By Rajat Kumar, Legal Consultant – TAD

Paper presented at panel Policy Analysis of Television Distribution IAMCR, Hyderabad, 16-19 July, 2014

The broadcasting rights in India have been the monopoly of the Government. The cable networks, which saw its inception in the 80s, were more or less unregulated till the Government came out with Cable Television Networks (Regulation) Act, 1995. Until arrival of cable television in the early 90s, Doordarshan and All India Radio, both state owned enterprises, were the only entities authorized to broadcast television and radio programmes. The Government of India overzealously guarded its monopoly over broadcasting rights. However, the entire broadcasting landscape was about to change by the Supreme Court judgment in 1996.

In Secretary, Ministry of Information and Broadcasting vs Cricket Association of Bengal, AIR 1995 SC 1236, the Supreme Court held that every citizen has fundamental right to impart as well as to receive information. It ruled that radio frequencies are public property, and that the Government has no monopoly over them. The Supreme Court directed the Government to take immediate steps and regulate the frequencies.

Since then till date the broadcast and cable Industry has seen a major shift. The cable industry which till as of today the main responsibility of content regulation is overseen by Ministry of Information and Broadcasting (MIB) and Telecom Regulatory Authority of India (TRAI) administers the carriage regulation in India. TRAI, which had been regulating the telecom sector in India from 1997, got jurisdiction over the cable and broadcasting in the year 2004 through an ordinance. This was a result of a controversial decision of the government in 2002 to introduce mandatory Conditional Access System (CAS) in India in a phased manner in India. Conditional Access System is encryption and decryption of programme material to ensure that only the authorised subscriber receives the programme. To decrypt the signals the user requires special devices (Set-top Box) so that the content could be viewed on the conventional television set. Before this Government decision to introduce CAS the signals of pay-channels were transmitted only through analogue non-addressable formats. The moment Government decided to introduce mandatory CAS, there was a strong resistance mainly from the consumers and Local Cable Operators (LCOs). Fearing the sudden hike of cable tariff and additional expense of buying set top box to view television the consumer groups were against the implementation of CAS policy. However, the Multi-Service Operators (MSOs) and the Broadcasters were in favour of the CAS policy. One main reason of their support was that in the analogue regime the LCOs did not disclose their exact service base of viewers in their area. As a result of the practice, the MSOs and the Broadcasters were suffering huge losses of revenue. In fact, even the Government realised that the lacuna and to cover the issue made CAS mandatory in India. However, due to stiff opposition from the consumers the Government decided to withdraw the implementation policy for time being. This decision of the Government was successfully challenged in the Delhi High Court, which ordered the Government to implement CAS as planned and also recommended to form a body to oversee its implementation. As a result of the of the Delhi High Court judgment, the Government immediately gave the jurisdiction to TRAI through an amendment ordinance to TRAI Act, 1997.

The present paper is a study of tariff regulation efforts of the TRAI in India. The paper maps the evolution of the tariff orders and tries to analyse how access to the television is changed under the new regime. Until the CAS was introduced in India, a conventional TV set owner could use an aluminium antennae and receive signals without any payment of charges. In so far as cable TV was concerned, though there was no tariff regulation but still the charges payable varied from area to area depending upon the social status of the locality and other local factors. Having said that it is also to be noted in analogue mode transmission, inter alia, there was problem of poor signal reception, sudden hike in charges and viewers having to pay for the channels which they do not want to watch (bundling or channel bouquet). It is hoped that with the introduction of addressability these issues can be tackled and viewers can be given more freedom and choice to pay for only those channels he/she wants to watch. However, in this changing scenario the viewer also has to shell out money for even free to air channels, like doordarshan, which earlier he could watch. Second most important feature of the earlier non-addressable analogue transmission to cross-subsidise the cable charges between the richer and poorer sections of a given subscriber base (i.e., pay-as-you-can) would also be severely affected. The problem becomes even more acute since in India the corporate structure of cable industry is vertically integrated from the content producers (broadcasters) to MSOs to LCOs. This structure results in unequal bargaining power of various stakeholders with ultimately harming the interests of the viewers.

The following analysis of tariff regulation uses the tariff legislations, consultation papers and case laws to decrypt the attempts of TRAI to balance various interests of the stakeholders. Each tariff orders and subsequent amendments have been referred in chronological order to the extent possible. The main focus of this paper is on the retail pricing of the cable services in India. Due to space restrictions the tariff scheme for the commercial consumers of cable has not been dealt in detail.


After TRAI acquired regulatory jurisdiction over broadcasting and cable services in 2004, it has actively intervened to regulate tariffs for those services. The first Tariff Order was issued by TRAI on 15th January, 2004.[1] The first tariff order sought to regulate charges[2] payable by:

  1. Cable subscribers to cable operator;
  2. Cable operators to Multi Service Operators/Broadcasters (including their authorised distribution agencies); and
  3. Multi Service Operators to Broadcasters (including their authorised distribution agencies)

As compared to its current avatar, the first tariff order was a simple one. It simply froze the prices of both, pay channels and free-to-air channels, to the rates existing as on 26th December, 2003, in both CAS and non-CAS areas. It is pertinent to note that at the time when the first tariff order was issued, only 4 metropolitan areas were CAS areas and rest of the country was considered to be non-CAS area. However, due to widespread protest from consumer groups and political parties, the Government suspended the mandatory operation of CAS until such date as may be notified by the Government. Due to this notification the distinction made by the tariff order into CAS areas and non-CAS areas ceased to exist. Subsequently first amendment was brought to the tariff order removing the words “both for CAS and non-CAS areas”. Vide same amendment of the tariff order Chennai was also exempted from the tariff order as Madras High Court had suspended the implementation of CAS in Chennai.

Some confusion was caused by the press note of TRAI dated 19th February, 2003, where TRAI had tried to explain the meaning of the word ‘charges’. According to the press note:

“’Charges’ mean and include the charges/tariff rates payable by one party to the other by virtue of the formal/informal Agreement prevalent on 26th December 2003. The principle applicable in the formal/informal Agreement prevalent on 26th December, 2003 should be applied for determining the scope of the term ‘charges’. For instance, if under the Agreement applicable as on 26th December, 2003 specified the total amount as rate or charge per subscriber, multiplied by the subscriber base, the ceiling applies to the per subscriber charge and not to the subscriber base. If earlier the amount paid varied on certain limited occasions linked to the likely change in the subscriber base for a specified short period, such a practice could still continue. However, the charge per subscriber in such cases should not be more than those applicable on 26th December 2003″.

In 2004, Indus Media vs. TRAI[3], an MSO filed a case against two broadcasters and TRAI challenging the aforesaid press note as ultra vires to the TRAI Act and that under the tariff order “charges” payable by them to the broadcasters get frozen irrespective of the increase in the subscribers base. What MSOs contended is that even when number of subscribers increase and they get more “charges” MSOs are not bound to pay the increased collection of charges to broadcasters as per the first tariff order. The TDSAT negativated the challenge and clarified that “charges” is quite explicit and has to be understood in its ordinary and practical sense. In other words, the press note merely clarified that if the number of subscribers increases, so will the subscribers base, and the amount of charges have to be increased accordingly. However, the charges payable by any subscriber shall remain frozen as they were on 26.12.2003. Thereafter, TRAI issued another amendment on 13th August, 2004, and clarified that the ceiling on the charges shall be exclusive of taxes. However, the first tariff order was soon repealed in October, 2004, and the TRAI issued second tariff order.


The second tariff order was not radically different from its pre-cursor; however, it did increase the scope of the tariff order and clarified certain principles. The one major change from the first tariff order to the second was in respect of its applicability. The second tariff order in Section 1 (ii) made the tariff order applicable throughout the territory of India. Whereas, the first tariff order cover tariffs for all Broadcasting and Cable Services throughout the territory of India as also those originating in India or outside India and terminating in India. In the explanatory memorandum no reasons are given for the omitting the broadcasting services which originate outside India and terminate in India. However, in the author’s opinion the term ‘throughout territory of India’ would include all the services terminating in India immaterial of its place of origin.

The second tariff order also defined terms like “broadcaster”, “Multi System Operator”, “Cable operator”, “Pay-channels”, “free to air channels” etc. However, it did not evolve any mechanism to determine the tariffs but, like its precursor, reinstated the price ceiling date of 26th December, 2003.

One major concern of the second tariff order was in respect to the new pay channels and those free-to-air channels which were converted to pay channels after the ceiling date of 26th December, 2003. The authority introduced a proviso to the Section 3 of the Second tariff order. The Authority correctly recognised the concern since there was no mechanism provided for pricing of these new channels which will be coming into the market after the ceiling date. In order to protect the interest of the viewers it was decided that pay channels launched after 26.12.2003 shall not be allowed to become part of bouquet of channels being provided on 26.12.2003. A similar rule was applicable for those channels that were free to air on 26.12.2003 and later convert to pay.

One anomaly which second tariff order created was of fixing the price ceiling for new pay-channels and channels which were converted from free-to-air to pay channels. The proviso provides that for the new pay channel(s) as well as the channel(s) that were free to air as on 26.12.2003 and have subsequently converted to pay channel(s) “the rates must be similar to the rates of similar channels”. In the absence of any mention of the rates of similar channels as on 26th December, 2003, the phrase becomes vague and confusing yardstick to determine the prices of the new channels. There was no standard to determine what type channels will be considered as “similar” channels. Even in the explanatory memorandum to the notification no light was shed on the issue.

One more issue which needs to be stated here is that by providing for method of pricing and offering new channels the TRAI expected that the tariff order would give choice to the operators and through them it would translate to the consumers.[4] This observation of TRAI is slightly confusing as at the time when the tariff order was issued there was no CAS or non-CAS areas existing in India. According to the statistics TRAI provided later, at the time when the second Tariff Order was issued, 28 new pay channels and 36 new FTA channels were converted to pay channels.[5] In view of this surge in pay-channels and without a clear mechanism to determine the prices of new channels, it is difficult how the ‘choice’ to the consumer, if any, would have any meaning. One can estimate that with 66 new pay-channels, without statutory obligation on the broadcasters/MSOs/LCOs to offer new channels on stand-alone basis or in the absence of any mandate for the manner in which the new bouquet has to be offered, the cable bills of the consumer was bound to hike up. This choice to the consumer aspect becomes even more problematic if we consider the nature of the cable industry with vertically integrated MSOs with broadcasters and LCOs with MSOs. Of course, the aforesaid observations are made with the benefit of the hindsight as TRAI at the time had recently got jurisdiction over the cable and broadcasting and with their own admission they did not have enough expertise/ data over the field. However, it is still difficult to understand what TRAI was thinking when the aforesaid regulation was issued as they knew the fact of new pay-channels are on surge in the market and various stakeholders in the cable industry are heavily vertically integrated with each other.

Subsequently, few more amendments were made by TRAI which provided for adjustment of 7 per cent inflation annually to the tariff and increasing the ceiling accordingly.

As expected the issues with regard to the Second Tariff Orders were raised before the TRAI by various stakeholders and consumers. Recognising the problem with the tariff determination of the new pay channels, the TRAI issued consultation paper on the same.

The MSOs were the first one to raise the dispute with regard to the new pay channels. The MSOs specifically stated that the choice of new pay-channels has be offered compulsorily on stand-alone basis and in the bouquet too. The consumers specifically stated that the broadcasters have been forcing them to take the new bouquet or they will disconnect the signals. On the other hand, the consumers are resisting to pay for the new pay channels. Consumer Organisations further resisted the choice through operators as farce given the current monopolisation at the last mile level. One main problem stated by TRAI in offering new pay channels on stand-alone basis was the absence of addressability. TRAI hoped that the problem would get sorted once the digital addressability is introduced. Various proposals were considered by TRAI from the MSOs, Consumers and the broadcasters. A general consensus was approached so far as the pricing of the new channels was concerned. The proposal of MSOs to suggested that the price of no new channel should be more than twice the average price of a bouquet. TRAI also recognised the difficulty in determining the similarity between new channels, however, considering the viewer’s perception on entertainment value of different channels, it was considered best to make a separate regulation to determine the similarity. It has to be noted here that at the time the City of Chennai was a CAS area, so the reference to the prices there were also considered in determining the similarity between channels.

Subsequently amended the Second Tariff Order vide notification dated 31.07.2006 incorporating additional Clause 3B as under:

In determining the similarity of rates of similar channels referred to in the provisos below Clause 3 above the following factors shall be taken into account:

  1. the genre and language of the new pay or converted Free to Air to pay channel;
  2. the range of price ascribed to the channel of similar genre and language in the price of a bouquet(s) and prices of bouquet(s) that existed as on 28.12.2003; and
  3. the range of prices of the individual channel of similar genre and language as existing in the cities where CAS is in existence.

The second proviso considered a case in which multi system operator or a cable operator reduces the number of pay channels that were being shown on 26.12.2003, in that case the ceiling charge was be reduced taking into account the rates of similar channels as on as on 26.12.2003.

In Neo Sports Broadcasting vs TRAI[6], Broadcasters of sports channels challenged the second tariff order. Neo Sports submitted that it has a bouquet of two channels, NEO Sports and NEO Sports Plus, which are basically cricket-centric channels. TRAI had fixed for each of these two channels a-la-carte price of Rs. 49.50 but for the bouquet, comprising both the channels, a price of Rs. 58.50 was fixed. TRAI has vide the impugned direction, reduced price of the appellant’s bouquet of channels from Rs. 58.50 to Rs. 37.25. Neo Sports alleged that the reduction had been done without taking into account the fundamental difference between the cricket centric channels of the appellant and other sports channels. To support its case, Neo Sports had quoted the then current price of ESPN Star Sports channel which is Rs. 42.50, much higher than the price fixed by the Regulator in case of appellants channels. The broadcasters submitted that its channels are cricket-centric and, therefore, have a special identity and should have been treated as such instead of being treated as a Sports Channel in general. TDSAT did not accept the contention of the broadcasters for treating its channels as a specialised sports channels. The TDSAT stated that the broad classification of genre and sports channel has to be interpreted based on the content of the channel and similarity worked out with such meaning/interpretation.

There were other allegations by the broadcasters about TRAI not considering their submissions before fixing price of the aforesaid bouquet. However looking at the circumstances of the case, without upholding the challenge to the tariff order, the TDSAT directed both the parties to co-operate and issue fresh directions within next 60 days.

Subsequent amendments to the second tariff orders the authority allowed a 4 percent increase in rates in November, 2005. The said tariff order was challenged by a consumer group in Grahak Hitvardhini Sarvajanik Sanstha Vs. TRAI & Ors. Appeal no. 12 (C) of 2005, before the TDSAT. The tribunal initially passed an order staying the tariff order, however, vide order dated 21.12.2005, the stay was lifted and the authority has been given the freedom to revise the rates for the next year as it deems fit.

However, on 31st August, 2006, the Government of India issued notification for introduction of CAS in a phased manner in India.


Pursuant to the order Delhi High Court in its order (Single Judge Bench) of 10th March, 2006, and order of the Division Bench of the Delhi High Court dated 31st January 2007, the Government of India had issued a notification on 31st July, 2006, notifying areas in the three cities of Mumbai, Kolkata and Delhi where CAS would be implemented w.e.f 31st December 2006. TRAI without any delay issued third tariff order for CAS areas on 31st August, 2006. This in effect meant that there were two separate framework for tariff regulations for CAS and non-CAS areas. The non-CAS areas were still being governed by the Second Tariff order and its subsequent amendments but for CAS areas a new tariff order was issued.

Before the tariff orders are issued, a consultation paper is issued by the TRAI to consider various issues in tariff regulation in CAS/ non-CAS areas. It is important to glance through the consultation papers as it gives us the window to the mind of the regulating authority and informs us of the various issues which TRAI has in its mind before coming out with the regulation. More importantly, it also helps to map the trajectory of various factors which will change in due course of time in tariff regulation.

In almost all the cases, the regulatory authority is faced with a question of whether to put tariffs under forbearance or regulate the tariff structure in cable and broadcasting. The frontrunner of the tariff forbearance argument in India has been the broadcasters. MSOs and LCOs too desire tariff forbearance, however, due to mutual distrust between various stakeholders, MSOs and LCOs from time to time have been supporting some sort of tariff regulation too. In the debate between tariff forbearance and regulation it is difficult to predict which side MSOs or the LCOs loyalty would lie. The single most important reason for this unpredictability is their vertical integrated corporate structures with each other and with the broadcasters. So far only the consumer groups have been consistent with their demand for tariff regulations and against forbearance. TRAI’s job in this context is to balance the various interests with that of consumers. On the one hand there is motive of profit maximisation of various stakeholders and on the other hand there is viewer’s welfare. As a regulator, TRAIs aim is to create a transparent and level playing field for all the stakeholders, so that they can compete with each other in the ‘free market’ and which in turn would take care of the interests of the viewers, or so that is assumed.

Currently, in India there are CAS and Non-CAS areas in India. CAS areas are those where the government by notification, under Sec 4A of the CTN Act, 1995, has made it mandatory for service providers to provide signals through addressable systems. In addressable systems television signals can be sent either in encrypted or unencrypted form, which can be decoded by the device or the premises of the subscriber. In Digital Addressable System, further sub division of CAS, the signals are sent in encrypted, i.e. digital form, and decoded by a special set-top box. DAS platforms includes direct to home service, head end in the sky broadcasting service, and Internet Protocol television service.

There are three different tariff regimes in India for cable and broadcasting services. The three tariff regimes are as follows:

  1. Tariffs related to services in non-CAS areas for non-addressable platforms,
  2. Tariffs related to services in CAS areas
  3. Tariff related to services in CAS areas through Digital addressable systems.

Tariffs related to services in non-CAS areas for non-addressable platforms:

After long deliberations, the authority issued a lengthy eighth amendment of the second tariff order regulates the tariffs for non-addressable systems in non-CAS areas in India. The eighth amendment extended the price ceiling date from 23rd December 2006 to 1st December, 2007.

During the consultations, the Broadcaster tried to make a case for tariff forbearance. They also argued that if there has to be a tariff regime then a process to review the market has to be put in place with a definite sunset date for tariff regime. On the other hand, the group of stakeholders representing multi system operators and cable operators favoured continuance of regulation of the sector in some form with opinions varying as to the degree of regulation and time upto which such regulation should continue. MSOs and LCOs group strongly favoured the availability of channels on a-la-carte basis from the broadcasters. As far as consumers are concerned, only two consumer associations and a couple of individuals responded to the consultation. By and large, with some variation, the consumer’s view was that the regime of regulations should continue for some more time because DTH is at a nascent stage and yet to provide effective competition to the cable services industry.

The authority concluded that there are conflicting views because of diverse commercial interests, but also point to a possible lack of mutual faith among the groups of stakeholders which is primarily arising out of non-addressable nature of analogue cable transmission.

Coming heavily down on the broadcasters, the Authority stated that there is no effective competition in the market. The authority further stated that at the delivery level also the consumer has little choice at the time and for the most part, the last-mile cable operator enjoys a virtual monopoly in content distribution within his area of operation. The authority also observed that the case of other countries cannot be used in India as there the option for delivery platforms are much more and unlike India within an area there are many cable operators to offer services.  

Making out a case for tariff regulation TRAI also stated that the tariff difference in the entire country is huge and there is no uniformity. The fact that the same service could cost more in one particular area and different in the other is a sure sign of market failure. Furthermore, the Authority also noted the perverse pricing of bouquets which the Broadcasters have been force feeding the MSOs/LCOs, whose ultimate cost is transferred to the consumer. In a non-addressable though the consumer has little option to choose what he wants to watch but even in that scenario little freedom which an MSO/LCO can use to address the local need is denied because of the strong arm tactic of the Broadcasters.

Pursuant to the above observations, the tariff order mandated that the broadcasters will compulsorily offer channels on a-la-carte basis to the multi system operators and cable operators.

Expectedly, this amendment was challenged by a group of broadcasters and MSOs in Sun TV Network Ltd. & Ors. Vs TRAI and Others[7]. The Petitioners argued that the subsequent amendments did nothing to de-freeze the ceiling and the amendments were in variance with the consultations held by the TRAI. Their argument is that the Authority has wrongly concluded that there is no effective competition in the broadcasting market and that even though the Authority itself favours forbearance as the best option, the Authority has wrongly prescribed, in the name of lack of effective competition, a ceiling on the rates that can be charged by the MSOs and Local Cable Operators (LCOs) from the subscribers. They also strongly object to the prescription, made in the name of offering choice of channels to the consumers, that they should offer channels on a carte basis to the MSOs and Cable operators. The contention of the Broadcasters was that the impugned Order is so structured that not only it is discriminatory but is prejudicial to the commercial interest of the Broadcasters as it enables the MSOs and LCOs to demand a higher carriage fee from the Broadcasters while, at the same time, it does not offer any advantage to the consumers. Their contention was that while the impugned Order takes care of the interests of the MSOs, it does not address itself to the interests of either the Broadcasters or the consumers. The respondents in the case strongly opposed the appeal and stated that the Broadcasters have been bundling the channels into bouquets and have been insisting that the MSOs/LCOS should take the entire bouquet and thereby increasing their subscription revenues as well as advertising revenues through an inflated subscriber base. They strongly argued that the impugned Order brings about a certain discipline in the system.

The TDSAT observed that the TRAI did not follow the correct procedure before issuing the impugned tariff order. It observed that some of the important surveys and other documents which were in possession of the TRAI were not disclosed to the petitioners during the consultation process. Finally it concluded that the impugned tariff Order is not an exercise in tariff fixation as is ordained by section 11 (2) of the Act, in so far as it relates to fixing the prices as on 1.12.2007. Similarly there was no cogent explanation for adoption of 4% as the rate of inflation except stating at Para 4.2 (i) of the explanatory memorandum of the tariff order that it is the same increase ‘allowed’ (not fixed) by the Authority vide its Tariff Amendment Order dated 29.11.2005. TDSAT further noted that perusal of the explanatory memorandum to the Telecommunication (Broadcasting and Cable) Services (Second) Tariff (third amendment) Order 2005, (8 of 2005) dated 29.11.2005 shows that it was based on the then existing annual rate of inflation including for the week ending 5.11.2005. TDSAT noted that nowhere was there an exercise by the Authority to examine whether this rate of inflation holds good even in October 2007 when the impugned Order was issued.

On the issue of forbearance of tariffs for cable, the TDSAT observed that it is not inclined to substitute their view with that of TRAI. In the consultation paper dated 21/05/2007, the TRAI had specifically noted that that the touchstone of effective competition which is whether there are enough players, whether the conditions exist in the market to enable a few players to use their dominance; whether all the stakeholders have sufficient knowledge to play an effective role in driving the market forces; and whether fear of loss of advertising revenue on account of increased subscription charges is enough to deter price increase. However, the TDSAT noted that on the one hand, the Authority admits that the number of channels as well as the number of cable subscribers has grown significantly. Yet, going by the touchstone of the criteria listed by the TRAI in the consultation paper, a conclusion was arrived at, that effective competition is lacking. To this extent the TDSAT observed that while introduction of forbearance or otherwise is within the competence of the judgement by the Authority, it must be based on more rational analysis than what was attempted. Finally, the TDSAT set aside the tariff order and directed the TRAI to consider the matter afresh and issue tariffs within 6 months from the date of the judgment.

The implementation of the aforesaid tariff order was bound to be marred with problems for several reasons. The tariff order was not an exercise of tariff fixation but it merely stated that the tariffs in cable industry will not be increased from what they were on 26th December, 2003. The other issue for the subscriber was determination of correct prices on the ceiling date. In the absence of providing with proper receipts it was nearly impossible to find out the correct tariff fixed by a viewer on the ceiling date. Secondly, between other stakeholders, in the absence of mechanism to find out the exact number of subscriber base it was again impossible to find out the amount which is supposed to be paid by the MSOs to Broadcasters and LCOs to the MSOs. This problem becomes acute when one of the stakeholder disputes the exact figure of her service base. The nature of cases which come before the TDSAT shows that exact figure of the service base has been the constant source of dispute between the service base.



The third tariff order made the Second tariff order inapplicable in so far its [second tariff order] applicability for the CAS areas and the charges payable by MSOs to broadcasters and Cable Operators to MSOs in the CAS areas is concerned. The charges payable by cable operators to MSOs/ Broadcasters and by MSOs to broadcasters in the CAS areas were now determined by new Telecommunication (Broadcasting and Cable Services) Interconnection (Second Amendment) Regulations, 2006, dated 24th August, 2006, read with Third Tariff order. The charges payable by MSOs to Broadcasters and Cable operators to MSOs in non-CAS areas were still determined by the Second Tariff Order and its subsequent areas.

It is important to note that in the CAS areas the signals could still be transmitted in encrypted or unencrypted format. In other words, the signals could still be transmitted in both, digital [encrypted], and analogue [unencrypted] formats. However, the only difference from the non-CAS areas was that now providing addressable system was compulsory for the service providers- which was not the case in non-CAS areas. The third tariff order regulated carriage for both, digital and analogue, ways of transmitting signals in the CAS areas.[8]

The third tariff order made provisions for regulating three aspects of CAS services:

  1. Tariff ceiling for ‘basic service tier’ in CAS Areas
  2. Tariff for supply of set top boxes in CAS Areas
  3. Ceiling on maximum retail prices for pay channels in CAS Areas.

Before the third tariff order came to be issued, Chennai was already a CAS area and as already stated above by the notification dated 31st July, 2006, the Government extended it to other three [Mumbai, Kolkata, and Delhi] metros. Since, the third tariff order was the first effective tariff regulation in the CAS areas, the authority had to regulate the tariff in the new market. Other important factors in favour of regulation were the fact of vertical integration between various stakeholders and resultant unequal bargaining power between them and the consumers in the supply chain. The authority also took note of the rampant disputes concerning discriminatory pricing, billing and payment disputes and allegations of unfair trade practices which has resulted several rounds of litigation in the last few years.[9] In this background, TRAI noted that the in order to make CAS successful, it is important to regulate the manner in which channels are offered to the viewer.


‘Basic Service Tier’ has been defined in the tariff order as package of free-to-air channels provided by a cable operator for a single price to the subscriber of the area in which her cable television network is providing service and such channels are receivable for viewing by the subscribers on the receiver set of a type existing immediately before the Cable Television Networks (Regulations) Amendment Act, 2002, without any addressable system attached to such receiver set in any manner.

The Ministry of Finance of Government of India after studying the market through a notification in the year 2003 had fixed price of the Basic Service Tier to Rs. 72/-. TRAI took this figure and adjusted to the 7 per cent inflation rate and fixed the price of the BST to Rs. 77/-. Further, TRAI also made it mandatory for the cable operator to offer at least 30 Free-to-Air channels in the bouquet. The group of MSOs and Cable Operators opposed the recommendation and stated various reasons like actual costs and tried to carve out the case for the hike in the BST tariffs. However, TRAI though accepting the case for the hike rejected the proposal of the MSOs and the Cable Operators. TRAI also stated that the figure of Rs. 72/-was reached after a detailed exercise by the Ministry and to review the figure a huge data collection exercise has to be undertaken. However, since the CAS has not been implemented, such collection of data would not hold meaning. Consumer groups during the consultation process asked for lowering down the ceiling rates. Considering the lack of data and the factor of affordability, TRAI fixed the rates of FTA channels bouquet to Rs. 77/-.


Set top box is a device, which is connected to a television set at the consumer premises and which allows a consumer to view encrypted channels of his choice. The basic function of the set top box is to decrypt the channels and to convert the digital into analogue mode for viewing on television sets. The TV channels carried in digital addressable system cannot be received without STB. One of the major hurdles in introducing the Conditional Access System is that it makes mandatory for the subscriber to buy a set top box. Without a set top box the accessing television was not possible. Set-top boxes are additional expense which the consumer has to bore to receive TV signals. TRAI recognised this “entry barrier” and to make sure that set-top boxes are offered in reasonable terms thought to regulate the tariffs connected to set-top boxes. Another issue of set top box which emerged is of the interopertability. The term ‘interoperatability’ basically means the ability of the customer to use the same set-top box for different service providers. However, there are several technological constraints which are cited by the stakeholders and TRAI to introduce easy interoperable provisions for consumers.

TRAI in order to provide consumers reasonable options to the subscribers and to prevent any malpractice by the service providers introduced the third tariff order. Regulation 5 of the third tariff order made mandatory to all MSOs and cable operator in a CAS area to offer the subscribers 2 options of the standard tariff package specified in the schedule annexed to the order. The two options as described in the schedule give choice to the customer to opt for schemes of maximum rent per month of the set top box, security deposit, installation charges, activation charges, repair and maintenance cost and deductions from the security deposit. The tariff order in addition to the said options also gave freedom to the service providers to offer alternative tariff packages so that in addition to the mandatory options, the consumer is free to choose the tariff packages so offered including the standard tariff package.

The tariff order makes it clear that no other charge other than the standard tariff packages and alternate tariff packages can be taken on account of: installation of set top box, activation charges, smart card/viewing card and repair maintenance or any other charges (for five years).

Interestingly, TRAI did not propose regulations for the STBs supplied by the Direct to Home (DTH) operators. TRAI stated that as CAS and DTH are two different systems of delivery in several respects. Further, DTH is a matter of choice for the subscribers while CAS has been notified by the Government of India for implementation in the specified areas of Chennai, Delhi, Mumbai and Kolkata.


The third tariff order made it mandatory on the broadcaster to offer all the pay channels on a-la-carte basis to multi system operators, and multi system operators in turn shall offer pay channels on a-la-carte basis to cable operators. Similarly, cable operators/MSOs shall also offer to pay channels on a-la-carte basis to the subscribers. Though, cable operators and MSOs were free to offer in addition to a-la-carte offer, pay channels in the form of bouquets.

The authority rightly pointed out the practice of bundling of pay channels which were forced by the Broadcasters. The authority during the consultation process asked all the broadcasters to provide a list of wholesale/retail prices of channels both on an a-la-carte basis and bouquets of channels for the CAS areas on 20th July, 2006. With the amendment of the Cable Television Network Rules, 1997, in the event the broadcaster fails to provide the aforesaid list, the authority was empowered to take interim measures on its own. The rules further empowered the Authority to fix the wholesale and retail prices of the channel if in its opinion the channel is priced too high. Several broadcasters submitted their price, however, they only provided the authority with their wholesale prices. The authority noted that the said prices were too high in comparison to prevailing prices in Chennai – which at the time was a CAS area- as well as the prices that have been negotiated by broadcasters/distributors for supply of the signals to the DTH service provider. The authority also noted there appears to be no attempt on the part of broadcasters/distributors to move away from the prevalent market practice of bouquet method of pricing that has been found to be affecting consumers’ interests adversely.

The authority in view of the above stated that the price for the pay channels have to be fixed in view of the existing rates in the non-CAS. Putting consumer interest as the motive, the authority stated that the consumer could not be put under financial burden because of the new technological changes. If that is not taken care off then there is a danger that CAS may never succeed. However, since there was no uniform system of pricing in non-CAS areas of the channel existed, the Authority recognised the difficulty in connecting the tariffs of two different systems.

TRAI looked into several factors like prices in Chennai, inferences from agreements between broadcasters and MSOs, offers made by DTH operators, prevailing prices and arrangement of revenue sharing with reference to advertisement, carriage, revenue generated from the subscribers. After consideration, TRAI had put a ceiling in respect of maximum retail prices of Rs. 5 per pay channel per month payable by a subscriber to MSO/CO. This ceiling was to applicable to both the existing pay channels as well as to new pay channels.

This tariff order was challenged by a group of broadcasters in Set Discovery Pvt. Ltd and others vs TRAI before the TDSAT[10]. The Appellants urged that the notification have the effect of destroying their business model by rendering their business unviable. They were particularly aggrieved by fixation of Rs. 5/- per month per subscriber as the maximum retail price per pay channel. It was argued by the broadcasters that the process by which the Authority arrived at the figure of Rs.5/- is wholly arbitrary, perverse and violative of principles of natural justice. It was alleged that there is total non-application of mind on the part of the Authority in this behalf. Besides arguing that there has been no sufficient discussion between the Authority and the various other stakeholders, the appellants tried to demonstrate that the figure of Rs.5/- notified by the Authority could not have been reached by any reasonable method, therefore, it is said that the figure is without any basis.

Interestingly the TDSAT noted that except criticizing the decision of the TRAI and the manner in which it was reached through bald statements, the appellants and other broadcasters did nothing to help the TRAI in its exercise. The tribunal further damned the broadcasters for not cooperating with TRAI at the consultation stage as reflected in the explanatory memorandum. In fact, when the broadcasters were asked to place their MRP price of the channels, they did not cooperate. Some of the broadcasters placed their whole sale price on record, which was not useful for the purpose.

Counsel for the TRAI also conceded that the data before them before fixing the price was not sufficient and more accurate data needs to be collected. However, the tribunal rejected the challenge and deplored the broadcasters for not being cooperative. The Tribunal further noted that the effect of the when a new system is being introduced and there is total lack of experience of past practice, some element of guesswork is bound to be there. The tribunal stated: “The TRAI has done its best to reduce the guesswork which is clear from the steps it undertook before issuing the impugned Notifications. The TRAI is conscious of this difficulty and it has at several places in the Explanatory Note as well as in the affidavit filed before us, stated that the exercise was experimental and it has to undertake a review in the light of experience gained.”   Finally, with a stinging remark against the broadcasters the tribunal dismissed the appeals stating:

“We also cannot help observing that the broadcasters are either unmindful of the fact that they stand to gain in the CAS regime or they are intentionally feigning lack of knowledge of this fact. To say the least they have not been fair in placing their case before us.” 

The first amendment to the third tariff order was to exclude the following types of commercial subscribers from the application of the tariff order:

i) Hotels with rating of three star and above

ii) Heritage hotels (as described in the guidelines for classification of hotels issued by Department of Tourism, Government of India)

iii) Any other hotel, motel, inn, and such other commercial establishment, providing board and lodging and having 50 or more rooms.

This amendment was a result of a batch of petitions filed by a couple of Associations of Hotels and Restaurants together with a hotel against some broadcasters and their authorized distributors in TDSAT. The dispute basically pertained to the fact whether the hotels and restaurants can be equated with domestic consumers for the provision of Cable TV Service besides other connected and consequential issues under adjudication. The TDSAT disposed of the petition vide their order of 17th January 2006. After a lengthy consultation process the TRAI made the changes in the tariff order and introduced differential rates for the prescribed commercial establishments.

At the time of writing this paper, the TRAI had issued a new consultation paper on 11th July, 2014, for analysing the issue of commercial subscribers de novo.

The second amendment to the tariff order made rent and refundable deposits in both the options for tariff for supply of set-top boxes exclusive of taxes levied under any other law. In December, 2008, TRAI brought third amendment by increasing the basic service tier and options for tariffs for supply of set boxes by seven per cent, as rate of inflation.



On 21st July, 2010, TRAI introduced Telecommunication (Broadcasting and Cable) Services (Fourth) (Addressable Systems) Tariff Order, 2010. Initially, this tariff order was applicable to the broadcasters and cable services provided to subscribers, through addressable systems, throughout the territory of India, except cable services provided through cable television networks in the States, cities, towns or areas notified by the Central Government under sub-section (1) of section 4A of the Cable Television Networks (Regulation) Act, 1995.

The definition of “addressable system” became was modified in the fourth tariff order from the third one and was made direct to home service, head end in the sky broadcasting service, Internet Protocol television service and digital addressable cable service, in its ambit. The difference from the third and the fourth tariff order was that in the third tariff order did not exclude the analogue addressable system from its ambit. Whereas, in the fourth tariff order the definition of ‘addressable system’ was modified to be applicable to the specific digital addressable delivery platforms in its ambit. The fourth tariff order is divided into six different parts:

  1. Preliminary
  2. Wholesale Tariff
  3. Retail Tariff
  4. Offering of Customer Premises Equipment
  5. Protection of Consumers against increase in Prices
  6. Miscellaneous

The Fourth Tariff Order was a result of several rounds of litigation at TDSAT, High Court and Suprem0e Court level. Pursuant to a petition filed by Tata Sky in Punjab and Haryana High Court direction of the Court to TRAI was sought to ensure level playing field conditions including fixing content tariffs for DTH and to ensure that similarly placed systems, namely CAS and DTH were treated equally. In TDSAT in two different petitions (ASC Enterprises vs Star India petition no. 136(C) of 2006 and Tata Sky vs Zee Turner & Ors petition no189 (C) of 2006) had held that the broadcasters should offer pay channels /bouquets to the DTH operators at 50% of the non-CAS rates pending a tariff determination for DTH services by TRAI. Pursuant to these litigations and some other, TRAI started its consultation process. The explanatory memorandum with the fourth tariff order mentions that an important issue raised in the consultation relating to the DTH sector was desirability or otherwise of linking the wholesale prices for the DTH sector to the prevalent non-CAS wholesale prices. In this context, a number of service providers expressed the view that the wholesale for DTH platform have to be linked to whole sale tariff for non-CAS areas, in view of the linkages between DTH and non-CAS tariff. Meanwhile, the Government had also notified HITS policy. After this the TRAI thought it to be fit to review the tariff orders of all cable services in CAS Areas.

The fourth tariff order in so far as retail pricing is concerned made a major shift as it had put the retail tariff for the DTH platform which is the predominant addressable platform, under forbearance. Initially, the forbearance was only applicable to the non-CAS areas. The reason assigned by the TRAI was that there are 6 DTH operators competing against one another and with the incumbent analogue cable system. It was further observed that the retail tariffs prevailing in the market are quite competitive. As the market forces appear to be operating effectively, the Authority was of the view that there is no need for regulatory intervention in the matter of retail tariff fixation at the time of issuance of the fourth tariff order. This observation of TRAI is least to say opaque. No relevant data has been provided in the explanatory memorandum except stating facts without any backing. Unlike, the previous TRAI consultations, as stated above, where TRAI has been cautious and providing reasons for the regulations of tariff, the fourth tariff order marks a departure from such practice. In the absence of any data it is questionable how TRAI reached to that figure. The only possible view one can think of is that the TRAI wanted to give impetus to DTH operators, agreed to their demands.

The factum of applicability of the present tariff order was also left in doubt. The explanatory memorandum attached to the order stated that the tariff order applies to all the addressable systems. However, without any explicit repeal of the third tariff order and new definition of the term ‘addressable systems’, it left a doubt with regard to its applicability to non-digital addressable systems. In digital addressable systems the signals which are sent are always in the encrypted format, in that case the mentioning of ‘unencrypted and encrypted’ signals in the definition clause leaves a doubt in the mind about whether reference is being made to DAS specifically or CAS included. However, in my opinion for all the non-digital CAS delivery system the third tariff order would be applicable, whereas, for all the digital addressable systems tariff will be regulated by the fourth tariff order.

The fourth tariff order was challenged by the broadcasters in Neo Sports Broadcasting vs. TRAI (2007) 3 Comp LJ 524 TelecomDSAT, among other ground, they questioned how right to fix the Maximum Retail Price of the channels of the Broadcasters was been given to the DTH Operators and not to the Broadcasters. The TDSAT noted that the Consumer Groups in TRAI during the consultation process stated that some DTH operators have been offering only 15 to 20 channels on a-la-carte basis and that too at about 250% to 300% of their wholesale price as the rates were under forbearance at retail level. However, in the TDSAT though one consumer group was impleaded as a party, neither they filed any written representation nor they advanced any arguments. The TDSAT reprimanded TRAI for not giving cogent reasons for rejecting the contentions of the consumer group. The tribunal noted its earlier judgment and held that the consumer groups should have been heard as price regulation is a must for protecting consumer interest. The Tribunal observed that fixation of MRP by the DTH Operator, which results after the distinction of Basic and Add On Packages have been removed, and there being complete forbearance at the retail level would pose the risk of Vertical Integration. Fixation of MRP by the DTH Operation and its ability to fix basic packages may be abused by the DTH Operators particularly those who are vertically linked to a Broadcaster or otherwise intend to promote their own channels by pricing the other channels exorbitantly. The tribunal directed the TRAI to start the process of Tariff fixation upon taking the relevant factors into consideration afresh and for the purpose of laying down tariffs undertake a detailed study of the same.

It will not be an understatement to say that the fourth tariff order showed some sort of a badly done exercise by TRAI. In the absence of any cogent reasons, neglecting views of the consumers and other stakeholders, and leaving doubts in the tariff order makes the entire exercise opaque and vulnerable.

In April, 2012, suitable amendments were made in the tariff stipulations prescribed in the said tariff order after following the due consultation process. The amendment made the fourth tariff order applicable to entire India as opposed to non-CAS areas, which was the case of its precursor. This tariff amendment order was notified on 30th April, 2012. The said tariff amendment order, amongst others, contains provisions pertaining to the tariff and composition of basic-service-tier (BST), retail tariff, tariff for advertisement free channels and revenue share between multi system operator (MSO) and local cable operator (LCO). In the said tariff amendment order, under Part -III (Retail Tariff), a proviso to clause 6(1) was inserted in the principal Tariff order, which prescribed a relationship between the a-la-carte rate of a channel and the rate of the bouquet, wherein the channel forms a part of the bouquet. This proviso was introduced at the retail level to ensure that a-la-carte channels do not become disproportionately high as compared to the bouquets, rendering the choice of channel on a-la-carte illusory to the consumer. However, the retail order continued the forbearance at the retail tariff level of the service. The authority noted that the forbearance has been working fine and DTH has been successfully penetrated even the cable-black areas.

The part four of the tariff order made it mandatory for every service provider to offer customer premise equipment (i.e. Set Top Box) outright purchase basis or hire purchase basis or rental basis. It further made compulsory to terms and conditions for return of the Customer Premises Equipment and replacement of faulty Customer Premises Equipment and repair and maintenance of Customer Premises Equipment.

The part five of the tariff order prescribes that no service provides broadcasting services or cable services using an addressable system to its subscribers, shall, increase the charges for a subscription package offered by him, for a minimum period of six months from the date of enrolment of the subscriber for such subscription package.


Issued on 27th May, 2013, the TRAI issued Telecommunication (Broadcasting and Cable) Services (Fifth) (Digital Addressable Cable TV Systems) Tariff Order, 2013 (No. 1 of 2013). The fifth tariff order sought to regulate tariff for supply and installation of set top boxes only. This short tariff order made mandatory for all the MSOs to offer to every ordinary subscriber[11] the standard tariff package, for supply and installation of the set top box, conforming to the Indian Standard, if any, set by the Bureau of Indian Standard, specified in the Schedule of the tariff order. The schedule of the tariff order has four additional schemes which are required by the MSOs to offer to their subscribers. It is made clear that the said options are in addition to the schemes Telecommunication (Broadcasting and Cable) Services (Fourth) (Addressable Systems) Tariff Order, 2010.


The Telecommunication (Broadcasting and Cable) Services (Sixth) (The Direct to Home Services) Tariff Order, 2013 (No. 2 of 2013) came into force 27th May, 2013, alongwith the fifth tariff order. The sixth tariff order regulates the tariff for supply and installation of customer premises equipment. The term, ‘customer premises equipment’ is defined as the equipment, components and accessories installed at the premises of the subscriber to enable the reception of any broadcasting service offered through an addressable system and includes —-

  1. the set top box and the remote control for set top box; and
  2. the dish antenna, where such dish antenna is essential for availing such service,—–but shall not include a television receiver set, computer or any such end equipment.

The sixth tariff order is applicable to DTH operators, as opposed to MSOs in the fifth tariff order. Like the fifth tariff order, sixth tariff orders gave four options in addition to the scheme in the fourth tariff order.


Indian cable and broadcasting landscape still has to travel a long journey. In the absence of hard data not only from TRAI but also other sources, it is difficult to paint absolute picture. However, the aforesaid analysis does throw up some issues which need to be addressed before India moves towards complete addressability. One consistent worrying aspect is absence of diverse consumer groups during consultations and even more in important litigations. This is not to suggest that the consumer groups are completely absent but the emphasis should be on the diversity of views from the consumers. Like the broadcasters/MSOs/LCOs have different motivations and considerations for different geographical areas, views from viewers of different areas could be different too. Law making process such as TRAI’s needs representations from different sources and would only be successful if it accommodate views from diverse backgrounds. As a hypothetical situation if different stakeholders clandestinely float their affiliated consumer groups, the exercise of law making would render meaningless.

As far as price forbearance is concerned, it has been done for the Direct to Home (DTH) operators in India. Once TDSAT had reprimanded TRAI on the same issue for not providing enough data to support the forbearance and not considering consumers views. However, TDSAT refused to substitute their own view but directed TRAI to issue the consultation once more. Even after the direction except for providing bald statements with no statistics the TRAI continued with their decision to forbear the tariffs. TRAI should have been more transparent in its decision making, especially in crucial matters like changing the dynamics of the market by leaving the tariffs to the will of the market. The issues like ownership, vertical integration of the DTH operators with that of the broadcasters was not even addressed in the explanatory memorandum of the tariff paper. In future, it is only hope that such hasty decision making will be avoided by the authority.

Lastly, a comment on judicial interventions in policy decisions of TRAI and the Government. Traditionally, at least in India, regular Courts (High Courts and the Supreme Court) have been hesitant in interfering with the policy framework of the Government. Plethora of case-laws are there where the court has refused to intervene in policy decision of the Government, except if the policy is illegal, mala fide and palpably arbitrary. The three grounds under which court may interfere with the policy decision are very high threshold to establish in the court of law. However, with the advent of super specialist tribunals, such as TDSAT, this traditional behaviour of the courts is changing. As noted above, at least two tariff orders were struck down by TDSAT on several grounds. With TRAI’s method of law making one more ground of challenge has been added to the above three stated grounds, which is denial of principle of natural justice. TRAI before coming out with a regulation issues a consultation process where comments are received from different stakeholders. One ground of challenge to any regulation is if the petitioner was not heard during the process. However, there is a constraint to this right too as the right to be heard only extends to an opportunity to be heard. However, an argument can be made that the petitioner’s argument was rejected without any application of mind or mala fidely. To conclude, in the author’s opinion it is a welcome change as it opens an avenue for the people to agitate unfair policy decisions, which may not be arbitrary or illegal per se.

Notes & References

[1] Preamble to The Telecommunication (Broadcasting And Cable) Services Tariff Order 2004 [1 of 2004 ], notified on 15th January, 2004.

[2] Ibid, Regulation 2

[3] Judgment dated 27th August, 2004 delivered by TDSAT. Retrieved from last accessed on 12th May, 2014

[4] The Telecommunication (Broadcasting and Cable) Services (Second) Tariff Order 2004″. Para 3 of the Explanatory Memorandum

[5] Telecommunication (Broadcasting and Cable) Services (Second) Tariff (Eighth Amendment) Order, 2007, Refer para 3.6 of the Explanatory Memorandum

[6] (2007) 3 CompLJ 524 TelecomDSAT

[7] Available on, Judgment dated 15th January 2009, Last accessed on 10th June, 2014)

[8] The Telecommunication (Broadcasting and Cable) Services (Third) (CAS Areas) Tariff Order, 2006 (6 of 2006)”. Regulation 2(a).

[9] The Telecommunication (Broadcasting and Cable) Services (Third) (CAS Areas) Tariff Order, 2006 (6 of 2006)”, Refer Explanatory Memorandum.

[10] Judgment dated 27/02/2007 in Appeal no. 10(C) of 2006, TDSAT Retrieved from : – Last accessed on 10th May, 2014

[11] Telecommunication (Broadcast and Cable) Services (Fifth) (Digital Addressable Cable TV Systems) Tariff Order, 2013 (1 of 2013), Refer Regulation 3(g) :“ordinary subscriber” means any subscriber who receives a programming service from service provider and uses the same for his domestic purposes