The Calcutta High Court said it will decide whether to lift its stay on the implementation of TRAI’s new TV channel regulations on Thursday after ascertaining if cable operators genuinely have a right and wherewithal to negotiate with their feed providers.
The court came to this conclusion after the TRAI disputed the complaint given by cable operators alleging that TRAI was, in a way, transferring the ownership of the customers from the cable operator to the feed provider via its 2017 tariff order.
Traditionally, the customer ‘belonged’ to the cable operator, and not to the feed provider.
Feed providers are a later evolution in India’s cable industry, which was created by thousands of small cable operators who strung together cable from one house to another.
Eventually, they realized that instead of each cable operator setting up their own ‘head-end’ — a centralized facility that collected the TV signals using several dish antennas — they can ‘borrow’ the signal from a player whose only job was to provide such signals to cable operators.
Therefore, to save costs, cable operators started dismantling their head-end, and instead started taking the signals from a third party that eventually came to be known as the MSO or the multi-system operator.
This signal would then be amplified and supplied to the cable operators’ customers.
As things stand now, the cable operator can at any time cancel his agreement with his feed provider and either set up his own head-end or sign a feed agreement with another MSO.
In their complaint, the cable operators said that TRAI was trying to stand this arrangement on its head by handing over the customers to the feed provider and making the cable operator dependent on the MSO, instead of the other way around.
According to a particular provision or schedule in the new rules, the monthly bill will now be made in the name of the feed provider (MSO) instead of the cable operator, the association told the court.
“Referring to Schedule VI [the advocate for the cable operators] points out, the agreement will provide for billing of subscribers to be in name of Multi System Operators (MSO). MSO will receive payment of subscriptions paid by subscribers. Revenue share per clause 12.1 of the agreement shall be paid by MSO to local cable operator (LCO) on receipt of invoice from LCO,” the Calcutta High Court had noted in its stay order.
“This, if implemented, his clients will be out of business,” the court said, quoting the advocate for the cable operators.
This was countered by TRAI, which said that the Schedule VI was just a ‘model agreement’ between the feed provider and the cable operator, and that cable operators were free to enter into any mutually negotiated agreement with any MSO if they so wished.
However, the advocate for the cable operators said that such a possibility was remote, given that the TRAI had made things so favorable for the MSO in its model agreement.
“There is no possibility of MSO agreeing to any other term or condition apart from this heavily loaded in its favour, standard format agreement prescribed in Schedule VI,” he pointed out.
The advocate also pointed out that the model agreement stipulated that out of the 100 rupees collected, the feed provider would keep 55 rupees and the cable operator — the original owner of the network — will get only 45 rupees.
“… revenue share ratio is also unviable for his clients considering it is the cable network and equipment of his clients which will reach contents to the subscribers. Share of revenue of his clients [cable networks], is of lesser percentage of the amount in bills to be raised in name of MSO and money collected by it,” the advocate argued.
The court noted that the pleas of the cable operators “betray apprehension regarding them losing their livelihood.
“It is a matter of concern. Since Court does not have information regarding said order dated 18th December, 2018 having been stayed, Court is inclined to stay, till 18th February, 2019, implementation of the [TRAI tariff] policy..”
The TRAI today approached the court today against the stay granted yesterday, highlighting that the Schedule VI agreement was not mandatory and that cable operators can make any deal with feed providers.
The Calcutta High Court, however, refused to lift the stay today, and said it wants to be convinced that cable operators’ “power to negotiate” with the MSO was ‘real’ and not ‘illusory’. It pointed out that if it can be convinced that cable operators actually have such powers to negotiate and conclude a just deal, then the stay can be lifted.
“Whether or not Court will interfere in sustaining interim order passed yesterday will turn on answer to the question as to whether option for negotiation given by impugned notification is illusory,” said the order by Justice Arindam Sinha.
The matter will now be taken up on Thursday at 10:30 AM. TRAI’s new rules were supposed to come into effect from Friday.