Scatmag.com
Scatmag.com

June 2016

TRAI CANCELS ITS EARLIER ANALOG TARIFF INCREASE


The 27.5% inflation based wholesale (broadcaster to MSOs) tariff hike issued by the TRAI for non DAS networks has been cancelled on 10 May 2016. The TDSAT had ruled against it & the Supreme Court had asked the regulator to reconsider the order.

The move is seen by industry observers as inevitable, since 2 courts had advised the TRAI to reconsider the price hike. The TRAI has however issued the hike cancellation order, based on its own reasoning, (which is quite the opposite of its earlier reasoning) rather than admitting to directions of the TDSAT and the Supreme Court.


Broadcasters Must Immediately Reduce Their Pay Channel Prices To Analog Headends By 27.5%.



BACKGROUND

On 31 March 2014, the TRAI issued a tariff order allowing broadcasters to hike their prices to analog cable TV networks by 27.5%. A 15% hike was permitted from 1 April 2014 and a further 12.5% hike was permitted from 1st January 2015. The TRAI reasoned that both hikes were to compensate for inflation, and were computed based on the government's inflation figures in the past 5 years when annual tariff hikes were not issued, since the matter was pending in courts.

Passing on the 27.5% hike in a single stroke would not be appropriate for the market and consumers. Therefore, the hike will be implemented in 2 phases, the TRAI had said in March 2014.

The 27.5% incremental tariff was applicable only to analog Cable TV Headends, and not for DAS Headends.





TDSAT REJECTS ORDER

The TRAI's order was challenged by Cable networks. The TDSAT set aside the tariff hike & directed TRAI to reconsider the matter. The TDSAT also raised specific issues with the TRAI's reasoning and justification for the inflation based price hike.


As Per Earlier TDSAT Order, All Pay 27.5% Extra Payment Received Must Be Refunded.


SUPREME COURT REJECTS ORDER

The Indian Broadcasting Foundation (IBF) challenged the TDSAT order in the Supreme Court, which upheld the TDSAT judgment. The apex court also directed TRAI to issue fresh orders.


TRAI NOW RELENTS

The TRAI has now admitted that the Compound Annual Growth Rate (CAGR) on revenues to broadcasters far exceeded the annual inflation figures.

"Consequent to aforesaid analysis of the facts, the authority has observed that there is a healthy growth in the industry with rise in revenues outstripping the increasing inflation over the years and therefore concluded that inflation-linked hike provided earlier vide 11th T.A.O. and 13th T.A.O. dated 31 March 2014 and 31 December 2014 respectively, which have been set aside by Hon'ble TDSAT vide its order dated 28th April 2015 & the said order of Hon'ble TDSAT has also been upheld by the Hon'ble Supreme Court of India, are not required at present," according to the TRAI's 10 May 2016 order.



RELIEF TO ANALOG CABLE

With the TRAI reversing its 27.5% hike to analog Cable TV Headends, all pay channels are required to immediately reduce their subscription prices to analog cable Headends by 27.5% effective 10th May 2015.


REFUND OF PAST PAYMENTS

TDSAT in its order had asked the TRAI to reexamine its stand on the price hike. Further, it had asked all stake holders to maintain separate accounts for the increase charged, which is to be refunded in case the appeal succeeds.

Based on the TDSAT's instructions, all pay channels will need to refund all past 27.5% incremental payments made by analog cable TV Headends to broadcasters.

It is unfortunate that the order comes so late... well after DAS Phases 1, 2 & 3 have concluded, leaving only a few months before analog cable TV is shut down countrywide after 31 December 2016.


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