TDSAT directs Hathway to enter into RIO pacts with Zee, Star India

NEW DELHI:  After a fiery battle that lasted over seven months, Hathway Datacom and Star India have been are directed to execute an interconnect agreement based on Star?s Reference Interconnect Offer for Star general entertainment channels and Star Sports channels by 30 September.

The Telecom Disputes Settlement and Appellate Tribunal (TDSAT), which had reserved orders in the ?deep-rooted? dispute between Hathway and others and Taj TV after a hearing that commenced on 25 August and continued on a day-to-day basis, also said Zee would also execute the RIO by 30 September in case it had not so far countersigned the RIO sent to it duly signed on behalf of Hathway.

TDSAT Chairman Aftab Alam and member Kuldip Singh in a 51-page judgment said in case Hathway has any objections to any of the clauses in the RIOs of Star and/or Zee, it would be open to it to make representations in that connection to TRAI. But the clauses under representations would continue to be binding upon it unless and until those are set aside or modified by TRAI.

Hathway has also been asked make payment of licence fees to the broadcasters at the RIO rates from the date of execution of the RIO based agreement.

For the interregnum between the expiry of the previous agreement and coming into existence of the new RIO based agreement, the Tribunal said Hathway will pay for the Star GEC channels and Zee at the rate of Rs 23 cost and Rs 21.50 respectively per subscriber. The licence fee on CPS basis as directed will be computed by taking into account every set top box by means of which any Star channel is viewable.

Hathway will pay the licence fee to Star Sports at the rate of Rs four cost per subscriber for the interregnum between the expiry of the previous agreement and coming into existence of the new RIO based agreement. The licence fee on CPS basis as directed will be computed by taking into account every set top box by means of which any Star Sports channel is viewable.

Taking into consideration the payments made earlier by Hathway, the payments will be made following reconciliation of the accounts.

Before parting with the case, the Tribunal said it was ?constrained to observe that the TRAI has failed to examine the rates quoted in the RIO submitted before it from the point of view indicated above. In an earlier judgment [Petitions nos.836(C)/2012 & 382(C)/2011 ? Dish TV India vs. ESPN Software India, we had asked the TRAI to pay attention to this aspect of the matter but unfortunately our observations failed to receive due attention. We reiterate the urgent need for TRAI to examine the RIOs submitted to it, especially the rates quoted by broadcasters and MSOs, to make these serve the purpose as intended in the regulations.?

The Tribunal ?categorically rejected? the submission made on behalf of the broadcasters that publication of their RIO on their websites satisfies the condition to act non-discriminatingly. However it added that though this may be the ideal, it can never be accepted as valid having regard to the way RIOs are being framed by the broadcasters and the MSOs at present. ?In the state in which we find the RIOs at present, this argument becomes a ploy to turn the RIO into a coercive tool and a threat to the seeker of the TV channels, and it undermines the essence of the regulations, which is to promote healthy competition by providing a level playing ground?, the Tribunal added. 

The Tribunal also clarified that its observation was not directed to the broadcasters in this case alone, but found true not only of most of the broadcasters but also of multi-system operators in their dealings with the seeker of the signals below them in the distribution line. ?We find, in case after case, an MSO or an LCO complaining that it was being required (by the broadcaster or the MSO, as the case may be) to take the signals at the price quoted by the provider or to sign on the dotted lines in the RIO.?

It noted that the ?Reference Interconnect Offer?, as defined under the Regulations, is a positive concept and if framed properly it should go a long way in ensuring a level playing ground. In Europe, and in an increasing number of jurisdictions worldwide, incumbent operators and/or those with significant market power are required to produce a RIO. This Specimen offer provides a common and transparent basis for all agreements for the provision of interconnection services subject to regulation. It also helps to ensure that new entrant operators can be confident of gaining terms which will not be less favourable to those applied to others (including the interconnection provider?s own retail operation).

The RIO may therefore be said to define the parameters of negotiations for arriving at an agreement on mutually acceptable terms. It may be argued that the RIO must contain the details and rates relating to all the bases on which the maker of the RIO intends to enter into a negotiated agreement, the Tribunal said.

It noted that ?unfortunately?, RIOs are framed in India seemingly in negation of these attributes. ?RIOs mostly give only a-la-carte rates and even those rates are fixed with reference to the maximum permissible under the tariff orders. But in reality the maker of the reference would be giving signals to most parties, or at least its favoured ones, at rates far lower than those stated in the RIO. In other words, the RIO rates are completely divorced from the market rates. The vast difference between the realistic market prices and the rate in the RIO gives the provider a free hand to quote a price much higher than the market price to a new seeker or one in disfavour, a price that would be commercially unviable and force the seeker either to accept that price or to accept the RIO.?

Furthermore, Clause 4(1) of the DAS Regulations requires the RIOs to be submitted to the TRAI and clause 6 requires that any amendments in the RIO must also be similarly submitted to the Telecom Regulatory Authority of India. The Regulations thus imply the endorsement of the RIOs by TRAI and that gives the RIOs a certain degree of sanctity. ?

Before the Tribunal reserved its order on 10 September, Star India had filed an affidavit in which it said it would ?henceforth? enter into agreements under the RIO on a year-to-year basis with all multi-system operators. It said the RIO would commence three months after the expiry of the erstwhile agreement and would only be on the basis of a published RIO. It also said it was sign any new agreement on cost per subscriber basis with MSOs operating at national level.

However, it listed eight MSOs working at regional or state level with which it already has CPS agreements and said these will continue for the term for which they are valid and thus last the full term.

The eight MSOs are Inspire Infotech Pvt Ltd of Delhi, Novabase Digital Entertainment Pvt Ltd of Delhi, E-Infrastructure and Entertainment Pvt (India) Ltd of Bangalore, Satellite Channels Pvt Ltd, of Delhi, Poona Cables Systems and Services of Pune, Sky Channel of Delhi, Home Cable Networks of Chittore District in Andhra Pradesh, and City TV of Coimbatore.

During the hearing, the Tribunal heard various counsel on behalf of Taj TV and Zee TV, Star India, Hathway, Bhaskar (MSO) from Jabalpur and Scod, an MSO from Mumbai and Navi Mumbai.

When listing the case for 25 August, the Tribunal had said: ?unfortunately, the dispute between the two sides is playing out in highly aggressive way and one may add in a rather unpleasant manner. It seems to be affecting a large number of people in viewing their favourite TV channels. The disputants themselves are approaching the Tribunal on a weekly basis complaining against the actions of each other and seeking some interim directions of the Tribunal consuming a lot of time on arguments on miscellaneous applications.?

The Tribunal noted that both sides had assured the Tribunal that they would avoid issuing the offensive advertisements against each other.

In the order last month, the Tribunal directed Taj TV to file their respective replies in petitions nos.319(C) of 2014 and 47(C) of 2014 and asked Hathway to file its rejoinder.

The Tribunal noted that the dispute has arisen at a stage when the earlier fixed fee agreement between the parties has come to end and they are unable to come to agreed terms for a fresh agreement and under the circumstances the MSO has no option but to take the broadcasters? channels on their RIO terms.

Earlier last month, TDSAT had directed Taj Television to restore with immediate effect the signals of Zee TV channels to Hathway Cable and Datacom pending the final hearing a petition by the latter.

It had also directed Hathway as an interim measure to make payment of the monthly subscription fees from 1 April 2014 (in case of in case of Kolkata and Digital Addressable System - II areas) and from 1 May 2014 (in case of Delhi and Mumbai) up to 31 July at the of Rs.21.60 cost per subscriber basis.

Zee Channels were earlier being distributed to Hathway by Media Pro but the latter was not in a position to renew the agreements In view of the Aggregator Regulations issued by the Telecom Regulatory Authority of India in February this year, around the same time the earlier agreements came to end.

Thus, the Zee group of channels came to be handled by Taj Television. But when discussions between Hathway and Taj Television for Zee TV channels failed to yield any results, Taj TV on 26 June sent the RIO based agreement executed from its side. There was delay on the part of Hathway in executing the RIO based agreement and in the meanwhile Taj Television issued the disconnection notice under regulation 6.1 on 8 July 2014 and the public notice under regulation 6.5 on 11 July 2014. However, Hathway later counter-signed the RIO based agreement and sent it back to Taj Television which refused to accept a cheque sent by Hathway. This led to the petition by Hathway.

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