TDSAT sets aside amendments for commercial & ordinary subscribers

NEW DELHI: Two amendments made by the Telecom Regulatory Authority of India (TRAI) to its tariff orders that aimed at preventing broadcasters from giving their channels directly to the subscribers and putting commercial subscriber at par with ordinary subscribers were today struck down by the Telecom Disputes Settlement and Arbitration Tribunal (TDSAT).

TDSAT chairman Aftab Alam and member Kuldip Singh said the two amendments were ‘quite unsustainable and we are thus constrained to set aside the impugned amendment orders.’

The amendments referred to are the Telecommunication (Broadcasting and Cable) Services (Second) Tariff (Twelfth Amendment) Order 2014 dated 16 July, 2014 and the Telecommunications (Broadcasting and Cable) Services (Fourth) (Addressable Systems) Tariff (Fourth Amendment) Order 2014 dated 18 July, 2014 by which similar amendments were made in the Telecommunication (Broadcasting and Cable) Services(Second) Tariff Order 2004 dated 1 October, 2004 (relating to non-addressable or analogue systems) and the Telecommunication (Broadcasting and Cable) Services (Fourth) (Addressable Systems) Tariff Order 2010 dated 21 July, 2010 (relating to addressable systems) respectively.

The Indian Broadcasting Foundation (IBF) and the Federation of Hotels and Restaurant Association of India (FHRAI) had challenged the amendments as the commercial subscriber is put at par with the ordinary subscriber and the tariff orders treat as equal groups of subscribers that are inherently unequal and are also so recognised in their different definitions in the tariff orders.

The impugned amendments introduce mainly three changes: firstly, the broadcaster is no longer allowed to provide its channels directly to a subscriber, be it an “ordinary subscriber” or a “commercial subscriber;” secondly, the terms “commercial establishment” and “commercial subscriber” are defined elaborately and classified separately from “ordinary subscriber” and thirdly, though defined and classified separately from “ordinary subscriber,” for the purpose of charges for receiving supply of channels, the very large and highly heterogeneous body of “commercial subscriber” is en-block put completely at par with the “ordinary subscriber.”

The appellants are aggrieved by the amendments in so far as the commercial subscriber is put at par with the ordinary subscriber and contend that as a result of the impugned amendments, the tariff orders treat as equal groups of subscribers that are inherently unequal and are also so recognized in their different definitions in the tariff orders.

The Tribunal said even while the hearing of the present appeal before the Tribunal was underway, TRAI issued the Telecommunication (Broadcasting & Cable) Services (Second) Tariff (Fourteenth Amendment) Order 2015 on 6 January, 2015 that inter alia restates the impugned amendments in the Second and Fourth tariff order. Consequently the appellants have filed an application for amending the appeal with a view to challenge the restatement of the impugned amendments in the fourteenth amendment of the Second tariff order.

Allowing the petition, TDSAT said proviso 6 and 7 to clause 3 of the fourteenth amendment along with the explanation appended to proviso 7 are also set aside.

It said TRAI must now undertake a fresh exercise ‘on a completely clean slate. It must put aside the earlier debates on the basis of which it has been making amendments in the three principal tariff orders none of which has so far passed judicial scrutiny. It must consider afresh the question whether commercial subscribers should be treated equally as home viewers for the purpose of broadcasting services tariff or there needs to be a different and separate tariff system for commercial subscribers or some parts of that larger body. It is hoped and expected that TRAI will issue fresh tariff orders within six months from to-day.’

TDSAT said that now that the impugned tariff orders are quashed, the question that arises is the rates that commercial establishments are to be charged, especially those that were excluded from the tariff protection by the seventh amendment of the Second tariff order until TRAI comes out with the fresh tariff order.

The seventh amendment to the Second tariff order and the first amendment to the Third (CAS Area) tariff order were quashed by the judgment of the Tribunal dated 28 May, 2010 but those were kept alive by the Supreme Court for a period of three months from 16 April, 2014, the date of the order by which the Court confirmed the Tribunal’s judgment.

As that period is long over, TDSAT said it would not be proper to revive the tariff amendment orders dated 21 November, 2006. As a consequence, the un-amended Second, Third and Fourth tariff orders will come into play and commercial subscriber would, by default, get bracketed with ordinary subscriber.

In other words though the impugned amendments in the tariff orders are quashed by this judgment, TDSAT said for practical purposes the situation will continue to remain the same. This is because despite two orders by the Supreme Court to consider the question of tariff in respect of commercial subscribers within specified times periods, TRAI has not been able to produce the tariff that would satisfy judicial scrutiny.

“This is evidently a highly anomalous situation and to remedy it TRAI must consider whether to issue an interim tariff order dealing with the matter until it takes a final call on the subject. TRAI should take a decision in regard to any interim arrangement within one month from today.”

The Tribunal said, “We are fully mindful that TRAI has been painstakingly grappling with this matter for a long time. We also recognise that the issue is highly complex and no easy answers are available. We feel that a good deal of confusion and misunderstanding has resulted from the fact that the seventh amendment of the Second tariff order came to be issued just three days before the pronouncement of the judgment by the Supreme Court in the first round of litigation. TRAI can hardly be blamed for this as it had acted in pursuance of the direction of the Supreme Court by which the Court had modified the status quo order passed at the time of the admission of the appeal. But the result was that in framing the seventh amendment to the Second tariff order, TRAI did not have the benefit of the pronouncement of the Supreme Court in the matter. At the same time the Supreme Court could not get to know how the First and the Second tariff orders were perceived by their maker, the regulator and to what object and purpose those tariff orders were made according to the regulator.”

The seventh amendment to the Second tariff order and the amendment to the Third CAS areas tariff order were eventually quashed by the Tribunal and in the judgment TRAI came in for some strong criticism.

TDSAT said it appeared that as a result of this, TRAI went to the other extreme in coming up with the impugned tariff orders. All the different kinds of commercial subscribers being put en block at par with the ordinary subscriber appears to be as arbitrary and unreasonable as the carving out of a very small segment of hotels [namely, (i) hotels with rating of three stars and above, (ii) heritage hotels and (iii) any other hotel/motel, inn and such other commercial establishment providing board and lodging having 50 or more rooms] for exclusion from the tariff protection.

“We are strongly of the view that what is required in the matter is a far more nuanced approach. We rather feel it is high time that TRAI should stop making any further amendments in the different tariff orders and take a completely fresh and holistic view on the question of tariff in broadcasting services. As a result of repeated amendments, the Second, Third and Fourth tariff orders have become so complicated that it has become difficult even to follow the exact import of a provision without examining all the amendments made earlier in the Principal tariff order. How much the tariff orders have become clumsy and unwieldy is evident from their very names as is sought be demonstrated in the opening lines of this judgment. We, accordingly, expect that as the whole country is now to come under the DAS regime, TRAI will undertake a fresh exercise and come out with a single consolidated instrument covering broadcasting services,” the Tribunal said.

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