Partial relief for broadcasters in tariff order case from Bombay high court

The Bombay High Court on Wednesday set aside one of the twin conditions of the Telecom Regulatory Authority of India (TRAI) in the case related to the amendments to the 2017 tariff order that mandated fixing and limiting prices of the channels offered by various broadcasters in a bouquet, offering partial relief to the TV broadcasters.

The division bench of Justice AA Sayed and Justice Anuja Prabhudesai, while upholding the constitutional validity of the amended tariff order (NTO 2.0), struck down the second proviso of the twin-conditions, which directed that the maximum retail price of any a-la-carte pay channel in a bouquet cannot be more than three times the average price of any channel in the same bouquet.

This simply means the broadcasters can now include higher price channels (up to Rs 12) in the bouquet along with low price ones.

However, the court, in an oral order set aside other prayers of the petitioners including the one challenging the constitutional validity of Section 11 of TRAI, which determines the functions and authority of the regulator over broadcasters.

TRAI’s NTO 2.0 timeline
Soon after the order, broadcasters sought a stay on the implementation of the NTO 2.0 to weigh their options, including challenging this order in the Supreme Court.

The court has allowed six weeks’ time and asked Trai not to take any coercive action till then.

The genesis of the dispute lies in the notification of January 1, 2020, by the regulator that brought amendments to the tariff order of 2017, with regards to fixing and limiting prices of the channels offer by various broadcasters in a bouquet.

The amendments were challenged in the Bombay high court by the broadcasters.

The parties to challenge Trai were Star & Disney India, Zee Entertainment Enterprises (ZEE), Sony Pictures Network India (SPN) and TV18, along with the Indian Broadcasting Foundation (IBF) and the Film and TV Producers Guild of India.

After hearing the arguments from all the parties, the court had reserved its judgement on March 4, 2020, when the Covid-19 pandemic resulted in a protracted lockdown.

In absence of any interim relief in the matter, on July 24, Trai asked the broadcasters to comply with NTO 2.0 and publish the revised rates of their respective channels and bouquets by August 10.

The broadcasters once again approached the court for relief, challenging the constitutional validity of NTO 2.0, which would have severely impacted their pricing ability.

Under NTO 2.0, Trai reduced the cap on the MRP of individual channels that were part of any bouquet to Rs 12 per month from the earlier Rs 19. The regulator also imposed twin conditions for the bouquet formation, which will restrict the discount on channel bouquets to around 33%.

Firstly, the sum of MRP of all the a-la-carte channels in a bouquet cannot be more than 1 ½ times of the price of the bouquet.

This means, if a broadcaster is offering a bouquet of 10 channels for Rs 100 per month, the combined MRP of all the 10 channels cannot be more than Rs 150. This will make broadcasters rationalise the channels' price and bouquet price.

The second condition, which has been struck down, would have made it difficult for the broadcasters to club a Rs 12 channel with Rs 0.50 or Re 1 channel in the same bouquet.

Earlier, broadcasters were offering consumers an average discount of 35-55% on channel bouquets, vis-à-vis total a la carte price of all the channels in those bouquets. Trai alleged that broadcasters have misused the flexibility on bouquet discounts to “throttle market discovery of channel prices.”

Trai has also limited the total number of bouquets per broadcaster to the total number of channels it distributes. So, if a broadcaster has 12 channels, it cannot form more than 12 different bouquets.

Senior counsel Venkatesh Dhond along with Ashish Pyasi of Dhir & Dhir Associates appeared for Trai in the matter. The Film and Television Producers Guild of India was represented by senior counsel Janak Dwarkadas and law firm AZB & Partners, while law firm TMT Associates was advising the IBF.

Desai Desai Carrimjee & Mulla was Star & Disney India’s law firm; ZEE and SPN were represented by Wadia Gandy & Co and Bharucha & Partners, respectively.