The country seems to be all set for the implementation of a new pricing regime for cable and DTH services from Friday, with Delhi High Court posting the next date in the Tata Sky vs TRAI case without any stay order on the implementation of the 2017 tariff order.
Tata Sky, Bharti Airtel and Discovery Communications, along with a host of other industry players who joined later, are challenging TRAI’s implementation of its 2017 tariff order.
While the original petitions, made in 2017 after TRAI revealed the new set of rules, attacked the tariff order on broad grounds, including TRAI’s right to frame such rules in the first place, the DTH players have changed their arguments in recent hearings.
The change in stance came after the Supreme Court upheld most of TRAI’s 2017 tariff order in October .
As of now, the distribution companies are more focused on getting a court order forcing the TRAI to implement its 2017 order in toto, instead of skipping the crucial 85:100 rule as it had done.
The 85:100 rules formed the core of the new anti-bouquet regulations. The rule stipulates that the ratio between the price of a channel inside a bouquet and its standalone price cannot be less than 85:100.
This provision meant that the individual price of a channel cannot be higher than its price inside a pack by more than 18%.
In other words, if a channel is priced at Rs 7 inside a pack, it cannot be sold for more than Rs 8 outside the pack. At present, channels that are priced at Rs 7 inside a pack are sold at Rs 18-22 when sold individually.
Because of this, consumers are forced to go in for packs, and like before, these packs often come with a lot of ‘junk channels’ that they don’t want.
This 85:100 rule was originally challenged by Star India in Madras High Court in 2017. This challenge was upheld by the Madras High Court, which held that there was no basis for imposing this rule, forcing the TRAI to freeze its implementation.
However, TRAI received a shot in the arm when the Supreme Court sided with it on the need for such a rule, and said TRAI was within its power to come up with such a rule to prevent broadcasters and DTH companies from forcing junk channels in the interest of the consumer.
The Supreme Court, in its October order, noted that the current practice of making individual channels very expensive in relation to pack resulted in “perverse pricing of bouquets vis-à-vis individual pay channels.”
“In the process, the public ends up paying for unwanted channels, thereby blocking newer and better TV channels and restricting subscribers’ choice. It is for this reason that discounts are capped,” the Supreme Court noted in its judgement.
However, TRAI continues to maintain that the Court’s judgment in this regard is ambiguous.
In an update to its ‘FAQs‘ on the new tariff plans earlier this month, the TRAI notes:
“Hon’ble High Court of Madras has struck down this clause for the bouquets being made by the broadcasters stating that the clause putting cap of 15% of discount on the MRP of a bouquet is not enforceable. In this regard the Authority has approached Hon’ble Supreme Court which has not agreed to. As such, at present, the 15% cap is not being implemented for the bouquets being made by the broadcasters.”
If the above rule is implemented, players like Tata Sky, Airtel Digital, Hathway Cable and Sun Direct too stand to benefit as they will get these channels at far lower prices.
Once the channels are available at lower prices, they too can mix and match these channels to create their own packs and offer them to their customers.
The implementation of the rule will also be of tremendous benefit to individual consumers in the country as it would bring down the price of pay channels like Star Plus, Zee TV, Sony TV and Colors to about Rs 8 per month from around Rs 22.42 at present.
It remains to be seen if the Delhi High Court will take a stand on this controversy and set the record straight.
If the Delhi High Court says that a reading of the Supreme Court order makes it clear that the 85:100 rule can be implemented, then it would clear the way for the TRAI to implement the rule as well, which will bring down prices across the board and increase consumer choice.
The next date of hearing in the Tata Sky vs TRAI case is Monday, Feb 4.