TRAI scraps 27.5 % inflation linked tariff hike applicable to television services rates

The TRAI decision comes in the wake of a TDSAT order, subsequently upheld by the Supreme Court of India and a reappraisal of the financial health of the broadcasting industry

BestMediaInfo Bureau | Mumbai | May 12, 2016

The Telecom Regulatory Authority of India (TRAI) has reviewed and rescinded the inflation linked tariff hikes made applicable to rates of television services at the wholesale level in the non- addressable (non-CAS) and addressable (DAS) systems.

The decision was announced on May 9, 2016, in the light of a April 2015 Telecom Disputes Settlement and Appellate Tribunal (TDSAT) order that was subsequently upheld by the Supreme Court of India. The TRAI's decision revokes the tariff orders it had issued on March 31, 2014 and December 31, 2014, providing for inflation linked hikes in tariff applicable to rates of television services at the wholesale level in the non-addressable (non-CAS) and addressable (DAS) systems.

The TRAI had worked out an inflation rate based on the Wholesale Price Index (WPI). The effective inflation linked hike permitted was 27.5 per cent. It was payable in two instalments. The first instalment of 15 per cent could be paid till March 2014. The second instalment of 11 per cent, accounting for the remaining part of the inflation linked hike in tariff rates was made effective from January 1, 2015.

These orders were set aside by the Telecom Disputes Settlement and Appellate Tribunal in a judgement dated April 28, 2015, which directed the TRAI to re-consider its directive in the light of the observations made by the tribunal. The TDSAT had also observed that the TRAI should consider other inflation indices, such as the Gross Domestic Product (GDP) deflator, to calculate inflation linked hikes in tariff.

The Indian Broadcasting Foundation (IBF) then filed a civil appeal in the Supreme Court against the TDSAT order. The Supreme Court upheld TDSAT's order and directed the TRAI to re-consider the hike in tariff rates in the light of the observations made in the TDSAT order.

The TRAI has now observed that the annual revenues that actually accrued to the broadcasters had surpassed the estimated revenues that should have accrued to them after taking into account the year-on-year hike in inflation calculated using the GDP deflator. The compound annual growth rate of the year-on-year revenue accruing to the broadcasters too have recorded a positive growth.

In its statement dated May 9, the TRAI has said, “Consequent to aforesaid analysis of the facts, the authority has observed that there is a healthy growth in the industry with rise in revenues outstripping the increasing inflation over the years and therefore concluded that inflation-linked hike provided earlier vide 11th T.A.O. and 13th T.A.O. dated 31 March 2014 and 31 December 2014 respectively, which have been set aside by TDSAT vide its order dated 28 April 2015 and the said order of TDSAT has also been upheld by the Supreme Court of India, are not required at present.”

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