Telecom Regulatory Authority of India Notification New Delhi January 15, 2004 / Pausa 25, 1925 No. 301-3/2004-Eco In exercise of the powers conferred upon it under sub-section (2) of section 11 of the TRAI Act, 1997 as amended read with the Notification No.39 dated 09.01.2004 issued from file No.13-1/2004-Restg. by the Government of India under clause (d) of sub-section (1) of section 11 and proviso to clause (k) of section 2 of the Telecom Regulatory Authority of India Act, 1997 to notify, by an Order in the Official Gazette, tariffs at which Telecommunications (Broadcasting and Cable Operation) Services shall be provided, the Telecom Regulatory Authority of India hereby makes the following Order.

THE TELECOMMUNICATION (BROADCASTING AND CABLE) SERVICES TARIFF ORDER 2004 [1 of 2004 ]

Section I Title, Extent and Commencement 1.

Short title, extent and commencement: i. ii.

iii.

This Order shall be called “The Telecommunication (Broadcasting and Cable) Services Tariff Order 2004”. The Order shall cover tariffs for all Telecommunication (Broadcasting and Cable) Services throughout the territory of India as also those originating in India or outside India and terminating in India. The Order shall come into force on the date of its notification in the Official Gazette.

Section II Tariff 2.

The charges payable by (a) Cable subscribers to cable operator; (b) (c)

Cable operators to Multi Service Operators/Broadcasters (including their authorised distribution agencies); and Multi Service Operators to Broadcasters (including their authorised distribution agencies) Prevalent as on 26th December 2003 shall be the ceiling with respect to both free-to-air and pay channels, both for CAS and 493

non-CAS areas until final determination by Telecom Regulatory Authority of India on the various issues concerning these charges.

Section III 3.

Explanatory Memorandum Annex A to this Order contains an Explanatory Memorandum for the issue of this Order.

Section IV 4.

Interpretation In case of dispute regarding interpretation of any of the provisions of this Order, the decision of the Authority shall be final and binding.

BY ORDER Dr. Harsha Vardhana Singh Principal Advisor cum Secretary Telecom Regulatory Authority of India

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ANNEX A

EXPLANATORY MEMORANDUM

2.

3.

4.

5.

able Television Networks (Regulation) Act, 1995 was amended in 2002 and Section 4A was inserted in the original Act which envisages “Transmission of programmes through addressable system” [popularly referred to as Conditional Access System (CAS)] with effect from such date as may be specified in the Notification. A Notification dated 14th January 2003 was issued by the Ministry of Information and Broadcasting, Government of India making it obligatory for every cable operator to transmit/re-transmit programmes of every pay channel through an addressable system in Chennai Metropolitan area, Municipal Council of Greater Mumbai area, Kolkata Metropolitan area and National Capital Territory of Delhi within six months from 15th day of January, 2003. Subsequently vide Notification dated 10th July, 2003 the date of implementation was deferred and fixed within six months from 1st March, 2003, and Chennai and the areas of NCT of Delhi, Kolkata, Mumbai to be covered by CAS were also specified. Thereafter vide Notification dated 29th August, 2003, the earlier Notification dated 10th July, 2003 was amended and areas in NCT of Delhi where CAS was to be implemented were deleted. he Hon’ble Delhi High Court, vide orders dated 4th December 2003, quashed the Notification dated 29th August 2003 issued by Ministry of Information & Broadcasting, Government of India. The cable operators of the notified areas partially withdrew pay channels from mid-night of 15th December 2003. elhi High Court in CW no. 8993-4/2003 in its order dated 26.12.03 allowed the implementation of CAS in Delhi. The Delhi High Court further directed that after expiry of three months, appropriate direction shall be issued after taking into consideration the feed back of three months’ experience. he Government of India issued a Notification No.39 dated 9th January 2004 whereby, under the proviso to clause (k) of subsection (1) of section 2 of the TRAI Act, 1997 as amended, the scope of the expression telecommunication services was increased to include the broadcasting services and cable services also. Thus, the broadcasting and cable services also came within the purview of the Telecom Regulatory Authority of India. Through this Notification, in exercise of the powers under clause (d) of sub-section (1) of section 11, the Telecom Regulatory Authority of India was further authorised to, inter-alia, specify standard norms for and periodicity of revision of rates of pay channels including interim measures. There is considerable uncertainty about different aspects of the Conditional Access System (CAS) regime and a detailed 495

examination is required of the various issues, including the rates for the broadcast and cable services in CAS and non-CAS areas. Not only are there no standard rates or conditions at which services are provided by the cable operators to the subscribers, there are reports that there may be an increase in the rates charged to the subscribers. The Authority has begun its process of examination of the relevant issues, including those relating to CAS, through a consultation process. To bring some certainty in the rates prevailing for these services, it was considered necessary by the Telecom Regulatory Authority of India to intervene in the matter. The TRAI has, therefore, deemed it appropriate to specify as ceiling the rates at which the charges will be paid by the cable subscribers to cable operators, by the cable operators to multi service operators and by multi service operators to broadcasters, as those prevailing on 26th December 2003 with respect to both free-to-air channels and pay channels, and for both CAS and non-CAS areas. This intervention will continue until a final determination by the Telecom Regulatory Authority of India on the various issues involved. The Hon’ble Delhi High Court, in CW No. 8993-4/2003 dated 26th December 2003, directed the continuance of implementation of CAS in Delhi on a trial basis, initially for a period of three months, after which appropriate directions would be issued after taking into account the feedback for the three months’ experience. The ceiling rates have therefore been specified as those prevailing on 26th December, 2003.

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CLARIFICATIONS ON TELECOMMUNICATION (BROADCASTING AND CABLE) SERVICES TARIFF ORDER 20041 After announcement of the Telecommunication (Broadcasting and Cable) Services Tariff Order 2004, a number of questions have been raised in regard to the underlying import of the provisions of the aforesaid Order. These are answered below: Q 1 What is the coverage of The Telecommunication (Broadcasting and Cable) Service Tariff Order 2004 dated 15.01.2004? Ans: The said or shall cover, throughout the territory of India, both for CAS and non-CAS areas, charges payable by — (a) cable subscribers to cable operator; (b) cable operators to multi service operators/broadcasters (including their authorised distribution agencies); and (c) multi service operators to broadcasters (including their authorized distribution agencies). Q 2 What is meant by word ‘charges’ mentioned in the Tariff Order? Ans: ‘Charges’ mean and include the charges/tariff rates payable by one party to the other by virtue of the formal/informal agreement prevalent on 26 December 2003. The principle applicable in the formal/informal agreement prevalent on 26 December 2003, should be applied for determining the scope of the term ‘charges’, for instance, * if under the agreement applicable as on 26 December, 2003 specified the total amount as rate or charge per subscriber, multiplied by the subscriber base, the ceiling applies to the per subscriber charge and not to the subscriber base. * if earlier the amount paid varied on certain limited occasions linked to the likely change in the subscribers base for a specified short period, such a practice could still continue. However, the charge per subscriber in such cases should not be more than those applicable on 26 December 2003.

1

Press Release No. 13/2004, dated 19 February 2004.

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Q 3 What about the charges if the cable service provider gives lesser number of channels compared to those shown on 26th December 2003? Ans: The ceiling charges are specified in terms of the products that they pertained to, namely the channels that were shown on 26 December 2003. Normally, there should not be a reduction in the number of channels shown on 26 December 2003. If, however, due to certain unavoidable reasons, the number of channels is reduced, the charges should also be reduced on a pro-rata basis. Q 4 What about the situation where the channel or cable service was not available on 26 December, and the channel or cable service is being provided after this date? Ans: In such cases, the Tariff Order does not provide any specific ceiling, and the formal/informal agreements regarding such charges could be entered into by the relevant parties. However, in specifying the relevant charges, the charges that the broadcaster/multi system operator/cable operator might have in place in the contiguous areas/ similar channels as on 26 December 2003 should be kept in mind. Q 5 Will the TRAI intervene, in case the subject matter of dispute between two service providers relates to ‘the number of subscribers’? Ans: The remedy in this case would lie in — * ‘ a Civil Court; * ‘ Telecom Disputes Settlement and Appellate (TDSAT), under section 14 of the TRAI Act..

Tribunal

Q 6 Whether individual subscribers can file complaints with the TRAI? Ans: Under the TRAI Act, the TRAI does not deal with complaints from individual subscribers/consumers for whom redressal mechanism is available before a Consumer Disputes Redressal Forum or a Consumer Disputes Redressal Commission or the National Consumer Redressal Commission established under section 9 of the Consumer Protection Act, 1986 (68 of 1986). Q 7 What is the remedy available for contravention of The Telecommunication (Broadcasting and Cable) Service Tariff Order 2004?

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Ans: In case of any violation of TRAI’s Order/Directive/Regulation, if a complaint is filed with TRAI with properly documented evidence, TRAI would, after examining the matter give a direction that the Order be followed. If the Order is still not followed, the TRAI has the option of filing a complaint before the appropriate courts under section 29 and 30 read with section 34 of the TRAI Act. Q 8 What is the remedy available to the stakeholders in case of a dispute between two or more service providers or between a service provider and a group of consumers? Ans: In case of a dispute between two or more service providers or between a service provider and a group of consumers, the dispute may be referred to Telecom Disputes Settlement and Appellate Tribunal (TDSAT) under section 14 of the TRAI Act. For more information, please see sections 11, 13 and 14 of the TRAI Act on the TRAI website www.trai.gov.in.

____________

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Telecom Regulatory Authority of India Notification New Delhi March 10th, 2004 No. 301-3/2004-Eco In exercise of the powers conferred upon it under sub-section (2) of section 11 of the Telecom Regulatory Authority of India, 1997 as amended read with the Notification No.39 dated 09.01.2004 issued from file No.13-1/2004-Restg. by the Government of India under clause (d) of sub-section (1) of section 11 and proviso to clause (k) of section 2 of the Telecom Regulatory Authority of India Act, 1997 to notify, by an Order in the Official Gazette, tariffs at which Telecommunications (Broadcasting and Cable Operation) Services shall be provided, the Telecom Regulatory Authority of India hereby makes the following Order.

The Telecommunication ( Broadcasting and Cable) Services Tariff (First Amendment) Order, 2004 (3 of 2004)

Section I Title, Extent and Commencement 1.

Short title, extent and commencement: i. This Order shall be called “The Telecommunication (Broadcasting and Cable) Services Tariff ( First Amendment) Order 2004”. ii.

iii.

Except Chennai Metropolitan Area where interim stay has been granted by Madras High Court in writ petition numbers 4863, 4890, 4936 and 4919 of 2004, the Order shall cover tariffs for all Telecommunication (Broadcasting and Cable) Services throughout the territory of India as also those originating in India or outside India and terminating in India. The Order shall come into force on the date of its notification in the Official Gazette.

Section II Tariff 2.

Clause 2 of Section II of The Telecommunication (Broadcasting and Cable) Services Tariff Order, 2004, shall be substituted by the following: “2. The charges payable by 501

(a) (b)

Cable subscribers to cable operator; Cable operators to Multi Service Operators/Broadcasters (including their authorised distribution agencies); and

(c)

Multi Service Operators to Broadcasters (including their authorized distribution agencies) prevalent as on 26th December 2003 shall be the ceiling until final determination by Telecom Regulatory Authority of India on the various issues concerning these charges.”

Section III 3.

Explanatory Memorandum Annex A to this Order contains an Explanatory Memorandum for the issue of this Order. BY ORDER Dr. Harsha Vardhana Singh Principal Advisor cum Secretary Telecom Regulatory Authority of India

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Explanatory Memorandum The TRAI provided its interim Recommendations on 23rd February, 2004, to the Government and based on a number of factors that were mentioned therein, Recommended that the Government Notification No. SO 792 (E) dated 10th July, 2003, which notified the areas for implementing CAS, be kept in abeyance for at least three months. The Recommendation was accepted by the Government. Vide Notification No. S.O.271(E), dated 27th February, 2004, the Government suspended the mandatory operation of CAS until such date as may be notified by the Government. Due to this Notification there are no separate CAS or nonCAS areas and such distinction has been withdrawn in this amendment. This would lead to a situation that in non-CAS areas, the 26th December, 2003 ceiling would continue as such. For such erstwhile notified mandatory CAS areas, where CAS was not actually implemented, the ceiling of 26th December, 2003, will continue. For erstwhile notified mandatory CAS areas where CAS was implemented, the Authority recognises that CAS may continue on a voluntary basis and in such a case the ceiling would again be the rates prevailing on 26th December, 2003, which the Authority recognises may have been lower than the rates in non-CAS areas. The Notification is not applicable for Chennai Metropolitan Area on account of stay granted by Madras High Court in writ petition numbers 4863, 4890, 4936 and 4919 of 2004.

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TELECOM REGULATORY AUTHORITY OF INDIA NOTIFICATION New Delhi August 13, 2004

No.1-29/2004-B&CS

In exercise of the powers conferred upon it under sub-section (2) of section 11 of the Telecom Regulatory Authority of India, 1997 as amended read with the Notification No.39 dated 09.01.2004 issued from file No.13-1/2004-Restg. by the Government of India under clause (d) of sub-section (1) of section 11 and proviso to clause (k) of section 2 of the Telecom Regulatory Authority of India Act, 1997 to notify, by an Order in the Official Gazette, tariffs at which Telecommunications (Broadcasting and Cable Operation) Services shall be provided, the Telecom Regulatory Authority of India hereby makes the following Order.

The Telecommunication ( Broadcasting and Cable) Services Tariff (Second Amendment) Order, 2004 (5 of 2004)

Section I Title, Extent and Commencement 1.

Short title, extent and commencement:

i.

This Order shall be called "The Telecommunication (Broadcasting and Cable) Services Tariff ( Second Amendment) Order 2004".

ii.

The Order shall be applicable throughout the territory of India.

iii.

The Order shall come into force on the date of its notification in the Official Gazette.

Section II Tariff 2.

In clause 2 of Section II of The Telecommunication (Broadcasting and Cable) Services Tariff Order as amended by The Telecommunication (Broadcasting and Cable) Services Tariff (First Amendment) Order 2004 after the words ‘charges”, the words “excluding taxes” shall be inserted.

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Section III 3. Explanatory Memorandum The Government of India in the Finance Bill, 2004 as introduced in the Lok Sabha has proposed to increase the service tax and levy an educational cess on cablel services. As the Authority has put a ceiling on the Cable TV service rates, a clarification has been sought that in view of the increase in the taxes, whether the cable TV service rates could be increased or not. Regulated prices are generally exclusive of taxes and in this case also the intention of the Authority was to place a ceiling on the charges exclusive of taxes. To clarify the issue, the Authority has decided to amend the tariff order. (Rakesh Kacker) Advisor (B&CS)

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TELECOM REGULATORY AUTHORITY OF INDIA A-2/14, Safdarjung Enclave, New Delhi 110029

NOTIFICATION No.1-29/2004-B&CS

Dated: October 1, 2004

In exercise of the powers conferred upon it under sub-section (2) and para (ii), (iii) and (iv) of clause (b) of sub-section (1) of section 11 of the Telecom Regulatory Authority of India, 1997 read with the Notification No.39 (S.O No. 44 (E) and 45 (E))dated 09.01.2004 issued from file No.13-1/2004-Restg. by the Central Government under clause (d) of subsection (1) of section 11 and proviso to clause (k) of section 2 of the Telecom Regulatory Authority of India Act, 1997, the Telecom Regulatory Authority of India hereby makes the following Order. 1.

Short title, extent and commencement:

i.

This Order shall be called "The Telecommunication (Broadcasting and Cable) Services (Second) Tariff Order 2004".(6 of 2004)

ii.

The Order shall be applicable throughout the territory of India.

iii.

The Order shall come into force on the date of its notification in the Official Gazette.

2.

Definitions:

(a)

“broadcaster” means any person including an individual, group of persons, public or body corporate, firm or any organization or body who/which is providing broadcasting service and includes his authorized distribution agencies;

(b)

“broadcasting services” means the dissemination of any form of communication like signs, signals, writing, pictures, images and sounds of all kinds by transmission of electro magnetic waves through space or through cables intended to be received by the general public either directly or indirectly and all its grammatical variations and cognate expressions shall be construed accordingly;

(c)

“cable operator” means any person who provides cable service through a cable television network or otherwise controls or is responsible for the management and operation of a cable television network;

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(d)

“cable service” means the transmission by cables of programmes including re-transmission by cables of any broadcast television signals;

(e)

“cable television network” means any system consisting of a set of closed transmission paths and associated signal generation, control and distribution equipment designed to provide cable service for reception by multiple subscribers;

(f)

“charges” means and includes the rates (excluding taxes) payable by one party to the other by virtue of the written/oral agreement prevalent on 26th December 2003. The principle applicable in the written/oral agreement prevalent on 26th December, 2003, should be applied for determining the scope of the term "rates"

(g)

“free to air channel” means a channel for which no fees is to be paid to the broadcaster for its retransmission through electromagnetic waves through cable or through space intended to be received by the general public either directly or indirectly ;

(h)

“multi system operator” means any person who receives a broadcasting service from broadcaster and/or their authorized agencies and re-transmits the same to consumers and/or retransmits the same to one or more cable operators;

(i)

“pay channel”, means a channel for which fees is to be paid to the broadcaster for its retransmission through electromagnetic waves through cable or through space intended to be received by the general public either directly or indirectly.;

3.

Tariff: The charges , excluding taxes, payable by

(a)

Cable subscribers to cable operator;

(b)

Cable operators to multi system operators/broadcasters (including their authorised distribution agencies); and

(c)

Multi system operators to broadcasters (including their authorised distribution agencies) prevalent as on 26th December 2003 shall be the ceiling with respect to both free-to-air and pay channels. Provided that if any new pay channel(s) that is/are introduced after 26-12-2003 or any channel(s) that was/were free to air channel on 26-12-2003 is/are converted to pay channel(s) subsequently, then the ceiling referred to as above can be exceeded, but only if the new channel(s) are provided on a stand alone basis, either individually or as part of new, separate bouquet(s) and the new channel(s) is/are not included in the bouquet being provided on 26.12.2003 by a particular broadcaster. The extent to which the ceilings referred to above can be exceeded would be limited to the rates for 508

the new channels. For the new pay channel(s) as well as the channel(s) that were free to air as on 26.12.2003 and have subsequently converted to pay channel(s) the rates must be similar to the rates of similar channels as on 26.12.2003: Provided further that in case a multi system operator or a cable operator reduces the number of pay channels that were being shown on 26.12.2003, the ceiling charge shall be reduced taking into account the rates of similar channels as on as on 26.12.2003. 4.

Reporting Requirement The broadcasters of such new pay channel(s) that have been introduced after 26-12-2003 or of any channel(s) that was a free to air channel on 26-12-2003 is/are converted to a pay channel subsequently, shall furnish to the Authority information in respect of charges for these channels in Schedule I of this Order. This information shall be furnished within seven days of coming into force of this order or the launch of new pay channel(s)/conversion of free to air channel (s) to pay channels, whichever is applicable.

5.

Repeal The Telecommunication (Broadcasting and Cable) Services Tariff Order 2004 dated 15th January 2004 along with its amendments is hereby repealed.

6.

Explanatory Memorandum Annex A to this order contains an Explanatory Memorandum for the issue of this Order

(Dr. Harsha Vardhana Singh) Secretary Cum Principal Advisor

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Annex A

EXPLANATORY MEMORANDUM 1.

The TRAI vide TTO dated 15.1.2004 had specified as ceiling the rates at which the charges will be paid by the cable subscribers to cable operators, by the cable operators to multi system operators and the multi system operators to broadcasters, as those prevailing th

on 26 December, 2003. 2.

A number of representations have been received seeking clarification on the manner in which new pay channels can be priced and the impact on retail prices. Similarly, clarifications have been sought on the impact of conversion to pay channels of th

channels that were free-to-air on 26 December, 2003. 3.

This issue has been carefully considered by the Authority. Since new channels will be coming into the market a mechanism has to be provided for pricing of these new channels. At the same time, there is a need to conserve the protection provided to the consumers by the Tariff Order dated 15.1.2004. To maintain the sanctity of the ceiling, it has been decided that pay channels launched after 26.12.2003 should not be allowed to become part of bouquet of channels being provided on 26.12.2003. A similar rule would apply for those channels that were free-to-air on 26.12.2003 and later convert to pay. It is expected that this would give choice to the operators and through them to the consumers.

4.

These new pay channels may be offered individually or as a bouquet of channels which are not covered by the ceiling specified by the tariff order dated 15.1.2004. Thus for those consumers who do not get the new pay channels the ceilings already prescribed would continue. Where the consumers get the new pay channels, the extent to which the ceilings referred to above can be exceeded would be limited to the rates for the new channels.

5.

The Authority has considered the question of fixing a ceiling price for new pay channels that have been introduced after 26-12-2003 or for any channels that was a free to air channel on 26-12-2003 is subsequently converted to a pay channel. Fixation of prices charged for new pay channels to consumers is difficult because of large variations of these prices and of the difficulty in linking these to costs. Further this is a localized issue which is not easily amenable to centralized regulation. Prices in different parts of the country are based on different systems using different methodologies for fixing the subscriber base. Many of these problems will get resolved if addressability is introduced, giving consumers choice and making 510

the interconnection agreements more transparent. TRAI has separately sent recommendations to the government which, interalia, provide for a framework for transition to addressability in different situations. However, in the interim period prices will have to be regulated. This revised tariff order provides the framework for such regulation. 6.

Thus the Authority has not lifted the ceiling for the pay channels that existed as on 26.12.2003. For the new pay channels introduced and the free to air channels converted to pay thereafter, the Authority expects that the rates for these channels would be similar to the rates prevalent on 26.12.2003 for similar channels. The Authority has therefore decided that broadcasters would furnish to the Authority information in respect of charges for these channels in the Schedule I of this Order. This information shall be furnished within seven days of coming into force of this order or the launch of new pay channels /converted Free to Air Channels to pay channels, whichever is applicable. After reviewing the information, the Authority would intervene in the matter, if necessary.

7.

The Authority has also considered the issue regarding ceiling charges in case a multi system operator or a cable operator gives th

lesser number of pay channels compared to those shown on 26 December, 2003. The Authority has decided that in this case the ceiling charge shall be reduced taking into account the rates of similar channels as on 26.12.2003. In case of any complaint, the Authority would intervene in the matter, if necessary. 8.

For ease of reference a self contained order has been issued repealing the earlier order dated 15.1.04 and all its amendments. Consequently the order now issued would supersede all previous orders, amendments and clarifications.

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Schedule I Format for Reporting Rates by Broadcasters to TRAI for New Pay Channels Launched or Converted Free To Air Channel to Pay Channels after 26.12.2003 (Refer Section 4 of The Telecommunication (Broadcasting and Cable) Services (Second) Tariff Order 2004 1. a)Name of the Channel b) Genre of Channel (eg. Entertainment, Sports, Movies etc.) 2. a) Language of Channel b) Target Audience (National or Regional, if Regional, specify state(s) ) 3. Whether channel is a pay channel in the whole of the country or only in part of the country. (Specify states if pay in part of the country) 4. a) Is it being offered as individual channel or bouquet of channel b) If bouquet, name other channels c) Name of owners of channels in the bouquet. 5 a) Rate of channel, if offered as individual channel b) Rate of channel in Chennai 6 a) Rate of bouquet if offered as part of the bouquet b) Revenue share arrangement between owners of channels in the bouquet 7 a) Expected Advertisement Revenue b) If channel is existing FTA channel, revenue for last three years 8 Likely Impact on Consumer Tariff

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TELECOM REGULATORY AUTHORITY OF INDIA A-2/14, Safdarjung Enclave, New Delhi 110029 NOTIFICATION No.1-29/2004-B&CS

Dated: October 26, 2004

In exercise of the powers conferred upon it under sub-section (2) and para (ii), (iii) and (iv) of clause (b) of sub-section (1) of section 11 of the Telecom Regulatory Authority of India Act, 1997 read with the Notification No.39 (S.O No. 44 (E) and 45 (E)) dated 09.01.2004 issued from file No.13-1/2004-Restg. by the Central Government under clause (d) of sub-section (1) of section 11 and proviso to clause (k) of section 2 of the Telecom Regulatory Authority of India Act, 1997, the Telecom Regulatory Authority of India hereby makes the following Order. 1. Short title, extent and commencement: i.

This Order shall be called "The Telecommunication (Broadcasting and Cable Services (Second) Tariff (First amendment) Order 2004. (7 of 2004)

ii. The Order shall be applicable throughout the territory of India. iii. iii. The Order shall come into force on the date of its notification in the Official Gazette. 2. In the second proviso of clause 3 the Telecommunication (Broadcasting and Cable) Services (Second) Tariff Order 2004 after the words “Provided further that in case”, the words “a broadcaster or” shall be inserted. 3. Explanatory Memorandum This Order contains an Explanatory Memorandum for the issue of this Order.

(Rakesh Kacker) Advisor(B&CS)

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EXPLANATORY MEMORANDUM In the Telecommunication (Broadcasting and Cable) Services (Second) Tariff Order 2004, reduction in rates was specified in the second proviso of clause 3 for multi system operators and cable operators. It is considered that the same principle should also apply in case a broadcaster reduces the number of pay channels being supplied or when a pay channel converts into a free to air channel. In view of this, the amendment is being issued.

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TELECOM REGULATORY AUTHORITY OF INDIA A-2/14, Safdurjung Enclave, NEW DELHI 110 029 NOTIFICATION No.1-29/2004-B&CS

Dated : 1.12.2004

In exercise of the powers conferred upon it under sub-section(2) and para (ii),(iii) and (iv) of clause (b) of sub-section (1) of section 11 of the Telecom Regulatory Authority of India Act, 1997 read with the Notification No.39 (S.O. No.44(E) and 45(E) dated 09.01.2004 issued from file No.131/2004-Restg by the Central Government under clause (d) of sub-section (1) of section 11 and proviso to clause (k) of section 2 of the Telecom Regulatory Authority of India Act, 1997) the Telecom Regulatory Authority of India hereby makes the following Order. 1.

Short title, extent and commencement: i)

This Order shall be called “The Telecommunication (Broadcasting and Cable) Services (Second) Tariff (Second amendment) Order 2004. (8 of 2004)”

ii)

This Order shall apply throughout the territory of India.

iii)

The Order shall come into force with effect from 1.1.2005. th

2.

The phrase “prevalent as on 26 December 2003 shall be the ceiling” appearing in the second last line of para 3 under the heading titled “Tariff” and before the first proviso under the same para of “The Telecommunication (Broadcasting and Cable) Services (Second) Tariff Order 2004”. (6 of 2004) shall be replaced by “prevalent as on 26.12.2003 plus 7% shall be the ceiling.”

3.

Explanatory Memorandum

This Order contains an Explanatory Memorandum for the issue of this Order.

Dr. Harsha Vardhana Singh Secretary cum Principal Advisor

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EXPLANATORY MEMORANDUM 1.

TRAI has specified vide the TTO (6 of 2004) that the charges, excluding taxes, payable by (a)

Cable Subscribers to Cable Operator;

(b)

Cable Operators to Multi System Operators /broadcasters (including their authorised distribution agencies); and

(c)

Multi System Operators to Broadcasters (including their authorised distribution agencies)

prevalent as on 26th December 2003 shall be the ceiling with respect to both free to air and pay Channels. It was also provided in the said Tariff Order that this ceiling could be exceeded, in case if any new pay channel was introduced after 26.12.2003 or an existing FTA channel as on 26.12.2003 was converted to Pay Channel provided that they are offered on a standalone basis and the extent of increase over the ceiling would be limited to the rates for the new channels and the rates on new pay channels or converted FTA channels must be similar to the rates of similar channels as on 26.12.2003. The Tariff Order also provided for reduction in the ceiling on the same principle if the Broadcaster/ MSO/ cable Operator were to reduce the number of pay channels that were being shown as on 26.12.2003. 2.

While indicating the regulatory framework for Tariff as stated above it was also indicated in the Recommendations on Issues relating to Broadcasting and Distribution of TV Channels, (sent to the Government on October 1, 2004) that the ceiling shall be reviewed periodically to make adjustments for inflation and that the next review would be undertaken in November 2004 so that the new rates are implemented from 26.12.2004.

3.

Accordingly an exercise was undertaken to determine the adjustment rate. For this purpose the Wholesale Price Index (WPI) has been used. The figures for this index are available upto 6.11.2004. The Consumer Price Index figures have not been used, as they do not have the latest information. Also these relate to certain specific consumption baskets. Therefore for the present purpose the WPI would be more appropriate. In deciding the rate of increase to be allowed the Authority has used the figures as on 30.10.2004 on which date the inflation rate was 7.06 %. Although subsequently the rate has increased to 7.64% it is not clear whether this trend would continue in the current month or not –the latest figure as on 13.11.2004 is 7.34%. For purposes of convenience and simplicity the increase has therefore been pegged at 7%. 516

4.

Therefore, it has been decided to issue this amendment Order to allow for inflation, which has been analyzed to be at 7%. This amendment Order will come into effect from 1.1.2005. Thus the new rates will apply for the payments to be made by consumers, cable operators, multi system operators for the month of January 2005. The 7% increase will apply to the charges, excluding taxes, payable as on 26.12.2003. Thus if the payment was Rs 220/- p.m as on 26.12.2003 of which Rs. 20/- was on account of taxes, the 7% increase will be applied on Rs 200/- and an increase of Rs.14/p.m would be the maximum permissible increase in the basic charges excluding taxes.

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518

TELECOM REGULATORY AUTHORITY OF INDIA NOTIFICATION th

New Delhi, 29 November 2005 No. 1-13/2005 – B & CS – In exercise of the powers conferred upon it under sub-section (2) and Para (ii), (iii) and (iv) of clause (b) of subsection (1) of section 11 of the Telecom Regulatory Authority of India Act, 1997 read with the Notification No.39 (S.O. No. 44(E) and 45 (E) dated 09/01/2004) issued from file No. 13-1/2004-Restg by the Central Government under clause (d) of sub-section (1) of section 11 and proviso to clause (k) of Section 2 of the Telecom Regulatory Authority of India Act, 1997, the Telecom Regulatory Authority of India, hereby makes the following Order: 1.

2.

Short title, extent and commencement: i)

This Order shall be called “The Telecommunication (Broadcasting and Cable) Services (Second) Tariff (Third amendment) Order 2005, (8 of 2005)”

ii)

This Order shall apply throughout the territory of India.

iii)

The Order shall come into force with effect from 1.1.2006

The words and figures “prevalent as on 26.12.2003 plus 7% shall be the ceiling with respect to both free-to-air and pay channels” appearing immediately after the existing words “ Multi system operators/broadcasters (including their distribution agencies” in clause (c) of Para 3 of The Telecommunication (Broadcasting and Cable) Services (Second) Tariff Order 2004 (6 of 2004) read with The Telecommunication (Broadcasting and Cable) Services (Second) Tariff (Second Amendment) Order 2004 (8 of 2004) may be substituted by the following words and figures: “prevalent as on 26.12.2003 as enhanced by 7% permitted w.e.f. 1.1.2005 plus 4% on such enhanced charges w.e.f. 1.1.2006 shall be the ceiling with respect to both free-to-air and pay channels”

3.

Explanatory Memorandum his Order contains as Explanatory Memorandum attached as Annexure A. By Order RAKESH KACKER) (ACTING SECRETARY- CUM- ADVISOR (B & CS))

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ANNEXURE - A EXPLANATORY MEMORANDUM 1. TRAI, vide its Tariff Order of 1.10.2004, as amended, had frozen the cable charges excluding taxes, payable by Cable Subscribers to Cable Operator, Cable Operators to Multi System Operators/ broadcasters (including their authorised distribution agencies), Multi System Operators to Broadcasters (including their authorised distribution th gencies) at the level prevailing as on 26 December 2003 in respect of both free to air and pay channels. The Tariff Order, as amended, also permitted increase/decrease in ceiling on account of new pay channel(s) launched after 26.12.2003 or on FTA channel (s) existing on that date converting to Pay channel (s) later or on reduction in the number of pay channel(s) as shown on 26.12.2003 under certain conditions. 2. In the detailed Recommendations on Issues relating to Broadcasting and Distribution of TV Channels of 1.10.2004, TRAI had indicated that the price regulation is intended to be temporary till such time as there is no effective competition and that the price regulation will be withdrawn as soon as there is evidence of effective competition. In this connection it may be noted that over the next 6-9 months it is expected that there are likely to be more DTH players in the market which could provide effective competition to the cable industry. The recommendations, while realizing the need to give protection for inflation in costs over a period of time, also provided that the ceiling shall be reviewed periodically to make adjustments for inflation. 3. The first periodical review for inflation adjustment was done during November 2004 and a notification was issued on 1.12.2004 further amending the Tariff Order of 1.10.2004 to provide for an increase of 7% over the ceiling cable charges (excluding taxes) prevailing as on 26.12.2003. This increase was made effective from 1.1.2005. 4. As almost a year has passed, another review has become due for the st period beginning from 1 January 2006. An exercise was undertaken to determine the inflation adjustment rate. For this purpose, the Wholesale Price Index (WPI) has been used, as was done during the last review. 5. In deciding the rate of increase the Authority has used the annual rate of inflation calculated on a point to point to basis. The figures for these indices were available for the period up to the week ending 5.11.2005. For the week ending on 8.10.2005 the annual rate of inflation was reported as 4.62%. For the subsequent weeks ending with the week of 5.11.2005, the inflation rate has varied, moving up 520

and down, between 4.75% (for the week ending with 29.10.2005) to 4.14% (for the week ending with 5.11.2005). It is not clear, if the trend of increase would continue as the inflation rate has fallen to 4.14% for the week ended 5.11.2005 from the level of 4.62% after increasing during the intervening weeks. For the purposes of convenience the rate increase to be effective from 1.1.2006 has been pegged to 4%. 6. This third amendment order has been issued to give effect to the inflation adjustment and will come into effect from 1.1.2006. The new rates will be applicable for the payments to be made by consumers, cable operators, multi-system operators for the month of January 2006. 7. This 4% increase, would be applicable on the cable charges (exclusive of taxes) as enhanced by 7% increase permitted w.e.f 1.1.2005 vide earlier notification of 1.12.2004. The total increase on account of inflation (taking into account both the 7% increase permitted w.e.f. 1.1.2005 and the proposed increase of 4% w.e.f 1.1.2006) would work out to 11.28% (7%+4%+4% on 7%) when calculated with reference to ceiling cable charges (exclusive of taxes) prevailing as on 26.12.2003 8. For example, if the cable charges (exclusive of taxes) prevailing as on 26.12.2003 was Rs. 200/- per month the increase on account of inflation adjustment in absolute terms at the permitted rates of 7% w.e.f. 1.1.2005 and 4% w.e.f. 1.1.2006 would work out to Rs. 22.56/[(7/100 *200)+ (4/100 *200) + (4/100 *14)]. The total cable bill for January 2006 as per this example would work out to Rs. 222.56 (200+14.00+8.00+0.56). The actual extent of increase on account of inflation in absolute terms with reference to ceiling cable charges as on 26.12.2003 would vary from case to case depending upon the actual cable charges that prevailed as on 26.12.2003 in respect of a consumer/cable operator/multi system operator. 9. The Authority has separately issued a consultation paper on certain issues relating to tariffs such as provision of channels as separate channels and not as a bouquet, pricing of channels launched after 26.12.2003 and pricing of channels which migrate from one distributor to another. Decisions on these issues will be taken separately after the consultation process is over.

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TELECOM REGULATORY AUTHORITY OF INDIA NOTIFICATION New Delhi, 7th March 2006 No.1-2/2006–B & CS – In exercise of the powers conferred upon it under sub-section (2) and Paragraphs (ii), (iii) and (iv) of clause (b) of subsection (1) of section 11 of the Telecom Regulatory Authority of India Act, 1997 read with the Notification No.39 (S.O. No. 44(E) and 45 (E) dated 09/01/2004) issued from file No. 13-1/2004-Restg by the Central Government under clause (d) of sub-section (1) of section 11 and proviso to clause (k) of sub section (1) of Section 2 of the Telecom Regulatory Authority of India Act, 1997, the Telecom Regulatory Authority of India, hereby makes the following Order: 1. Short title, extent and commencement: i)

This Order shall be called “The Telecommunication (Broadcasting and Cable) Services (Second) Tariff (Fourth Amendment) Order 2006, (2 of 2006)”

ii) This Order shall apply throughout the territory of India. iii) This Order shall come into force on the date of its publication in the Official Gazette 2. (i) In the Telecommunication (Broadcasting and Cable) Services (Second) Tariff Order, 2004 (6 of 2004), under clause 2 after the existing sub-clause (d) and the entry relating thereto, the following sub clauses and the entry relating thereto shall be inserted as subclauses dd) and (ddd), respectively, namely:(dd) ‘Ordinary cable subscriber’ means any person who receives broadcasting service from a cable operator and uses the same for his/her domestic purposes. ddd) ‘Commercial cable subscriber’ means any person, other than a multi system operator or a cable operator, who receives broadcasting service at a place indicated by him to a broadcaster, multi system operator or cable operator, as the case may be, and uses such signals for the benefit of his clients, customers, members or any other class or group of persons having access to such place.

Explanatory Note The distinction between an ordinary cable subscriber and a commercial cable subscriber is in terms of the difference in the use to which such signals are put. The former would use it for his/her own use or the use of his/her family, guests etc. while the latter would 523

over commercial and other establishments like hotels, restaurants, clubs, guest houses etc. which use the signals for the benefit of their customers, clients, members or other permitted visitors to the establishment. “ a) In the Telecommunication (Broadcasting and Cable) Services (Second) Tariff Order, 2004 (6 of 2004), under clause 2 the following shall be substituted for the existing clause (f) “(f) Charges’ means (i) for all others except commercial cable subscribers, the rates (excluding taxes) payable by one party to the other by virtue of the written/oral agreement prevalent on 26th December 2003. The principle applicable in the written/oral agreement prevalent on 26th December 2003, should be applied for determining the scope of the term “rates” (ii) for commercial cable subscribers, the rates ( excluding taxes) payable by one party to the other by virtue of the written/oral agreement prevalent on 1st March 2006. The principle applicable in the written/oral agreement prevalent on1st March 2006, should be applied for determining the scope of the term “rates” 3.

In clause 3 of the Telecommunication (Broadcasting and Cable) Services (Second) Tariff Order 2004, (6 of 2004), the existing subclause (a) and the entries relating thereto shall be substituted with the following: - “ (a) Ordinary cable subscribers to cable operator.”

4.

In the Telecommunication (Broadcasting and Cable) Services (Second) Tariff Order 2004, (6 of 2004), after the existing clause 3 and the entries relating thereto, the following clause and the entries relating thereto shall be inserted as clause 3A: “3A: the charges, excluding taxes, payable by commercial cable subscribers to cable operators, Multi system Operators or Broadcasters as the case may be, prevalent as on 1st March 2006 shall be the ceiling with respect to both free to air and pay channels. Provided that if any new pay channel(s) that is/are introduced after 1-3-2006 or any channel(s) that was/were free to air channel on 13-2006 is/are converted to pay channel(s) subsequently, then the ceiling referred to as above can be exceeded, but only if the new channel(s) are provided on a stand alone basis, either individually or as part of new, separate bouquet(s) and the new channel(s) is/are not included in the bouquet being provided on 1-3-2006 by a particular broadcaster. The extent to which the ceilings referred to above can be exceeded would be limited to the rates for the new 524

channels. For the new pay channel(s) as well as the channel(s) that were free to air as on 1-3-2006 and have subsequently converted to pay channel(s) the rates must be similar to the rates of similar channels as on 1-3-2006. Provided further that in case a broadcaster or multi system operator or a cable operator reduces the number of pay channels that were being shown on1-3-2006, the ceiling charge shall be reduced taking into account the rates of similar channels as on as on 1-3-2006.” 5.

Explanatory Memorandum: This Order contains as Explanatory Memorandum attached as Annex A. By Order Rakesh Kacker ACTING SECRETARY-CUM ADVISOR(B&CS)

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Annex A EXPLANATORY MEMORANDUM A batch of petitions was filed by a couple of Associations of Hotels and Restaurants against leading broadcasters in Telecom Disputes Settlement and Appellate Tribunal. The dispute basically pertained to the fact whether the hotels and restaurants can be equated with domestic consumers for the provision of cable TV service and there were also other connected and consequential issues under adjudication. The Hon’ble TDSAT while adjudicating on the issues of dispute in its judgment dated 17th January, 2006 in Petition No. 32(C) of 2005 (M.A.No.84 of 2005) and Petition No.80(C) of 2005 (M.A.No.239 of 2005) in the light of the provisions of Telecommunication (Broadcasting and Cable) Services (Second) Tariff Order, 2004 (6 of 2004) had observed interalia as under: “36. ……….We have already concluded that the members of the petitioner associations cannot be regarded as subscribers or consumers. As such we are of the view that the above tariff notification of the TRAI would not be applicable. It seems that TRAI has found it necessary to fix the tariff for domestic purpose. We think the Regulator should also consider whether it is necessary or not to fix the tariff for commercial purposes in order to bring about greater degree of clarity and to avoid any conflicts and disputes arising in this regard. 37. In view of the above, we are of the opinion that the respondents are well within their rights to demand members of the petitioner associations to enter into agreements with them or their representatives for receipt of signals for actual use of their guests or clients on reasonable terms and conditions and in accordance with the regulations framed in this regard by TRAI” 2. TRAI had also received a representation from the Federation of Hotel and Restaurant Associations of India (FHRAI) in which they had interalia requested: i)

TRAI to fix Tariffs for hotels as per normal procedure (i.e) after giving appropriate opportunity to the affected persons including hotels and restaurants to represent against the proposed Tariffs.

ii) TRAI to issue a restraining order on the broadcasters stating that they (broadcasters) may not charge arbitrary rates fixed for hotels and restaurants till the regulations are framed by TRAI. 3. The Authority considered the observations made by the Hon’ble TDSAT and the representation of FHRAI in the context of the judgment of the Hon’ble Tribunal. The issue of need or otherwise to fix tariff for commercial purpose and the method and manner of 526

fixing specific commercial tariff are connected issues and needs a detailed consultation and examination. The Authority is considering the course of action on this separately. 4. In the meanwhile keeping in view the observations of Hon’ble TDSAT and the representation of FHRAI, the Authority has considered appropriate, in the interim, to extend the protection of ceiling to the commercial consumers as well. This protection in respect of Commercial Cable Subscriber will however be available at the level of the rates prevailing on 1st March 2006 unlike in the case of noncommercial consumer. To give effect to this, the words Ordinary Cable Subscriber, Commercial Cable Subscriber has been defined and the definition of ‘charges’ has been amended and new clause to give effect to the relevant date for determining the ceiling in respect of commercial cable subscriber has been introduced. 5. The proposed amendment is intended to be a short-term measure and would be reviewed on the basis of detailed examination as indicated in para 3.

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TELECOM REGULATORY AUTHORITY OF INDIA NOTIFICATION th

New Delhi, 24 March, 2006 No. 1-2/2006–B & CS – In exercise of the powers conferred upon it under sub-section (2) and Paragraphs (ii), (iii) and (iv) of clause (b) of sub-section (1) of section 11 read with section 36 of the Telecom Regulatory Authority of India Act, 1997 and the Notification No.39 (S.O. No. 44(E) and 45 (E) dated 09/01/2004) issued from file No. 13-1/2004Restg by the Central Government under clause (d) of sub-section (1) of section 11 and proviso to clause (k) of sub section (1) of Section 2 of the Telecom Regulatory Authority of India Act, 1997, the Telecom Regulatory Authority of India, hereby makes the following Order: 1. Short title, extent and commencement: i)

This Order shall be called “The Telecommunication (Broadcasting and Cable) Services (Second) Tariff (Fifth Amendment) Order 2006, (4 of 2006)” ii) This Order shall apply throughout the territory of India. iii) This Order shall come into force on the date of its publication in the Official Gazette 2. In the Telecommunication (Broadcasting and Cable) Services (Second) Tariff Order, 2004 (6 of 2004), read with the Telecommunication (Broadcasting and Cable) Services (Second) Tariff (Fourth nd

Amendment) Order 2006, (2 of 2006) after the existing 2 proviso below clause 3A and the entries relating thereto, the following explanation and the entries relating thereto shall be added: “Explanation1:

3.

For the purpose of clause 3A above the question whether commercial cable subscriber will pay the cable operator/MSO/the broadcaster will be determined by the terms of agreement(s) between broadcasters, MSO(s), Cable Operator(s) or between Broadcaster(s) and the Commercial Cable Subscriber(s) or between MSO / Cable Operato who have been authorized to provide signals to the Commercial Cable subscriber(s), on the one hand, and Commercial Cable Subscriber(s), on the other, as the case may be”

Explanatory Memorandum:

This Order contains as Explanatory Memorandum attached as Annex-A. By Order (Rakesh Kacker) Advisor (B&CS) 529

ANNEX A EXPLANATORY MEMORANDUM TRAI had in pursuance of the observations of Hon’ble TDSAT and the representation of FHRAI, considered appropriate, in the interim, to extend the protection of ceiling to the commercial consumers as well. Accordingly, the Authority issued a Tariff Amendment Order (Fourth Amendment Order) on 7.3.2006. This protection in respect of Commercial Cable Subscriber was however to be available at the level of st the rates prevailing on 1 March 2006 unlike in the case of noncommercial consumer. The proposed amendment it was indicated to be a short-term measure and was to be reviewed on the basis of detailed examination. 2.

As a part of initial step towards detailed examination a process of seeking inputs from groups representing hotels and broadcasters was initiated. During this process the group of broadcasters made a representation in which it was pointed out inter alia as under: “ …….The Order (Tariff Amendment Order dated 7.3.2006) has in effect nullified / reversed the order (TDSAT order) dated 17.1.2006. (emphasis in italics added). TDSAT recognized that the services to the hotels should be only through authorized means. A vast majority of the Hotels and Commercial establishments who obtain service through cable operators without requisite authorization from the broadcasters. In our view, the current arrangements through which Hotels and Commercial Establishments obtain supply is tantamount to piracy of signals. There is a clear danger that Hotels /commercial Establishments shall misuse the TRAI Tariff Order to legitimize the present unauthorized arrangements. A hotel or a commercial establishment needs to obtain a license from the respective broadcaster to receive and exhibit the service. However, clause 4 3(A) is being exploited by the Hotels to continuously receive service and exhibit the services without a valid license and in an unauthorized manner….”

3.

The spirit and intention behind the provision of extending the protection of ceiling to commercial cable consumers through the Tariff Amendment Order of 7.3.2006 was to cover those commercial cable subscribers who are provided television signals by those who are authorized to provide signals by virtue of agreements either written or oral. The intention of the amendment order is not to promote illegal provision of broadcasting services.

4.

Hon’ ble TDSAT in its judgment of 17.1.2206 has also recognize this in para 37 of the judgment wherein it has been indicated 530

“……..Therefore, we leave upon the Respondents to proceed against the petitioners association and its members for recovery of legitimate amount due to them for receipt of signals by the members of petitioners associations. If the members of the petitioners association have paid the subscription to the authorized agent/distributor/MSO of the respondent broadcasters, then that will be treated as legitimate payment but wherever such subscription has been paid to unauthorized distributor or MSO or Cable operators it will be open to the respondent broadcasters to raise demands from the members of petitioners association………” 5.

With a view to bring clarity to interpretation it has been decided to nd add an explanation below the existing 2 Proviso to the newly added clause.

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TELECOM REGULATORY AUTHORITY OF INDIA NOTIFICATION New Delhi, 31st July 2006 No. 1-13/2005 – B & CS – In exercise of the powers conferred upon it under subsection (2) and sub-clauses (ii), (iii) and (iv) of clause (b) of subsection (1) of section 11 of the Telecom Regulatory Authority of India Act, 1997 (24 of 1997) read with the Notification No.39 (S.O. No. 44(E) and 45 (E) dated 09/01/2004) issued from file No. 13-1/2004-Restg by the Central Government under clause (d) of sub-section (1) of section 11 and proviso to clause (k) of sub section (1) of section 2 of the Telecom Regulatory Authority of India Act, 1997 (24 of 1997), the Telecom Regulatory Authority of India, hereby makes the following Order: 1.

2.

Short title, extent and commencement: i) This Order shall be called “The Telecommunication (Broadcasting and Cable) Services (Second) Tariff (Sixth Amendment) Order 2006, (5 of 2006)” ii) This Order shall apply throughout the territory of India. iii) This Order shall come into force on the date of it publication in the Official Gazette In the Telecommunication (Broadcasting and Cable) Services (Second) Tariff Order,2004 (6 of 2004) after the existing clause 3A and the entries relating thereto, the following clause and entries relating thereto shall be inserted as clause 3B, namely :-

“ 3B : In determining the similarity of rates of similar channels referred to in the provisos below clause 3 above the following factors shall be taken into account:

3.

(i)

the genre and language of the new pay or converted Free to Air to pay channel;

(ii)

the range of price ascribed to the channel of similar genre and language in the price of a bouquet(s) and prices of bouquet(s) that existed as on 26.12.2003 ; and,

(iii)

the range of prices of the individual channel of similar genre and language as existing in the cities where CAS is in existence;”

Explanatory Memorandum This Order contains an Explanatory Memorandum attached as Annexure A. By Order Rakesh Kacker (Advisor (B&CS) 533

ANNEXURE A EXPLANATORY MEMORANDUM 1.1

The MSO Alliance, an alliance representing some of the major Multi System Operators (MSO) had suggested that all new pay channels (i.e those introduced after 26.12.2003) should be offered as individual channels. According to the MSOs the existing provision in the Tariff Order to offer the new pay channels(s) / or converted FTA to pay channels either individually or as part of a new separate bouquet on a stand alone basis has not been effective. Further, it has been stated that the absence of availability of information on individual channel prices, within the bouquet, hampers decision-making based on proper business rationale. On behalf of the MSO Alliance it was stated that the Tariff Order needs to be amended to ensure that the channels within a new bouquet are offered individually.

1.2

The MSO Alliance, in the context of the above, had made a proposal for amendment of the Tariff Order vide their letter dated March 14 2005. They had sought deletion of the words “or as part of new separate. Bouquets” in the proviso to the Tariff Order of 1.10.2004. The implication of this is that all new channels can only be provided as separate individual channels. They also indicated that once a new bouquet of pay channels is introduced, the new bouquet rate should be frozen at the level of introductory rate excepting for increase for inflation. Another suggestion was that if the broadcaster wishes to introduce any further channels after the introduction of a new bouquet then further introduction of the channel(s) in pay channel mode may be offered as single channel and should not be loaded with the 2nd bouquet of new channels. Attention of the Authority was also drawn to Rule 9 of the Cable Television Network Rules 1994, as amended, and in particular the second proviso relating to illusory pricing introduced with effect from 6.6.2003.

1.3

The Authority considered the proposal and decided that broader consultation would be necessary before a final decision can be taken. Besides, during the process of implementation of the Tariff Order of 1.10.2004, a number of other issues such as migration of channels from one broadcaster to another, freezing of rates of new pay channels at the introductory level, publishing of wholesale prices in TRAI’s website were also raised. Accordingly a

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combined Consultation paper was issued covering all these issues. Consultation Process 2.1

As indicated in para 1.3 above in order to give effect to broader consultation it was decided by the Authority to issue a consultation paper on 7.11.2005. The following questions were posed for consultation: i)

Whether the proposal for amendment to the Tariff Order as suggested by MSO Alliance for deletion of the words “or as part of new separate bouquets” should be agreed to or not?

ii)

If not, whether there can be any other method by which the concerns expressed by MSO Alliance can be addressed within the existing framework of non-existence of addressability? If so how?

iii)

Whether the existing tariff order be amended to indicate benchmarks which can be used for determining similarity in rates of new pay channels vis-a–vis rates of similar channels that was prevailing on 26.12.2003? If so what should be the benchmarks and how to arrive at these benchmarks out of the following options: a)

Can the average wholesale price of bouquet of channels existing as on 26.12.2003 be used as benchmark to determine similarity in rates?

b)

Should available Chennai (CAS area) individual channel prices and wholesale bouquet prices in CAS Areas and Non CAS areas be used to derive a wholesale individual channel price within a bouquet in non CAS area and this derived wholesale price of the individual channel be used as a benchmark for judging the similarity in rates?

c)

Whether there can be any other methodology and what are the details of such alternative methodology?

d)

Whether similarity should be judged with reference to the same broadcaster or all broadcasters for similar genre of channels and whether language and reach of a channel also be considered for reckoning similarity?

iv)

What should be the approach in case an existing pay channel changes from one distributor to another as in the case of HBO and Ten Sports and what specific changes may be required in the Tariff Order?

v)

Whether the prices charged by broadcasters to the MSOs, for channels/bouquets launched after 26.12.2003, should 535

be frozen at the levels at which they were introduced, with an annual increase for inflation as suggested by the MSOs? vi)

Whether the prices charged by the broadcasters to the MSOs as reported under clause 4 of the Tariff Order of 1.10.2004 should be released for public information by TRAI as and when there are changes? If so how this would lead to more efficient functioning of the market?

vii)

Whether we should move towards pricing of individual channels so that the consumers in a non-CAS environment, through the cable operators, exercise a wider choice regarding channels?

Comments were received from 14 stakeholders. A gist of the detailed comments is available on TRAI’s website www.trai.gov.in. As a part of the process of consultation Open House Discussions were held on 18th, 19th, 23rd and 25th January 2006 at Mumbai, Delhi, Bangalore and Kolkata respectively. A summary of the gist of the comments on the various issues received during the consultation process is placed in the Annexure to this Explanatory Memorandum. Analysis of the Issues raised during Consultation Amendment to the Tariff Order for deletion of the words “or as part of new separate bouquets” 3.1

The Tariff Order of 1.10.2004, interalia, provides that the ceiling as existing on 26.12.2003 can be increased on account of introduction of new pay channel by a broadcaster after 26.12.2003 or conversion of FTA channel existing as on 26.12.2003 to a pay channel subsequently, provided such new pay channel or converted FTA Channel is offered on a stand alone basis and not form part of a bouquet existing as on 26.12.2003, either individually or as part of new bouquet. The stipulation providing that the new pay channel(s) will not form a part of the existing bouquet that existed on 26.12.2003 and will be offered on a stand alone basis was intended to protect the sanctity of the price ceiling of channels existing as on 26.12.2003. It was expected that the MSO or independent LCO, would, on receiving the offer of new pay channel individually or as a bouquet, be considering his/her business case before taking a decision. The choice to accept or reject the offer is still available to the MSOs and independent Local Cable Operators (LCO) taking feed from the broadcaster though such a choice is technically not available at levels below in the distribution chain including the consumer.

3.2

Though in the original proposal of MSO Alliance the request was for deletion of the words “or as part of new separate bouquets in response to consultation paper and the during Open House 536

Discussions it was suggested by MSOs that the MSOs should have a choice to opt between a-la-carte and bouquet. 3.3

The basic argument, which is advanced by the MSOs in support of the amendment is that, the broadcasters are forcing the newly introduced bouquets on operators under threats of disconnection of even the old bouquets existing on 26.12.2003. It was also pointed out that they are not able to carry all the channels in the new separate bouquet, in a substantially analogue network due to bandwidth constraint. Further it was stated that there is consumer resistance to pay for unwanted channels in the new bouquet while the MSOs are burdened to carry and pay for the entire new bouquet. While these concerns are valid it must also be recognized that a- la carte pricing could be more expensive due to higher distribution costs and could in the absence of addressability and the current disparities in market power lead to a situation where the MSOs are forced to take all the new channels and that too at a higher price.

3.4

While expressing similar concerns the consumer organizations have suggested that the choice through the operator would only be farce given the current scenario of area monopolization at the last mile level and the amendment would only give leverage to the MSOs.

3.5

The proposal in all fairness can be considered for implementation only on a prospective basis. This would mean there will be three different sets of regimes for channels floated at different points of time. One for those which existed as on 26.1.2.2003, the second for those new pay channels which came in after 26.12.2003 and third the proposed new regime as finally decided on the basis of the proposal of MSO Alliance. The implementation of different sets of regulations for three sets of regimes could become complicated. The proposal would invite criticism on grounds of being unfair to the new entrants.

3.6

Considering all these factors and in particular the views of the consumer organizations that this would not lead to better consumer choice, the Authority has decided that this suggestion of the MSO Alliance should not be accepted. Alternative Methods in a non addressable system

3.7

Digitalization is seen to be one solution to address the stated cause for proposed amendment. TRAI has already made detailed recommendations on Digitalization of Cable Television in September 2005 . With developments on the DTH platform even the small /medium level MSOs and Last Mile Operators have started realizing the need for moving towards digitalization. Digitalization per se would only give a larger array of channels 537

and much improved quality but may not facilitate the concept of pay for what you watch without addressable system at the level of consumer. However both CAS and digitalisation to spread throughout the country would take time. 3.8

A suggestion has been made that in a non-CAS environment there has to be a mechanism to know the price of individual channel price vis-à-vis the average price of a channel within a bouquet. As already indicated in the analysis done under the heading of Amendment to the Tariff Order’ the individual channel pricing decision will have meaning only if the facility to make a choice of an individual channel within a bouquet exists

3.9

One approach could be that the tariff order could mandate that in case if the new pay channel is offered as a part of a stand alone new bouquet the individual channel prices should also be mentioned along with the bouquet price. This would bring in transparency. An argument often advanced by the broadcasters against stating individual prices is that the business model is to sell a package of channels of different genres and assign a value at which the bouquet can be marketed and the bouquet price is not merely a sum of cost of individual channel in a bouquet. However it is often seen that the channels in the bouquet are not sourced from the same content provider which should mean that the channels are acquired individually and therefore it can have a reference price.

3.10

The suggestion that there should be an overall price freeze taking all the bouquets together plus 7% is not practical and is not in the spirit of the Tariff Order and could also create problems for the implementation of the current price order which essentially seeks to control the bouquet prices as prevalent on 26.12.2003.

3.11

The other suggestion referring to the recommendation of premium channels coming through set top box is essentially a more CAS oriented solution which will depend on the Government decision.

3.12

On the basis of the above analysis and the decision on the first issue for consultation it is felt that this concern could be better addressed through introduction of addressability and spread of digitalisation. Amendment to existing tariff order to indicate benchmarks which can be used for determining similarity in rates of new pay channels vis-a–vis rates of similar channels that was prevailing on 26.12.2003

3.13

The existing tariff order does not indicate any specific methodology to be adopted in establishing similarity of channels that existed on 26.12.2003. The difficulty envisaged was that no one method could really be justified as a perfect method given the 538

degree of difficulty in establishing the criterion for treating two channels as similarly placed. More importantly, even after one is able to establish similarity in content and programme quality between two channels, the value attached to such similar channels depends on the perception of diverse segment of viewers. Entertainment appeals to the mind unlike a manufactured product and therefore perception of viewers is bound to vary between two similarly placed channels. There is therefore a valid business case to price a similar product differently based on the perception of viewers. The comments received on this question also support this. Therefore any exercise, prima facie, even if done would only be bordered more on subjectivity and judgmental assessment and therefore not perfect. 3.14

The methodology suggested by the MSOs of using the formula indicated in the Consultation paper of April 2004 will not be effective. Essentially this formula suggests that the price of no channel should be more than twice the average price of a bouquet. However as has been indicated in the consultation paper itself this would lead to wrong results in a 2 channel bouquet like ESPN/Star Sports (the price of each channel would be equal to the bouquet price).

3.15

Following the comments of the consumers it is proposed to provide guidelines to benchmark the prices. The only method that could be followed is to take the bouquet prices, adjust them for inflation, take into account the individual prices of the channels in Chennai ( and other CAS markets when these emerge) of the same genre and then fix the individual prices after adjusting for the wholesale price discount. The tariff order is being amended to provide for these guidelines. A sample calculation is provided below to make the process clear.

3.16

Bouquet consists of 5 channels priced at Rs. 50 in December 2003. Individual Channel prices in Chennai : Rs. 30 ( Gen entt.) , 25 (Sports),15 ( Films), 8 ( Cartoons) and 7 (Lifestyle). Total = 85 Benchmark price for General entertainment channel sold a-la carte would be 30* 1.07 (for inflation) = Rs. 32.10. Similar calculation would be done for all the genres and the benchmark price for individual channel would be the range offered by this calculation. Benchmark price when channel sold in bouquet would be 30*1.07*(50/85) = 17.77 The reference bouquet price would be calculated by totaling benchmark prices of the individual channel 539

prices in the bouquets as arrived above. Rs.85 and Rs 50 used above are only examples. The determination of benchmark prices for individual channels in a bouquet would take into account bouquet price(s) that existed on 26.12.2003 of all broadcasters, the range of price ascribed to the individual channels of similar genre and language out of bouquet price of the broadcaster’s bouquet(s) that existed on 26.12.2003, range of individual channel prices offered on a-la-carte of channels of similar genre and language of all broadcasters. Approach in case an existing pay channel changes from one authorised agency to another 3.17

It has been decided to insert a separate section indicating the factors that would be taken into account while determining the similarity of rates of similar channels as indicated in the Tariff Order of 1/10/2004. Further so far there have been only two cases of a channel moving from one authorised agency to another. Ten Sports which was being distributed earlier by Modi Entertainment joined the One Alliance and is now being distributed by them as part of a new bouquet. HBO which was earlier being distributed by the One Alliance is now being distributed by Zee Turner as part of a new bouquet. One of these channels is an English Movie Channel which is not very popular. The approach set out in the earlier paragraph could be used to determine the reasonableness of the individual prices if the channel is offered as an individual channel and also the prices of a bouquet if the channels are offered as a bouquet. It has therefore been decided not to consider any amendment to the Tariff Order in regard to the issue of shifting of a channel from one broadcaster to another. Whether the prices being charged by Broadcasters to the MSOs for channels/bouquets launched after 26.12.2003 should be frozen at the levels at which they were introduced?

3.18

This suggestion was made by the MSO Alliance – it has also been indicated by them that an annual inflation adjustment mechanism could be considered. The apprehension here is that the prices of these new bouquets could be escalated. The broadcasters have objected to any price control as they consider that this is not necessary since the price increase is only temporary. Out of the two consumer organizations one has agreed with the views of the MSO alliance while the other has suggested that this be regulated through the mechanism suggested for judging similarity (discussed in paras 3.13 to 3.16 above) . This suggested approach is the best as it would

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provide a fair basis of judging the reasonableness of the prices in a comprehensive manner. Whether the prices charged by the broadcasters to the MSOs as reported under clause 4 of the Tariff Order of 1.10.2004 should be released for public information by TRAI as and when there are changes? If so how this would lead to more efficient functioning of the market? 3.19

On this issue the two consumer organizations have supported thesuggestion. Some Broadcasters have however pointed out that this should also be accompanied by further dissemination of information by the MSOs and the Cable operators to the consumers. In principle there can be no real objection to the release of prices. This would lead to greater transparency and information. However given the market as it has evolved today there is no direct correlation of wholesale prices to retail prices – this depends on the level of negotiated connectivity and total payment not only for the particular bouquet but also the other bouquets. Thus the same wholesale prices lead to different retail prices in different parts of the country. It would not be possible to bring about uniformity in these prices, in the absence of addressability, because of the great diversity in conditions in different parts of the country. Therefore the best course of action would be for each service provider to provide a break up of these charges with all elements including arrears. This would also help in the resolution of disputes as and when they arise. It has been decided in principle that these wholesale prices reported by the Broadcasters would be put up on TRAI’s website with the clarification that retail prices need not fully reflect these prices since the negotiated connectivity is less than 100% and that is why retail prices are generally lower than the wholesale price. There should also be a mechanism by which prices for individual channels charged by MSOs to cable operators and by cable operators to consumers should be made available to the cable operators and consumers respectively. In view of the large number of operators the manner in which this should be done will have to be determined separately taking into account that at present there is no field level enforcement machinery in place. Thus action to publicise and /or inform individual consumers about the rates of channels /bouquets would be examined separately as one comprehensive exercise. Whether we should move towards pricing of individual channels so that the consumers in a non-CAS environment, through the cable operators, exercise a wider choice regarding channels? 541

3.20

A general view over this subject is yet to crystalise. Accordingly there appears to be no need to make any changes in the basic scheme of the price control regime for the present.

3.21

The factors mentioned for determining the similarity of rates of similar channels contained in the proposed clause 3B in the Amendment Order has not been extended to the charges in respect of commercial subscribers, in deference to the directions of the Hon’ble Supreme Court on 28.4.2006 to maintain status quo as on the date of the order until further orders in civil appeals no 2061 of 2006 and 2247 of 2006.

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ANNEXURE LIST OF COMMENTS OF STAKEHOLDERS The opinion on the issues have generally been seen to be divided along the lines of business model reflecting the respective interests of stakeholder groups of Broadcasters, channel Providers and channel Distributors on the one hand and the MSOs and Cable Operators on the other. Only two consumer Organisations have responded. The comments received have been summarized to reflect the different views received under these three major groups of stakeholders. Certain new issues, which have been raised in the Open House Discussions, have also been taken into consideration. a)

On the proposal for amendment to the Tariff Order proposed by MSO Alliance the views of the major groups are: I.

Group consisting of distributors of channels

Broadcaster,

channel

provider,

i)

Collective choice given the wide variety of individual choices would require consensus, which is not practicable. Further the argument of a-la-carte leading to wider consumer choice is fallacious, as the consumers will still have no choice over cable operator or placement of channels or quality of service.

ii)

It is important to have a proper addressable system for a-lacarte model to be effective and transparent.

iii)

Restricting channels to a a-la-carte leads to a loss of benefits of economies of scale, result in lower programme diversity and absence of level playing field to new and niche channels, restrains the growth of the industry leading to loss of benefits of volume discounting, reduced choice and increased cost to the consumers. It has been reported that there is evidence to this effect shown in a study of US Market.

II

Group consisting of MSOs, Cable Operators i)

Broadcasters are hard bundling all the pay channels and customers are not willing to pay as they do no watch all pay channels. The words ‘or as part of new separate bouquet’ has been taken advantage by the broadcasters in the case of HBO and Ten Sports Channels.

ii)

What has been requested is that both choices – to subscribe individually or bouquets – should be

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available and for the choice to be real a pricing formula needs to be incorporated in the Tariff Order whereby a ceiling on the individual/ a-la-carte prices comprised in a bouquet is imposed. iii) With the large increase in the number of channels it is not possible to carry all the channels because of limitations of bandwidth. III

Group consisting of consumer organizations The responding consumer organisations have stated that the proposal of MSO Alliance should not be agreed to till the introduction of CAS or an addressable system at the level of consumer. Collective choice in the present set up when the consumer is required to deal with only one cable operator is a farce and the amendment will only give leverage to the MSOs.

b)

On the issue of alternative methods by which the concerns expressed by MSO Alliance can be addressed within the existing framework of nonaddressability the views of the various groups of stakeholders are as under: I.

Group consisting of Broadcaster, distributors of channels

i)

In the absence of CAS, digitalization is seen to be the solution for addressing the concerns of MSOs over constraints of bandwidth for carrying channels in Analogue mode. The choice of offering channels individually or as a bouquet should be left to the broadcasters to determine and market driven solution is advanced as the best option in a Non CAS environment.

II

Group consisting of MSOs and Cable Operator

i)

The general view is that there is no other method excepting amendment to the Tariff Order, as they are not able to carry all the bouquet(s) of channels imposed on them in analogue mode.

ii)

However in the alternative in a non-addressable situation there is a need for a basic formula of individual pricing of channels Vs Average price per channel in a bouquet so that the individual channel price is not unviable for operators to choose.

iii)

One view is that in the event amendment being not practical the price prevailing on 26.12.2003 can be used as benchmark but only 7% increase be permitted on the aggregate price of all bouquets.

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channel

provider,

iv)

Another view is that TRAI’s recommendation on pay channels coming after a notified date through STB with limited price regulation on maximum available discount in a bouquet should address the issue.

III

Group consisting of consumer organisations

i)

If CAS through STB is implemented on rental basis and digitalization takes place the issue will get resolved.’

ii)

Another consumer organisation is of the view that the issue has arisen due to migration of pay channels and it is a dispute between service providers. In order to avoid future dispute TRAI should mandate all broadcasters /distributors to decide on individual prices of all existing pay channels.

c)

On the issue of amendment of Tariff Order to indicate benchmarks for determining similarity in rates of new pay channels vis-à-vis rates of similar channels that was prevailing on 26.12.2003 the views of the various groups are as under:

I.

Group consisting of Broadcaster, distributors of channels

i)

This group have stated that the rapid growth in competitive market should be recognized and price freeze withdrawn and the Tariff Order amended to invoke free market principle and pricing should be allowed to be based on commercial agreements.

ii)

Fixing benchmarks for a product, which comprises intellectual property rights and copyrightable material, would amount regulating the price of copyrights. Entertainment is not a commodity to apply quantitative parameters and is not an essential commodity to be brought under price regulation.

iii)

With intrinsically different cost structure on account of technology used, distribution model followed, differences in content quality, programme format, margin/fees paid to intermediaries, the benchmark approach will be ineffective, illogical and sub optimal.

II.

Group consisting of MSOs and Cable Operators

i)

Similarity of channels should be judged by taking into consideration the rate card or price of individual channel of all broadcasters of similar genre and the language of the channel. The criteria based on reach being subjective should not be used.

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channel

provider,

ii)

The derived wholesale price should not be used as a benchmark.

iii)

One view is that if the price prevailing as on 26.12.2003 is used as benchmark only 7% increase on account of inflation should be allowed on the aggregate price of all the bouquets of a broadcaster/distributor.

iv)

Another view is that the method of fixing prices on a la carte vis a vis bouquet of channels as envisaged in para 4 of chapter 3 of the consultation paper of April 2004 can be used as basis.

v)

Despite subjectivity involved in pricing of content there has to be ceiling on the price of new channel vis-à-vis the price of existing channel of that genre. A limit of 1.5 times the price of existing channel is suggested as one option. In case if a broadcaster fees that such pricing will not cover his costs and reasonable margin exception can be made by TRAI on caseto- case basis after examining costing details.

III.

Group consisting of consumer organisations One view is that the available Chennai CAS area individual channel prices and wholesale bouquet CAS and NON CAS area prices be used to derive wholesale individual channel price within a bouquet and for judging similarity in rates. Another organisation has suggested that channels be classified under various genres by the broadcaster and average price falling under a genre can be used as a benchmark till such time the addressability is introduced. Market forces may be allowed to determine the prices once the addressability is introduced.

d)

On the issue of specific changes required in the Tariff Order and the approach in case of an existing pay channel change from one distributor to another, the arguments representing various stakeholder groups are:

I.

Group consisting of Broadcaster, distributors of channels

channel

provider,

i)

The Regulator should not be interfering in what are commercially negotiated contracts between private parties.

ii)

Such events are unique and it is impossible to work out any methodology because the events are spread over different periods of time.

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iii)

II.

III

There are also a couple of suggestions on the methodology. One suggestion is that the current distributor be allowed to acquire a new channel in place of an existing channel going out of his existing bouquet without change in the existing bouquet price. Alternatively if the cost of acquisition leads to higher cost per subscriber, the new distributor should be left to his discretion to provide such new channel on a-la-carte basis or as a part of new bouquet by adding volume discount.

Group consisting of MSOs and Cable Operators i)

The extent of reduction in the bouquet price should be the benchmark for the new broadcaster/distributor and to facilitate this the prices of individual channels and bouquets should be published by broadcasters in public domain.

ii)

Another suggestion is that the principle of price freeze on the total price of all bouquets subject to escalation for inflation must be applied or alternatively the shifted channel be mandated to be offered on a standalone basis for at least six months till the market forces determine the true value of the channel.

Group consisting of Consumer Organisations. One view is that the extent of reduction should be with reference to the benchmark prices as prevailed on 26.12.2003 of the channel that moved out of a bouquet. Another view is that it is an issue, which has to be settled between MSO and broadcaster, but in order that no dispute arises in future TRAI should mandate broadcasters/MSOs to decide on the individual channel prices of all the existing pay channels.

e)

On the issue of freezing of the rates of new pay channels /bouquets introduced after 26.12.2003 at the level of introduction the views are as under:

I.

Group consisting of Broadcaster, channel provider, distributors of channels i)

The group have opposed price freeze and suggested lifting of price caps and recommended to leave it to market forces.

ii)

The object behind introductory pricing is to provide an opportunity to as many people to view content and therefore the prices should not be frozen at this level.

iii)

With two platforms for delivery and with more DTH operators expected to become operational the Indian market 547

is competitive and price control and restrictions will impact revenues, limit investment, slow down launch of digitalization, affect quality and diversity of programming.

III

iv)

TRAI’s objective is to promote competition and price freeze is only a temporary measure. There is no comparable regulation on price etc on other forms of entertainment such as theatre, print media. Globally pay channels are not capped or regulated except the basic tier.

v)

Price regulation sanctifies piracy and resultant under declaration.

vi)

No market failure scenario or other compelling economic rationale exists for placing price control on pay channels.

II.

Group consisting of MSOs and Cable Operators

i)

The prices should be frozen except for the adjustment for annual inflation till addressability and choice at the consumer level is not sorted out as otherwise the objective of protecting consumer interest will be defeated.

ii)

Another suggestion is that not only the prices be frozen in respect of new pay channels that have come after 26.12.2003, the tariff order should also be amended imposing restrictions on the grounds for increase in subscriber base limiting it to only on account of enlargement of service area or addition to the number of cable operators. Alternatively, the price freeze should operate only at the level of broadcasters to MSO and MSOs should be allowed to increase the cable charges for the distribution chain below so that the additional outgo to broadcasters due to imposed increased connectivity is recouped.

Group consisting of Consumer Organisations One of the consumer organisations has favoured the freezing of prices of pay channels at the level of introduction after 26.12.2003 and the other has viewed that it should not be frozen and may be reviewed on the basis of benchmarks adopted for pricing of new pay channels.

f)

On the issue of release for public information of prices of new pay channels charged by broadcasters to MSOs reported under clause 4 of the Tariff Order by TRAI as and when there are changes, the arguments advanced are:

I.

Group consisting of Broadcaster, channel provider, distributors of channels i)

The relevant information to the consumer is the retail price and not the price charged by broadcaster to MSOs. 548

Publishing of information without similar obligations down the distribution chain will cause confusion and make the market functioning inefficient.

II.

III

ii)

Another view is that the information furnished to TRAI on prices is confidential information and public disclosure of negotiated commercially sensitive information will create difficulties for the parties to enter into agreements based on their respective competitive strength in future.

iii)

There is also a view that the rates of the channel may be published by TRAI.

Group consisting of MSOs and Cable Operators i)

The prices should be published by TRAI as TRAI will be best official source for pricing and will bring transparency. The prices should be made available to the consumer organisations. Broadcasters and MSOs should also disclose the prices through their respective channels. Attention has been invited to Rule 9 of the Cable Television Rules 1994 in support.

ii)

Stating that there is a worldwide practice of sharing distribution margin between broadcasters, MSOs, LCOs and a similar model should be adopted in India.

Group consisting of Consumer Organisations The consumer organisations have commented that it will be very positive step and would lead to transparency and informed decision making at all levels.

g)

On the issue of moving towards pricing of individual channels so that the consumers in a NON CAS environment through the cable operators exercise wider choice regarding channels the views of the various groups of stakeholders are:

I.

Group consisting of Broadcaster, channel provider, distributors of Channels The broadcaster group has not supported the moving towards pricing of individual channels. Generally the grounds for not supporting the proposed amendment to the Tariff order facilitating the a-la-carte system, has been reiterated. The absence of non existence of addressability at the consumer level, collective choice cannot be representative of individual consumer choice etc, increased costs to consumers on a-lacarte system have been cited as the reasons for not supporting this proposal.

II.

Group consisting of MSOs /Cable operators i)

We should move towards pricing of individual channels. Broadcasters are bundling slow moving channels with channels in good demand and a move towards pricing of

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individual channels in non CAS environment will give wider choice to consumers. ii)

It has been stated that MSO/operator who is getting direct feed should be able exercise choice on behalf of the consumers till addressability comes at consumer level and this is the practice worldwide.

iii)

One view that it has both advantages and disadvantages. The benefit is to choose collectively through the operator but the difficulty is that the MSO will have to select all the channels, as there will be divergent demands and increased number of agreements with the cable operator.

III.

Group consisting of consumers Exercising choice through Cable operator is just an illusion and pricing of individual channels should go along with the introduction of pay channels through the addressable system. Another view is that we should move towards pricing of individual channels but the consumer will not be able to exercise choice because of analogue networks with limited bandwidth.

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