Regulators

Tariff Hike Case: SC rejects appeal challenging TDSAT order; asks TRAI to out new tariff

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NEW DELHI: Dismissing the appeal challenging an 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, the Supreme Court today asked the Telecom Regulatory Authority of India (TRAI) to come up with new tariff as early as possible.

The Court also said that the multi-system operators (MSOs) will not insist on a refund of their payments to broadcasters but will wait for the new tariff orders.

Thus, the apex Court held intact the 28 April order of the Tribunal holding as ‘untenable’ the Telecommunication (Broadcasting & Cable) Services (Second) Tariff (Eleventh Amendment) Order, 2014’ and ‘The Telecommunication (Broadcasting & Cable) Services (Second) Tariff (Thirteenth Amendment) Order, 2014’.

Appellants Indian Broadcasting Foundation (IBF), Star India, Vijay Television, Viacom18 and Sun TV had sought stay on the ground of wholesale price index. They also sought to argue that there was consultation prior to issuance of the Tariff orders, which they said were not strictly Tariff orders.

While the appellants were represented by senior advocates Kapil Sibal and Abhishek Manu Singhvi, the defendant Home Cable Network Services Pvt Ltd and Vikki Choudhary were represented by senior counsel Aman Lekhi and Vivek Sarin.

When the appellants late last month sought early hearing, the Court asked TRAI not to give effect to its direction asking broadcasters to roll back the 27.5 per cent tariff hike for non-addressable areas until the next hearing. The regulator had on 27 July asked broadcasters to revise their wholesale tariffs, even though it had noted that the Supreme Court had declined to stay the TDSAT order.

In its order, TDSAT had said 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 Wholesale Price Index (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.

The IBF had come in as an intervener while the other interveners were direct to home (DTH) operators, MSOs, Association of Cable Operators and cable operators.

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 were based on increase in the WPI. In the Explanatory Memorandum with the Second Amendment to the Principal Tariff Order, it was explained that for making adjustments for inflation WPI 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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