INTERCONNECT AGREEMENTS MUST INCLUDE BOUQUET & A-LA-CARTE DEALS
The TRAI has observed that broadcasters often provided only Cost Per Subscriber (CPS) deals in their interconnect agreements and have failed to simultaneously offer their channels on bouquet and a-la-carte rates in the signed interconnect agreements.
The law requires broadcasters to strictly comply with the provisions of Clause 3C of the 2004 Tariff Order, & Clause 4 of 2010 Tariff Order.
A-LA-CARTE TARIFF ORDER
Clause 3C of the 2004 tariff order specifies that every pay channel must be offered on a-la-carte basis and must satisfy the twin condition for a-la-carte, viz:
a. The sum of the a-la-carte rates of the pay channels of a bouquet shall not exceed 1.5 times of the rate of that bouquet, &
b. The a-la-carte rate of each pay channel, shall not exceed 3 times the average rate of a pay channels of that bouquet.
Sub-clause 2 of clause 4 of the Tariff Order, 2010 dictates the following terms for the bouquet rates.
i. The same bouquets must be offered to nonaddressable and addressable systems.
ii. The bouquet rate for addressable systems shall not exceed 42% of the bouquet rate for nonaddressable systems.
A 'bouquet' or 'bouquet of channels' is defined as an assortment of distinct channels, offered together as a group or as a bundle.
When queried by the TRAI, why signed interconnect agreements contained only CPS rates, the broadcasters stated that under CPS agreements, all channels were given to a DPO (Digital Platform Operator - Digital Headend or DTH) at a single rate per subscriber per month. The DPO made payments to the broadcaster on the basis of the number of STBs carrying any or all the channels, irrespective of number of channels actually selected by subscribers.
The broadcasters further contended that the CPS-based agreements were mutually negotiated interconnection agreements that could not be construed as bouquets of channels and hence did not fall within the realm of a-la-carte or bouquet offerings, they did not contravene the provisions of Clause 3C of Tariff Order 2004, they argued.
The TRAI has completely disagreed with the broadcasters' justification for not offering bouquet and a-la-carte rates.
The TRAI has ruled that:
1. Since in the CPS agreements, an assortment of distinct channels is being offered together as a group or as a bundle, it is nothing but a bouquet of channels.
2. Provisions of the Tariff Orders of 2004 & 2010 are certainly applicable to all type of interconnection agreements, including mutually negotiated interconnection agreements, entered between the broadcaster and the DPOs.
To protect the interest of service providers & consumers, the TRAI has directed all pay channel broadcasters to compulsorily provide both bouquet and a-la-carte rates when providing pay channel signals, including in CPS agreements.