TRAI warns Pay Broadcasters against ignoring cost per subscriber in interconnect agreements

NEW DELHI: All the broadcasters of pay channels have been asked by the Telecom Regulatory Authority of India to strictly comply with the provisions of clause 3C of Tariff Order, 2004 and clause 4 of the Tariff Order, 2010 at the time of providing signals of TV channels including in term of Cost Per Subscriber agreements.

In its direction, TRAI said this was being done “to protect the interest of service providers and consumers” under Section 13, of the TRAI Act 1997, clause 4A of the Telecommunication (Broadcasting and Cable) Services (Second) Tariff Order 2004, and clause 10 of the Telecommunication (Broadcasting and Cable) Services (Fourth) (Addressable Systems) Tariff Order 2010.

Following a Supreme Court interim order of 18 April 2011, the rate of a bouquet of channels of addressable systems shall not be more than 42 per cent of the rate of such bouquet as specified by the broadcaster for non-addressable systems. 

The Authority also pointed out that the Tariff Order, 2010 defines bouquet or bouquet of channels and bouquet rate or rate of bouquet as an assortment of distinct channels offered together as a group or as a bundle. The ‘bouquet rate’ or ‘rote of bouquet’ means the rate at which a bouquet of channels is offered to the distributor of TV channels or to the subscriber, as the case may be.

The Regulator said that on examination of the information relating to the interconnection agreements filed by the broadcasters under the Register of Interconnect Regulations 2004, the Authority noted that in many cases the agreements are signed in the name of CPS deals between the broadcasters and Distribution Platform Operators (Multi System Operators providing cable TV services through Digital Addressable Systems and DTH operators) for offering of channels of the broadcasters in different formations, assemblages and bouquets for a group or a bundle of channels.

The Authority in a letter on 1 December 2015 requested the broadcasters of pay channels to clarify the exact nature of CPS agreements being executed with different Distribution Platform Operators and also explain how CPS agreements comply with the existing regulatory framework including the provisions of clause 3C of Tariff Order 2004.

Most of the broadcasters, in their responses stated that all the channels of a broadcaster are given to a Distribution Platform Operator at a single rate per subscriber per month under CPS agreements. The Distribution Platform Operator pays to the broadcaster on the basis of the number of Set Top Boxes carrying any or all the channels of the broadcaster irrespective of number of channels of the broadcaster actually opted by subscribers.

Most of the broadcasters in their response stated that CPS based agreements are purely mutually negotiated interconnection agreements and cannot be construed as bouquet of channels and hence do not fall within the realm of' a-la-carte or bouquet offerings and; since CPS agreements do not fall within the category of a-la-carte or bouquet offerings therefore such agreements do not contravene the provisions of the clause 3C of the Tariff Order! 2004.

After examining the response of the broadcasters in pursuance of

the provisions contained in sub-clauses (2) and (3) of clause 3C of the Tariff Order 2004 and the definition of bouquet or bouquet of channels in the Tariff Order 2010, and concluded that this nothing but a bouquet or bouquet of channels being given as an assortment of distinct channels being offered together as a group or as a bundle in the CPS agreements.

And whereas the provisions of the Tariff Order 2004 and Tariff Order 2010 are applicable to all type of interconnection agreements, including mutually negotiated interconnection agreements, entered between the broadcaster and the Distribution Platform Operators and the definition of bouquet or bouquet of channels in the Tariff Order 2010, the conditions specified in sub-clause (2) of clause 3C of the Tariff Order 2004 are applicable on the CPS agreements signed for an assortment of channels offered together as a group or bundle of channels.

It stressed that sub-clause (3) of clause 3C of the Tariff Order 2004 was clear that a broadcaster may offer discounts to Distribution Platform Operators on a-la-carte rates of its channels or bouquet rates and such offer of discount in no case will directly or indirectly have effect of contravening the provisions of sub-clause (2) of clause 3C of the Tariff Order 2004.

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