What Bombay HC's NTO 2.0 verdict entails for TRAI & IBF
The bench has also observed that TRAI will not take any coercive steps for six weeks for implementation of remaining part of NTO-2.0, which has been upheld
The Bombay High Court has pronounced its judgement in the pleas filed by TV broadcasters against Telecom Regulatory Authority of India's (TRAI) New Tariff Order (NTO) 2.0.
The HC has upheld the NTO 2.0 barring the second proviso of the twin conditions which states that the a-la-carte rates of each pay channel (MRP), forming part of a bouquet, shall in no case exceed three times the average rate of a pay channel of the bouquet of which such pay channel is a part.
The bench of Justices AA Sayed and Anuja Prabhudessai found the second proviso to be arbitrary. The bench has also observed that TRAI will not take any coercive steps for six weeks for implementation of remaining part of NTO-2.0, which has been upheld.
The twin conditions state that i) the sum of the a-la-carte rates of the pay channels (MRP) forming part of a bouquet shall in no case exceed one and half times the rate of the bouquet of which such pay channels are a part; and ii) the a-la-carte rates of each pay channel (MRP), forming part of a bouquet, shall in no case exceed three times the average rate of a pay channel of the bouquet of which such pay channel is a part.
The broadcasters had prayed for striking down the amended tariff order and regulations since they violate Article 14, Article 19(1)(a) and Article 19(1)(g). The broadcasters had sought a stay on the NTO 2.0 contending that the TRAI has sought to overhaul the entire method and manner in which broadcasters conduct their business. They also argued that the broadcast industry had barely adapted to the MRP regime, which came into force in February 2019.
The IBF and other petitioners have also contended that the broadcasters, on an average, lost 50% of the subscribers to whom their channels were reaching compared to the previous regime. This has impacted the ad as well as the subscription revenue of the broadcasters.
Among the key provisions of NTO 2.0 opposed by the broadcasters include 1) arbitrary reduction of MRP cap to Rs 12 from Rs 19, 2) Imposition of twin conditions on bouquet pricing, 3) restricting incentives only to à la carte, and 4) impact of network capacity fee (NCF) on consumer pricing.
The TRAI had notified the amended tariff order, regulations and quality of service (QoS) guidelines on 1st January 2020. Prior to notifying the amended regulations, the authority had issued a Consultation Paper on ‘Tariff related issues for Broadcasting and Cable services’ on 16th August 2019.
The amendments were brought about since the regulator felt that certain tariff related issues may require some kind of ironing out and pivotal in achieving the overall objective of the framework notified in March 2017.
Faced with consumer criticism due to the increase in monthly TV bills under the new MRP regime, the TRAI had decided to put a cap on the a-la-carte price of channels as well as place reasonable restrictions on the formation of bouquets. The authority had stated that broadcasters are forcing consumers to opt for bouquets through deep discounting and by pricing popular channels close to the channel cap of Rs 19.
With the NTO 2.0 upheld, only those channels which are having MRP of Rs. 12 or less will be permitted to be part of the bouquet offered by broadcasters. For channels that are not part of a bouquet, the broadcasters have the freedom to determine the price of the channel.
Further, The number of pay channel bouquets cannot be more than the number of pay channels offered by a broadcaster. The distribution platforms have to provide 200 channels for network capacity fee (NCF) of Rs. 130 excluding taxes per month. Earlier, the DPOs had to provide 100 SD channels for an NCF of Rs 130.
