TRAI to work on issue of commercial subscribers

Telecom Regulatory Authority of India (TRAI) has recently issued a consultation paper ‘Tariff Issues Related to Broadcasting and Cable TV Services for Commercial Subscribers’. The paper is aimed to relook at the regulatory agenda for tariff applicable for commercial subscribers. This matter has been under legal examination since 2005 before both the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) and the Supreme Court. The consultation paper covers issues like definition of ‘commercial subscriber’, ‘commercial establishment’; categorisation of commercial subscribers; manner of offering of TV services to the commercial subscribers; and various alternatives of tariff for the commercial subscribers. 

This move comes after a directive by the Supreme Court. The order passed in April this year, directs as follows:
“…However, we direct that for a period of three months, the impugned tariff, which is in force as on today, shall continue. Within the said period, TRAI shall look into the matter de novo, as directed in the impugned judgment, and shall re–determine the tariff after hearing the contentions of all the stake holders….”

In the consultation paper, the authority has presented meaning of commercial subscriber and commercial establishment on the basis of the Shops and Establishments Act in various states.

Definition of commercial subscribers
The authority has defined ‘commercial subscriber’ as any person, other than a multi-system operator (MSO) or a cable operator, who receives broadcasting service at a place indicated by him and uses such signals for the benefit of his clients, customers, members or any other class or group of persons having access to its commercial establishment. On the other hand, a ‘commercial establishment’ has been defined as any premises wherein any trade, business or profession or any work in connection with, or incidental or ancillary thereto is carried out and includes a society registered under the Societies Registration Act, 1860. However, it does not include a shop or a factory registered under the Factories Act, 1948. The underlying idea of the above definitions is to shift the focus from the concept of ‘end user’ and, instead, define a commercial subscriber as a commercial establishment that avails the broadcasting or cable service from a broadcaster or a DPO, as the case may be, the authority reasoned. It may also be noted that as per the proposed definition of ‘commercial subscriber’, the TV signals can be obtained by the commercial subscriber either from any of the DPOs or from the broadcaster directly. It would be the responsibility of the commercial subscriber to ensure distribution of TV signals in digital and encrypted form within its commercial establishment in case it obtains signals directly from the broadcaster.

Categorisation of commercial subscribers
According to TRAI, commercial subscribers are of different kinds, depending on their size of business, paying capacity of their clients, objectives of the business and extent to which the TV services contribute to the same. Therefore, one view could be that commercial subscribers may be further sub-categorised into groups of similarly placed entities. However, there could also be a view that given the wide range of parameters on the basis of which further sub-categorisation may be done, it may not be practically feasible to work out a comprehensive list of similarly placed entities. This being the case, the authority noted that any such sub-categorisation will be open to objections by different stakeholders depending on their interests. From the details provided under the heading ‘Background to evolution of category of and tariff for commercial subscribers’, it may be seen that sub-categorisation has been a major bone of contention resulting in litigation in the past.

Manner of offering to the commercial subscribers
The authority has suggested that TV signals can be made available by the broadcasters directly or through any of the distribution platforms. The regulator has suggested three models whereby channels can be offered to commercial establishments. The first is that only the broadcaster publishes the rates for commercial tariff in the form of reference interconnect agreement (RIO) in accordance with the regulatory framework for the same. Such RIO shall form the basis for finalising the agreements with commercial subscribers. The commercial subscribers will have to negotiate with the broadcasters and once the negotiations are settled and agreements are in place, the broadcaster shall identify the distribution platform which will supply the signals to the commercial subscriber. The broadcasters shall have their own agreement with the distribution platform, based on mutual negotiations. In case the commercial subscribers have their own digital headend and would like to take signals directly from the broadcaster, the RIO of the broadcasters should also have distinct provisions for such commercial subscribers. The second possibility is that, the distribution platform publishes the rates for commercial tariff in the form of RIO in line with the regulatory framework for the same. Such RIO shall form the basis for finalising the agreements with commercial subscribers. The commercial subscribers shall have to negotiate with the distribution platforms and once the negotiations are settled and the agreements are in place, the distribution platforms shall supply the signals to the commercial subscribers. The distribution platforms shall have their own agreements with the broadcasters based on mutual negotiations. The third model could be a combination of the above two models. In this model, both the options mentioned above are available to the commercial subscribers. Both the distribution platforms and the broadcasters publish the RIOs, and there will be competition among the distribution platforms as well as between distribution platforms and broadcasters. The commercial subscribers will have more flexibility and options for negotiations to get competitive rates.

Tariff for commercial subscribers
The authority has suggested that there can be four alternative tariffs for commercial subscribers. The first alternative is to treat both commercial and ordinary subscribers alike. With respect to tariffs for TV services, there could be a view that the two categories of subscribers may not be treated on a par, as the commercial subscribers utilise the TV services for commercial considerations. However, there may be a counter view in this regard claiming that the ultimate end consumer is the same person; only the place of viewing varies. Thus, there should not be any tariff differentiation, TRAI stated. In case of the second alternative, a linkage could be in terms of fixing a tariff ceiling for commercial subscribers which is some factor of the tariff ceilings for the ordinary subscribers prescribed at the wholesale level. However, the authority feels that fixing such a blanket ceiling for all the commercial subscribers may not serve the purpose. Prescribing ceilings would be meaningful only if the commercial subscribers are categorised into similarly placed groups and a ceiling is prescribed for each such group. In the third alternative, there may not be any tariff or linkages prescribed for the commercial subscribers. However, to protect the interest of commercial subscribers, broadcasters and DPOs, providing TV signals to the commercial subscribers, certain provisions may be mandated. The fourth alternative involves keeping the tariff for commercial subscribers under forbearance as there is enough competition in the market due to digitisation. Furthermore, from the tariff stipulations for the ordinary subscribers served through digital addressable systems, it can be seen that greater the choice offered to the consumer, more is the freedom a distribution platform enjoys in pricing its offerings and in the ultimate scenario where the consumer has total choice. Besides, niche channels like HD TV channels as well as ad-free channels have been kept under tariff forbearance.