New Delhi: The Telecom Regulatory Authority of India (Trai) had drafted the tariff order on revenue sharing at the behest of broadcasters and, hence, the revenue-sharing formula appears to have benefited them the most.
There was a tacit admission in Para 27 of the Explanatory Memorandum of the Tariff Order issued on 30 April this year that the revenue sharing had been fixed at the behest of broadcasters, said counsel for multi system operator (MSO) Delhi Distribution Company Navin Chawla in his arguments challenging the tariff order in the Telecom Disputes Settlement and Appellate Tribunal (Tdsat).
The tariff order was issued ahead of the transition to digital distribution in the four metros, which has been postponed to 1 November 2012.
Continuing his arguments on Thursday, Chawla said a broadcaster could start a channel irrespective of whether there was a demand for it or not, but an MSO would have to place it as part of the 500 mandated television channels. He said the regulations were clear that if a channel had a viewership of less than 5 per cent of the subscribers, then it could be taken off the bouquet for up to one year but this meant that it would still have to be received from the broadcaster.
The counsel said every MSO would have to create infrastructure for carrying 500 channels even if the demand was for much less, which benefits the broadcasters.
"A broadcaster is free to set up a channel, but I (MSO) cannot be forced to provide a platform for it even if there is no demand,‘ Chawla said.
Section 11A of the regulations says there is no need for a placement fee to be charged in view of the electronic programme guide (EPG), but this favoured the broadcasters since Trai had at the same time mandated that the channels had to be placed genre-wise in the EPG.
Thus, Chawla said, Trai was creating a market for broadcasters through the MSOs.
Referring to the carriage fee, Trai had said this would not be chargeable if an MSO approached a broadcaster. But it had also said that even where carriage fee was payable, it would only be to cover the cost of transmission and this amounted negating the concept of carriage fee.
The tariff was clear that the MSO would have to pay the broadcaster from his share of 65 per cent in the case of a pay channel bouquet of Rs 150 but no study had been undertaken to determine the expenditure that an MSO would have to incur to set up the required infrastructure.
Chawla pointed out that under the conditional access system (CAS), the LCOs could charge Rs 82 for 30 channels. But Trai had failed to give any reasoning for the new concept of the basic service tier of Rs 100 for 100 free to air channels. He said Trai had admitted that the CAS formula of 2006 had worked well and there had been minimal litigation.
When Chawla sought to reiterate that there had been no application of mind or study, Trai Counsel Meet Malhotra intervened to say that there had been an internal study and he would refer to that in his response to the counsel for the petitioners.
Chawla said the very purpose of an Explanatory Memorandum was to give reasoning, but said this had not been done.
He pointed out that the Cable Television Networks (Regulation) Act as amended in December last year said that the local cable operators would fix the rates, but Trai had said that it would do so.
He said that there was also contradiction within the Act about who will do the packaging of the channels: the LCOs or the MSOs.
Concluding his arguments, Chawla said the Tariff Order had failed to lay down the tariff for the consumer but only given a revenue sharing formula and a ceiling, and no basis had been shown for fixing of either the revenue sharing in the BST of Rs 100 or the bouquet of Rs 150.
He said the differences that had already been brought before Tdsat after the 2010 Tariff Order and had been struck down (though they were pending in appeal in the Supreme Court) had been repeated despite the fact that a new system was being introduced.
"If DAS and direct-to-home were similar as contended by Trai, then why no BST had been fixed for DTH and no rationale had been given for letting DTH take placement fee and carriage fee?," he argued.
