestions and TRAI being an expert body may arrive at suitable tariffs independently; it is up to it to consider the above and/or any other factors,? the Tribunal said.

Later, IBF supported the order as intervener while other interveners including Direct to Home (DTH) operators, Multi System Operators ( MSOs), and Association of Cable Operators opposed the order on the same grounds as the Appellants.

TRAI had allowed a 15 per cent hike from 1 April, 2014. The second installment of 12.5 per cent tariff hike came into effect from 1 January, 2015.

TRAI said the inflationary increases given by it are based on increase in the Wholesale Price Index (WPI). In the Explanatory Memorandum with the Second Amendment to the Principal Tariff Order, it was explained that for making adjustments for inflation Wholesale Price Index (WIP) had been used. It was explained that Consumer Price Index (CPI) was not used as latest information for this was not available and further this related to certain specific consumption baskets. As per the Explanatory Memorandum to the impugned Tariff Order, the WPI has increased by 43.69 per cent and giving a pass through of 63 per cent, an inflation linked increase of 27.5 per cent is allowed.

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