Regulators

HITS to be treated at par with pan-India MSOs; TDSAT advises TRAI to frame consolidated Broadcasting Code

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NEW DELHI: In a judgment expected to have far reaching consequences on the Indian broadcasting industry, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) today said that headend-in-the-sky (HITS) players should be treated on the same level as pan-India multi-system operators (MSOs) for commercial purposes.

 

In a judgment on a petition filed by the Noida Software Technology Park Ltd (NSTPL) against Media Pro and others, the Tribunal said its judgment would come into effect from 31 March, 2016 by which time the relevant reference interconnect offers will be revised wherever necessary.



The Tribunal said, “It is difficult to see a HITS operator as different from a pan-India MSO and in our considered view a HITS operator, in regard to the commercial terms for an interconnect arrangement has to be taken at par with a pan-India MSO and must, therefore, receive the same treatment.”



Expectedly, the judgment will also help Hinduja Group’s HITS platform NXT Digital, which entered into the fray earlier this year.



TDSAT chairman Justice Aftab Alam and members Kuldip Singh and B B Srivastava said both Star and Taj, as well as the other broadcasters who have joined the proceedings as intervenors are directed to issue fresh RIOs in compliance with the Interconnect Regulations, as explained in the judgment within one month from the date this order becomes operational and effective. It will be then open to NSTPL to execute fresh interconnect agreements with Star and Taj, and with any other broadcasters on the basis of their respective RIOs or on negotiated terms within the limits.

 

Star and Taj will have to execute fresh interconnect agreements with the petitioner within two weeks from the date of issuance of their fresh RIOs. The agreement with Star would relate back to 30 October, 2015 and with Taj to 30 June, 2015. The issuance of the fresh RIOs by the broadcasters will also give right to other distributors of channels with whom the broadcasters may be in interconnect agreement to have their agreements modified in terms of clause 13.2A.7.

 

NSTPL had executed an RIO based agreement with Media Pro. At that time, it did not complain before the Tribunal that it was being forced into the RIO based agreement even though it had ample opportunity to do so as the Media Pro application was pending before the Tribunal. Later on, after Media Pro ceased to be an agent of the broadcasters, NSTPL, even after filing the present petition, signed RIO based agreements both with Star and Taj. The agreement with Star was for the period upto 30 July, 2015 and the two agreements with Taj were upto 31 March, 2015.

 

NSTPL must, therefore, be held bound by those agreements till the periods of those agreements and further, three months beyond that in terms of clause 8 of the Interconnect agreement. After those dates (29 October in case of Star and 30 June in case of Taj) the arrangement will be governed by the fresh agreements.



The Tribunal said the non-discrimination obligation, which TRAI acknowledges as the pivot of those regulations, appears inconsistent with a regime where parties are allowed full latitude to mutually negotiate their agreements and also not disclose the commercial terms of the agreement to other market participants.

 

There is the obligation to frame a meaningful RIO in which all bouquet and a la carte rates are specified, and there is also some room for mutual negotiation (even on rates) within certain specified parameters. This will achieve the objective of introducing a transparent non-discriminatory regime whereby distributors can obtain access to content, while still retaining some latitude to mutually negotiate the terms and conditions of access. It will also make the nexus between a la carte and bouquet rates, which the regulator thought fit to introduce, applicable to all mutually negotiated agreements. Negotiations must be within the parameters to those mandatory.

 

At the same time, TDSAT said it was conscious that the present judgment may unsettle the way in which various parties in the broadcasting sector have entered into existing agreements. “We are further conscious that while the TRAI has taken a position broadly in line with our conclusions in this case, that has not always been the case. As the Amicus Curiae and the counsel for the Petitioner have pointed out, the positions taken by TRAI in the past have not always been fully consistent. In particular, we note the observation of TRAI in Consultation Paper No.15 / 2008 that in view of the confidentiality restrictions, the automatic implementation of non-discrimination clause in Interconnect Regulation is practically difficult,” it said.

 

Thus, as far back as 2008, TRAI was aware that the non-discrimination clause – which, in these proceedings, it has sought to place on a very high pedestal – was effectively inoperative. And yet, matters in the broadcasting sector have been allowed to lie where they are by TRAI.

 

TDSAT said it had on past occasions as well, made similar suggestions with the hope of nudging the Regulator to take proactive steps to reduce the scope of disputes arising out of the Regulations. At the same time, the fact that regulatory intervention may be the ideal way forward cannot and should not be an excuse for this Tribunal to shirk the interpretative issues that have come before us. This is particularly so when there appears to be regulatory inertia.

 

This was the reason for suspending the operation of this judgment till 31 March, 2016. The judgment shall take effect on 1 April, 2016. “While we are aware that this is not a common procedure, we are of the view that it is appropriate in the peculiar facts and circumstances of this case, since the effect of this judgment may be to unsettle a number of existing agreements and necessitate re-negotiation,” the Tribunal said.

 

In the meanwhile it will be open to TRAI to undertake a comprehensive restructuring of the Regulations, which would hopefully clarify many of the issues that arise in these proceedings. “We make it clear that this Tribunal is issuing no such direction to TRAI. The delayed operation of the judgment is only to afford an opportunity to TRAI to consider the matter and act in the intervening period, if appropriate,” it further added.

 

As a greater part of the country would come under the DAS regime with effect from 1 January, 2016 the Tribunal said it would be advisable that TRAI should try to frame a consolidated Broadcasting Code instead of the large number of Regulations dealing with different aspects of the service and each having undergone numerous amendments. In order to make a serious effort in that direction, TRAI would be required to get hold of all the negotiated interconnect agreements between the broadcasters and the distributors of channels, which the broadcasters are in any event obliged to submit to TRAI. The Regulator may even feel the need to take a re-look at the tariff orders framed by it.

 

Needless to add that in case TRAI issues any fresh Regulations before 1 April, 2016, the petitioner and the broadcasters would be obliged to execute agreements on that basis. In case, however, no fresh Regulations are issued by TRAI, this judgment and order will come into effect from the aforesaid date and the parties would be obliged to follow the directions give above.



Suspension of this judgment is in the larger interest of the broadcasting sector. But this leaves open the question of the petitioner’s liability to pay licence fees to the broadcasters Star and Taj for their signals received by it during the pendency of the petitions before the Tribunal and further until execution of fresh agreements in terms of this judgment or in terms of fresh Regulations, if any, framed by TRAI. And since it will not be fair that the broadcasters should continue to supply signals to the petitioner without any payment for the next several months, some interim arrangement under which the petitioner should make payment of licence fees to the two broadcasters until after execution of fresh agreements accounts are finally reconciled. For this purpose, the petition against the broadcasters was de-tagged from this judgment and kept pending.

 

Star has already filed an application in Petition No. 314 (C) of 2015 claiming the dues of licence fees from the petitioner. Petition No. 526 (C) of 2015 is directed to be tagged with Petition No. 314 (C) of 2015. In these two petitions, the Tribunal proposes to determine the Petitioner’s liability to pay the license fees to Star and Taj on an ad hoc basis and as an interim measure until the execution of the agreements with the two broadcasters, and when the accounts of the two sides may be reconciled to determine any final liability of the Petitioner or Respondents to make any further payments.

 

It also made clear that all future deals between broadcasters and MSO/HITS players will be bound by the RIO agreements.

 

While the case was initially filed against Media Pro in mid-2014, NSTPL had subsequently in December last year filed another petition against Star India and Taj TV.

 

Since the issues in both petitions were similar and any judgment would affect the broadcasting sector as a whole, TDSAT had on 30 July this year issued a public notice asking all stakeholders to present their case on the issues involved.

 

In an earlier case in 2013 between NSTPL and Media Pro Enterprise India Pvt. Ltd. TDSAT had on 12 September, 2013 directed Media Pro to provide signals of its TV channels to NSTPL.

 

Later, NSTPL moved the Tribunal against Media Pro in which Taj Television Ltd and Star India Private Limited were brought in. Telecom Regulatory Authority of India (TRAI) was also a party in the two petitions of 2014.

 

The first petition 10 July, 2014, NSTPL raised some questions regarding RIO and wanted the Tribunal to declare Clause 3.2 of The Telecommunication (Broadcasting and Cable Services) Interconnection Regulation 2004, as amended from time to time should mandate that all distributors be offered the same rate per subscriber per month which is the rate specified in the broadcaster’s RIO, unless the conditions of Clause 3.6 of Interconnection Regulation are fulfilled.

 

It also wanted declaration in terms of Clause 3.6 of Interconnect Regulation to the effect that any discounted volume related scheme must be disclosed in a transparent manner, so as to enable the similarly placed distributors to avail of the same.

 

It demanded that Media Pro be directed to disclose the volume related schemes at which it offers TV channel signals to distributors that are similarly placed with NSTPL and permit NSTPL to avail of such schemes.

 

The second petition on 12 December, 2014 was against Taj and TRAI, which impugned the disconnection measures that had been initiated by Taj against NSTPL on account of alleged defaults like non-payment of certain amounts of subscription fees.

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