Bombay High Court Upholds TRAI's Tariff Order Except One Condition In TV Channels' Challenge

In a big win for the Telecom Regulatory Authority of India (TRAI) and ordinary consumers, the Bombay High Court on Wednesday upheld the constitutional validity of Section 11 of the TRAI Act regarding the regulator's powers and functions over television broadcasters.

The court also upheld TRAI's 2017 and 2020 Tariff Order(Rules) and regulations but set aside one of the twin conditions in the 2020 Order according to which the MRP of an a-la-carte channel could not be more than 1/3rd the maximum rate of a channel in the bouquet. To illustrate, this rule(which has been now struck down by the HC), if the maximum rate of a channel in a bouquet is Rs.12, a broadcaster could not charge more than four rupees for an a-la-carte channel.

However, the division bench of Justice AA Sayed and Justice Anuja Prabhudessai extended the "no-coercive action" relief granted to broadcasters during the pendency of the petition for an additional six weeks.

The lead petition against TRAI was filed by the Indian Broadcasting Foundation, a unified representative body of television broadcasters in India. All leading broadcasters like Sony Pictures, Star India owned by Disney, ZEE Entertainment, TV18 and Film and Television Producers Guild of India were amongst the petitioners.

The clutch of petitions was reserved for orders on October 20, 2020.

The Rules

As per TRAI, the new amendments of 2020 were brought in to protect the interest of consumers. Discounts on a bouquet of channels (which was earlier as high as 80 per cent) was capped at 33 per cent, which means that the consumer would no longer be obliged to buy bouquets created by the broadcasters.

Additionally, the Telecom Authority decided that only those channels which are having MRP of Rs.12 or less will be permitted to be part of the bouquet offered by broadcasters.

Also, unlike earlier, when consumers had access to 100 channels, TRAI has mandated that consumers be offered 200 Free To Air (FTA) channels at a base price of Rs. 160.

The following regulations were challenged:

1. Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) (Second Amendment) Regulations 2020 dated January 1, 2020
2. Telecommunication (Broadcasting and Cable) Services Quality of Service and Consumer Protection (Addressable Systems) (Third Amendment) Regulations, 2020 dated January 1, 2020.
3. Telecommunication (Broadcasting and Cable) Services (Eight) (Addressable Systems) Tariff (Second Amendment) Order, 2020.

The Case

The petitioners challenged the regulations and tariff order as being ultra vires to Articles 14, 19(1)(a) and 19(1)(g) of the Constitution of India-

They claimed that the telecom regulator's decision to bring in amendments to the New Tariff Order would adversely impact the sector's growth.

The plea stated,

"..it is manifestly arbitrary to unilaterally and without any application of mind whatsoever, reduce the price cap on the maximum price that a channel can be priced at in order to qualify being made part of a bouquet. There is especially not justification given to reduce the said ceiling from Rs.19 to Rs.12, especially as there is ostensibly a formula on the basis of which Rs.19 was arrived at 3 years ago."

TRAI Arguments

TRAI's arguing counsel Venkatesh Dhond submitted it was not against the offering of bouquets. However, it could not be at the cost of the freedom of consumers to choose channels in a manner they may like.

TRAI argued that its provisions should be viewed in the light of protection of interests of both service providers and consumers. And that the amendments were undertaken to frame a comprehensive code for the Broadcasting Sector, so as to ensure that the consumer gets the benefit of a meaningful and informed choice and the inter-se relationship between the Broadcasters and the Distributors is based on principles of non-discrimination and transparency.

The authority explained how bouquet channels being pushed by broadcasters limited the choice of total channels for the consumers and how the new amendments will be beneficial for the consumers.

 Click here to read/download the judgment