Scatmag.com

November 2018

SUPREME COURT APPROVES TRAI TARIFF ORDER



On 30 October 2018, the Supreme Court rejected STAR India & Vijay Television's appeal against the Madras High Court's decision in favour of the TRAI tariff order. This ends a long and contentious battle where the TRAI's basic regulatory authority itself was also challenged, and the industry and 10 Crore Pay TV consumers were held back.


THE SC CASE

Star had challenged the TRAI's jurisdiction to frame the tariff order!

Star contended that the tariff order did not allow the broadcaster to fully exploit intellectual property (IP) rights, as covered under the Copyright Act.

The broadcaster has also challenged the TRAI press release informing about the implementation of the regulatory framework from 3 July.


MADRAS HC VERDICT

In its 23 May 2018 order, 3 judges of the Madras High Court ruled in favour of the TRAI's Tariff order & Interconnection Regulation, except for a clause that was to restrict the bouquet price discount to not more than 15% of the a-la-carte price.


The Supreme Court's Emphatic Judgement Rejected Star India's Petition.

The Madras High Court's Order Against The 15% A-La-Carte Price Cap Has Also Been Cancelled.




SC JUDGEMENT

During arguments, Star's battery of lawyers insisted on its rights to fully exploit IP. The judge pointed out that this does not imply that Star is not subject to any other laws of the land!

The validity of STAR India's extended litigation is summarised in the last line of the Supreme Court's Verdict: "As there is no merit in these appeals, the same are, therefore, dismissed."


15% PRICE CAP

Some doubts have been raised whether the Supreme Court had allowed the 15% Cap in price difference between the a-la-carte & Bouquet prices of pay channels. Pages 85 to 87 of the judgement detail the court's view on the desirability of a price cap.:

"For example, when high discounts are offered for bouquets that are offered by the broadcasters, the effect is that subscribers are forced to take bouquets only, as the ala- carte rates of the pay channels that are found in these bouquets are much higher. This results in perverse pricing of bouquets vis-à-vis individual pay channels. In the process, the public ends up paying for unwanted channels, .... It is for this reason that discounts are capped. While doing so, however, full flexibility has been given to broadcasters to declare the prices of their pay channels on an a-la-carte basis."




SUMMARY

In summary, the Supreme Court's verdict is to completely implement the TRAI's original Tariff & Interconnection orders - 2017. Even changes suggested by the Madras High court have been rejected.


LOOKING AHEAD

This (New) TRAI Tariff Order is radically different from earlier tariff orders.

It provides for reasonable returns for Digital Platform Operators (DPOs) viz:

1. Distribution Fee From Pay Broadcasters

2. Network Capacity Fee from Consumers

3. Carriage Fee From FTA & Pay Channels

4. Placement Fees (Unregulated - To be negotiated between DPOs and broadcasters)

(DPO include Cable TV networks, HITS, DTH & IPTV platforms.)

In the December 2018 issue, we will provide a wealth of information on the new pay channel rates as well as revenue streams & guidelines for DPOs & Broadcasters.

Post Divali we will also share relevant information on our website: www.scatmag.com

Stay Tuned! n