The verdict in the crucial case filed by Star India against the sector regulator’s move to control a-la-carte pricing of television channels in India is expected to be delivered next week, a key industry official said.
“The judgment has been reserved by the Madras High Court. There has been a representation by the Government, TRAI and players.. What we have come to know is that it will be pronounced in a week,” he said.
TRAI’s regulations, unveiled early last year, are designed to prevent broadcasters and distribution companies — including DTH players — from forcing consumers to subscribe to ‘junk’ channels by the use of bundling.
UPDATE: The two-judge bench was unable to come to a consensus and both gave different orders. Both judges, however, were unanimous in striking down the main TRAI rule that sought to prevent broadcasters from increasing the price of their channel by 10 or 100 times when it is sold individually and not as part of a bouquet or package. The judgment denotes a victory for broadcasters. The final decision will be taken by the Supreme Court.
The rules and regulations were supposed to have come into effect on Sept 1 last year.
However, in May last year, the implementation of the new rules was stayed by the Supreme Court due to various cases filed by Star India, Bharti Airtel and Tata Sky at various High Courts.
The cases filed by Tata Sky and Bharti Airtel on the same subject are pending at Delhi High Court, which has put it on hold till the Madras High Court delivers its judgment.
At the time of granting a stay on TRAI’s order in May last year, the Supreme Court asked the Madras High Court to complete the hearing in four weeks so that a final order could be delivered well before Sept 1.
However, the case in the Madras High Court has dragged on for nearly seven months.
A MATTER OF PACKAGING
The core of the new rules is that the sum of the individual prices of all channels contained in a pack cannot exceed the pack price by more than 17.65%.
This is aimed at preventing consumers from being forced to buy channels they don’t want, and to give them the freedom to pick and chose the channels they want to subscribe to.
At present, distributors such as Bharti Airtel and Tata Sky often charge as much as Rs 70 per HD channel, while a bundle of 70 HD channels can be purchased for as little as Rs 225 per month.
On average, an HD channel in India costs around Rs 40 per month if purchased by itself.
In other words, if one were to buy these 70 HD channels one-by-one at their individual prices, it would cost Rs 2800 per month.
However, if one buys all these channels as a pack, it costs only Rs 225.
This is so because DTH operators and certain broadcasters do not want customers picking and choosing their channels.
Customers picking and choosing their channels will remove the control exercised by DTH companies and broadcasters on which channels customers will see.
Moreover, selling channels in the form of packages is more lucrative to DTH and cable companies because they can then charge the channel-owners an inclusion charge for being made a part of their packs. In other words, they get money from both their suppliers as well as their customers.
It also helps big broadcasting groups like Star India to bundle their less popular channels with their popular channels, ensuring that consumers buy their less-popular channels and not just the popular channels.
However, TRAI argued that this practice was anti-consumer and anti-competitive, and brought out the new rules to link the individual prices of channels to the pack price.
If implemented, the rule is expected to bring down the average price of HD channels to single digit rupees from around Rs 40 at present.
TWO-TIER CHARGES
Under the new rules, a customer has to make two types of payments to DTH and cable operators.
The first type is the pay channel subscription fee, which is mentioned above.
This amount is primarily determined by the channel owner, and collected via the DTH platform.
Most of this money will go to the channel company — such as Star or NDTV.
In addition to the pay channel price, the customer must also pay capacity fee to the DTH and cable operator.
TRAI has left it to the DTH companies to decide how much of capacity fee they want to charge. They have been allowed to charge zero as well, giving capacity free. In such cases, they have to depend on taking a ‘cut’ from the subscription fees paid by consumers to broadcasters.
However, at the same time, it has put upper limits on the capacity fees that they have been allowed to charge.
The basic subscription charge has been stipulated at a maximum of Rs 130 per month, which includes the cost of 100 standard definition or 50 HD channels.
If a subscriber needs more channels, he or she has to buy additional ‘capacity packs’.
Each capacity pack will allow you to add 25 standard definition channels or 12 HD channels. The maximum price for a capacity pack has been kept at Rs 20 per month.
WHAT NEXT
Even after the Madras High Court verdict, the loser is likely to appeal the verdict in the Supreme Court.
However, the Supreme Court is likely to dispose of the appeal in a matter of days as it won’t admit fresh evidence, but only evaluate the evidence submitted before the High Court and examine the verdict passed by it.