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AIDCF files a writ petition against Trai over NTO 3.0

They claim that Trai failed pricing of television channels.

Mumbai: India's digital multi-system operators (MSOs) apex body the All India Digital Cable Federation (AIDCF), and Kerala Communicators Cable Ltd. have filed a writ petition against the Telecom Regulatory Authority of India (Trai) for changes in the telecommunication (broadcasting and cable) services interconnection (addressable systems) (fourth amendment) regulations, 2022.

AIDCF, which represents more than 40 per cent of subscribers (cable TV), has challenged the NTO.3 before the High Court of Kerala. The AIDFC is one of the main negotiators for NTO1.0, 2.0 and 3.0 with Trai and the ministry of information and broadcasting (MIB).

The writ petition accessed by claims that Trai has failed to regulate the pricing of television channels. It said, "The impugned regulations are arbitrary and contravene the provisions and objectives of the Trai act and the constitutional rights under article 14 and 19 (1) (g) of the Constitution of India."

"In addition, the said impugned regulations also take away from consumer choice and autonomy, which are the cornerstones of the new regulatory framework for cable television after 2017. Further, the procedure for making the impugned regulations also violates the provisions of section 11 (4) of the Trai act that require transparency and consultation in the process of framing regulations thereunder," it further added.

AIDCF claims the primary objective of the Trai is to promote and ensure orderly growth of the telecom sector, which includes the cable television sector. However, Trai, in framing the regulations, has acted arbitrarily and undone the protections and regulations that were introduced to ensure the orderly growth of the sector and to protect the interests of consumers further, and has instead demonstrated a failure to exercise jurisdiction and arbitrary decision-making by caving in to the demands of broadcasters at the expense of the orderly growth of the cable television sector and the protection of the consumer and other service providers.

"The actions of the Trai instead of stemming the consistent decline of the cable television sector are bound to ensure the slow and steady decline of the sector leaving the mass of consumers in rural, tier two and tier three cities and towns, who do not have access to high-speed internet with no access to information and entertainment, in addition to leaving lakhs of employees working in the cable television sector without employment," said AIDCF.

With a view to fixing the commercial and/or technical terms of interconnectivity between service providers in the cable television sector, Trai issued the telecommunication (broadcasting and cable services) interconnection regulations, 2004 on 10 December, 2004.

AIDCF highlighted the fact that the cable television industry needs to be protected by ensuring that consumers receive cost-effective and competitively priced content, and in relation to the same, the Rs 12 price cap cannot be reduced. In fact, additional measures need to be introduced to tackle the abuse of pricing freedom by the broadcasters, including fixing the maximum retail price (MRP) of channels.

AIDCF pointed out that principal regulation 10 (12) provides clearly that a broadcaster shall not directly or indirectly seek any guarantee of a minimum subscriber base or minimum subscription percentage. The explanation to regulation 10 (12) has rendered the protection of the section otiose by allowing the broadcasters to incorporate a provision in the interconnection agreement whereby the discount offered to the multi-system operators is connected with the minimum number of subscribers. Regulation 10 (12) has been rendered ineffective in practice as a result of the explanation.

Further, the Trai in the new regulatory framework 2022, has also amended the tariff order 2017 by introducing the following changes, which are challenged by the AIDCF.

In clause 3 of the telecommunication (broadcasting and cable) services (eighth) (addressable systems) tariff order, 2017 (hereinafter referred to as the "principal tariff order"), in subclause (3) (a) in the second proviso, for the words "rupees twelve," the words "rupees nineteen" shall be substituted;

(b) For the third proviso, the following proviso shall be substituted: Provided further that the maximum retail price per month of a such bouquet of pay channels shall not be less than fifty-five percent of the sum of the maximum retail price of the month a-la-carte pay channel forming part of the bouquet.

In clause 4 of the principal tariff order, (a) in the second proviso to sub-clause (3), for the words "rupees twelve," the words "rupees nineteen" shall be substituted; (b) in the first proviso to sub-clause (4), for the words "rupees twelve," the word "rupees nineteen" shall be substituted.

AIDCF added that even though the root cause of the increase in price to the consumer is the abuse of pricing freedom by the broadcaster and their proposal to price driver channels out of bouquets, the Trai, instead of protecting the cable television industry and the consumer, has allowed the broadcaster more pricing freedom by allowing an increase in the cap for the inclusion of a channel in a bouquet to Rs 19/-.

"There is no justification for a total u-turn made by the Trai, which, instead of ensuring that driver channels are priced appropriately, is now again allowing broadcasters to price bouquet channels at Rs 19, which will increase the burden on consumers and lead to further exodus of consumers from the digital cable industry into the relatively unregulated OTT space where the regulations, pricing caps, and protections are not being effectively implemented," said AIDCF.

AIDCF alleged that the authority has further failed to notice the impact of the conflict of interest of broadcasters, who have no incentive to ensure the orderly growth of the digital cable television sector as they are running a substitutable and similar service directly through OTT.

AIDCF mentioned that an analysis of the packs announced after the impugned 2022 tariff amendment, which are yet to be implemented or passed on to consumers, demonstrates that consumers will need to pay between 20-40 per cent higher prices on the regularly subscribed channel (la carte/bouquets) on an immediate basis, with the potential for a manifold increase in the future also.

"With regard to a-la-carte channels, a clear trend is seen that the channels priced at or below Rs 12 for inclusion in the bouquet under the NTO 2.0 regime have been sought to be priced even higher, and in many cases at the cap price under NTO 3. This clearly shows that with each channel being a separate product and the driver channels being in high demand, the price cap is being announced as the MRP for such channels, and there is thus a need to regulate the MRP," said AIDCF.

"By way of the 2022 tariff order amendment, a completely arbitrary discount figure of 45 per cent has been permitted on broadcaster-formed bouquets of channels. The authority in the consultation paper has explained that if the discount on bouquets is so high that the price of bouquets becomes lower than the sum of ala-carte channels, then the identical amounts to perverse pricing," AIDCF added. spoke to SCOWA (seemandhra cable tv operators welfare association) Andhra Pradesh secretary R S Raju, who said,"If NTO 3.0 is implemented then around two crore digital cable TV and DTH customers may migrate to unregulated OTT & Free Dish platforms.

In NTO 3.0, not only the MSOs but also the LCOs will lose consumers. The main issue with NTO 3.0 is that the same content cost rules were not extended to OTT and Free Dish.

As one voice of our 1,55,000 LCOs in India, please convey our grievances to Trai NTO 3.0, which should be implemented only after proper OTT regulatory norms. There are around 1700 licensed MSOs in India, and Trai should apply the same content rules to OTT platforms and DD Free Dish before implementing NTO 3.0 (level playing field).

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