TelecomLive January-2019

New Broadcasting Regime www.telecomlive.com 32 Telecom LIVE January 2019 These are: Penetration, Lead Channel Number (LCN), Sub- scriber Volume, and Premiumization. As per our detailed analysis of various condi- tions attached for incentives, these targets can only be achieved if the distributor sells only packages to the consumers. This way, even though a transparent mechanism is being provided by Trai under a new regulatory regime, but the cost to the end consumer will be very high. Control: Broadcaster vs Dis- tributor By not enforcing 15 per cent price cap, the control of packaging has gone into the hands of the broadcaster. The distributor, who knows the local market well, will have no choice of making its own package of channels. Star is owned and controlled by a Mauritius based company (see table below). It is earning substan- tial revenue from the Indian mar- ket . Why should (see table at pg 33) the control of price and packages rest with them! Pricing / packaging control should be vested with dis- tributor. If a distributor packages channels, it will be fairly priced, choice friendly, and truly reflective of usage pattern. Background The issue relates to capping of discount on price of bouquet of rd channels as provided for in 3 pro- viso to clause 3(3) of the Telecom- munication (Broadcasting and Cable) Services Tariff Order, 2017 (Tariff Order 2017). The Inter- connection Regulations 2017 and the Tariff Order 2017 noti- fied by Trai on Mar 3, 2017 were challenged by Star India Pvt Ltd and Vijaya TV before High Court of Madras. Justice Sundar of the High Court of Madras in his judgment dated Mar 2, 2018, allowed the Writ Petitions and struck down many provisions of the Inter- connection Regulation and Tar- iff Order, including the third proviso to clause 3(3) of the Tariff Order 2017, on the ground that these provisions regulate the content of the programmes of TV channels of the broadcast- ers and therefore, ultra vires the TRAI Act. However, the then Chief Jus- tice of the High Court of Madras, in her dissenting judg- ment dated Mar 2, 2018, dis- missed the Writ Petitions filed by Star India Pvt Ltd and Vijaya TV and upheld the powers of TRAI to issue the Interconnect Regulations and Tariff Order. However, she gave a finding that the capping of price of bouquet at 85 per cent of the sum of a-la- carte price of the channels, as provided for in the third proviso to clause 3(3) of the Tariff Order 2017, is arbitrary and un- enforceable. Since there was a split ver- dict, the judgments dated Mar 2, 2018 were referred to a third judge, Justice Sundresh of the Madras High Court, to adjudi- cate on issues of difference. The third judge in his judgment dated May 23, 2018, while con- curring with the judgment dated Mar 2, 2018 of the Chief Justice of the High Court of Madras, dismissed the Writ Petitions and upheld the powers of Trai to frame the Interconnection Regu- lations and the Tariff Order under the TRAI Act. However, the third Judge declined to con- sider the validity of capping on discount as provided for in the third proviso to clause 3(3) of the Tariff Order 2017 observing also not reduced the cap of Rs 19 for the individual channels. As a result, the broadcasters are offering heavy discounts in packages, mak- ing the individual channels unat- tractive for the consumers. The 15 per cent cap on discount gives a level playing field to the broadcasters as well as cable and operators. If you remove the cap, broadcasters will arbitrarily and discriminatorily resort to heavy discounting on the bouquets as compared to the MRP rates, and choice in true sense will not be there. Consumer will once again be forced to buy the entire bouquet. We have observed that only Star has been vehemently opposing Trai's regulation for the last several years challenging its powers on framing regulations. We have ana- lysed all the channels and packages on offer by Star and found that Star is engaged in heavy discounts for packages rendering the choice for selecting individual channels a useless exercise (see tables at pg 34 to pg 39). RIO We have studied the Reference Interconnect Offer (RIO) of Star and found that it offers a flat 20 per cent discount on MRP to the dis- tributor. This discount is uniform for both individual channels and packages. In addition, Star offers a maximum of 15 per cent incentive to the distributors, which is linked to very tight selling targets, under four different categories of incen- tives. No. of of Equity Shares of Rs 10 each of Star India Pvt Ltd (Mar 31, 2017) Sl Name No. % 1 Buzzer Investments Ltd, Mauritius 205,588,171 50.03 2 Star Entertainment Holdings Ltd, British Virgin Island 129,779,856 31.58 3 Star ISP Ltd, Mauritius 23,208,394 5.65 4 Startv.com Holdings Ltd, Bermuda 21,917,229 5.33 5 Worldwide Wickets, Mauritius 20,976,987 5.10 6 Star Television Technical Services Ltd, British Virgin Island 9,356,673 2.28 7 Quazar Investments (Mauritius) Ltd, Mauritius 121,732 0.03 8 Mr Krishnan Kutty 100 0.00 Total 410,949,142 100