All India Digital Cable Federation and Kerala Communications Cable Ltd v. Telecom Regulatory Authority of India

**WP(C) NO.2879/20** 1 ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN MONDAY, THE 12[TH] DAY OF JULY 2021 / 21ST ASHADHA, 1943 WP(C) NO. 2879 OF 2020** ## **PETITIONERS:** 1 ALL INDIA DIGITAL CABLE FEDERATION, 236 OKHLA INDUSTRIAL ESTATE PHASE-III NEW DELHI 110 020, INDIA. REPRESENTED BY ITS SECRETARY GENERAL MANOJ PRAKASH CHHANGANI 2 KERALA COMMUNICATIONS CABLE LTD, 1ST FLOOR, 142-H1 AM COA BHAVAN, THOUNDAYIL ROAD, PANAMPILLY NAGAR, ERNAKULAM 682 036, KERALA REPRESENTED BY ITS MANAGING DIRECTOR MR. SURESH KUMAR P.P BY ADVS. M.GOPIKRISHNAN NAMBIAR SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS SRI.PAULOSE C. ABRAHAM SRI.JAIMOHAN ## **RESPONDENTS:** TELECOM REGULATORY AUTHORITY OF INDIA, MAHANAGAR DOORSANCHAR BHAWAN, JAWAHARLAL NEHRU MARG (OLD MINTO ROAD) NEW DELHI 110 002, INDIA REPRESENTED BY ITS SECRETARY. BY ADVS. SHRI.P.VIJAYAKUMAR, ASG OF INDIA SRI.MANU SRINATH THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 10.04.2021, THE COURT ON 12.07.2021 DAY DELIVERED THE FOLLOWING: **WP(C) NO.2879/20** 2 ## **ANU SIVARAMAN, J.** ## **= = = = = = = = = = = = = = = = =** ## **W.P.(C) No.2879 of 2020 = = = = = = = = = = = = = = = = = Dated this the 12th day of July, 2021** ## **JUDGMENT** ## 1. The prayer in this writ petition is as follows:- “Issue a writ, direction or order in the nature of mandamus or any other writ, order or direction quashing and setting aside Regulation 4(3), Regulation 4(8) r/w Schedule VIII, amended second proviso to Regulation 8(2) and amended Regulation 18(4) of Exhibit P1 Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems)(Second Amendment) Regulations, 2020 dated 01.01.2020 issued by the Respondent and Regulation 4(1) of Exhibit P2 Telecommunication (Broadcasting and Cable) Services (Eight) (Addressable Systems) Tariff (Second Amendment) Order, 2020 dated 01.01.2020 issued by the respondent.” 2. Heard Sri.Arun Kathpalia, the learned Senior Counsel appearing for the petitioners, briefed by Sri.Jai Mohan and Sri.Saket Singh, learned Senior Counsel appearing for the respondent. 3. Since arguments were raised by the learned Senior Counsel for the petitioners on each challenge separately, I shall deal with the arguments raised in the order that they were raised by the learned Senior Counsel and answered on behalf of the 1[st] respondent. **WP(C) NO.2879/20** 3 4. The 1[st] issue raised by the learned Senior counsel for the petitioners was with regard to the Amendment to Regulation 18 (4) of Ext.P1. ## 5. The pre-amended provision reads as follows:- “18. Listing of channels in electronic programme guide: XX XX XXX (2) It shall be mandatory for the distributor to place channels in the electronic programme guide, in such a way that the television channels of same genre, as declared by the broadcasters, are placed together consecutively and one channel shall appear at one place only: Provided that all television channels of same language within the same genre shall appear together consecutively in the electronic programme guide. Provided further that it shall be permissible to the distributors to place a channel under sub-genre within the genre declared for the channel by the broadcaster. xxx xx xxx (4) The channel number once assigned to a particular television channel shall not be altered by the distributor for a period of at least one year from the date of such assignment: Provided that this sub-regulation shall not apply in case the channel becomes unavailable on the distribution network: Provided further that if a broadcaster changes the genre of a channel then the channel number assigned to a particular television channel shall be changed to place such channel together with the channels of new genre in the electronic program guide. “ **WP(C) NO.2879/20** 4 ## 6. Clause 6 of Ext.P1 (Second Amendment) Regulations provides as follows:- “In regulation 18 of the principal regulations - (a) for sub-regulation (2) and provisos thereto, the following subregulation shall be substituted, namely:- (2) It shall be mandatory for the distributor to place all the television channels available on its platform in the electronic programme guide, in such a manner that all the television channels of a particular language in a genre are displayed together consecutively and one television channel shall appear at one place only.” - (b) in sub-regulation (4), for the words “for a period of at least one year from the date of such assignment.”the words “without prior approval of the Authority” shall be substituted - (c) for second proviso to sub-regulation (4), the following proviso shall be substituted namely: “Provided further that if a broadcaster changes the genre or language of a channel then the channel number assigned to that particular television channel shall be changed in order to place such channel with the channels of the new genre or language in the electronic program guide.” 7. It is submitted that the amendment in Regulation 18(4) brings about a situation that a number allotted to a channel in the Electronic Programme Guide cannot be changed without the prior approval of the Telecom Regulatory Authority. It is submitted that Section 11 of the TRAI Act specifies the functions of the 1[st] respondent. It is submitted that Section 11(2) of the Act provides the regulatory functions of the Authority and includes the power to regulate **WP(C) NO.2879/20** 5 the terms and conditions of inter-connectivity. It is submitted that interconnection is not defined in the TRAI Act. However, the principal Regulations that is, the Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) Regulations, 2017 defines interconnection to mean “commercial and technical agreements under which service providers connect their equipments and networks to provide broadcasting services to the subscribers”. Similarly, placement is also not defined in the Act or in the Regulations. 8. It is the contention of the learned Senior Counsel that in the scheme of things of the Act and the Regulations, the signal or the content is the property of the broadcaster. The signal is broadcast from the head end by the broadcaster, which is received by the Multi System Operator (MSO for short) and transmitted to the consumer. It is submitted that the entire network for the receiving and the transmission of the signal is the property of the Distributor Platform Operator or the MSO. It is submitted that the right to place different channels in the Digital Programme Guide is a property right which has value. Therefore, subject to the regulatory exercise of the TRAI in areas where such regulation is **WP(C) NO.2879/20** 6 permissible, the MSO has a right to generate revenue in the matter of placement of channels which is not liable to be interdicted by any regulatory exercise. It is contended that interconnection and placement are different and distinct and placement, being a valid revenue scheme for the MSO, the 1[st] respondent has no manner of right or authority to restrict the exercise of such right by the MSO. It is submitted that the principal Regulations themselves stated that a Logical Channel Number (LCN) once allotted to a channel cannot be changed arbitrarily and should be retained for a year. However, the present amendment, in so far as it provides that the LCN once allotted cannot be changed without the prior permission of the TRAI, is an intrusion into the valuable rights of the MSO and is bad on that count alone apart from being bad for want of legislative competence and further for want of proper consultation as is provided under the Act. It is further contended that there are absolutely no guidelines with regard to the exercise of the power by the TRAI for change of LCN and the grant of such unbridled power to the TRAI is likely to result in clear arbitrariness and exercise of power without restrictions. The contention is that TRAI will be enabled by the provision to arbitrarily accept or reject request for change of LCN without any rhyme or reason. **WP(C) NO.2879/20** 7 9. Reliance is placed by the learned counsel for the petitioners on the judgment of the TDSAT in **United Cable Operator's** **Welfare Association v. Telecom Regulatory Authority of** **India** [2012 SCC online TDSAT 691] where the TDSAT observed that it may be necessary to put a particular channel at a better place so as to attract higher viewership. It was held that an attempt to regulate placement and placement fee should be non-discriminatory and should be informed by a proper process of consultation as provided in Section 11(4). Paragraphs 48 to 52 of the said judgment is specifically referred to. “48. Mr. Saket Singh would contend that the question of placement of channel would not arise in a digital system in as much as unlike the non-CAS regime, there is no question of placing a channel in a particular frequency, having regard to technological aspect of the matter, clarity and/or quality of the picture on the TV screen would be the same or similar for all the channels. With a view to judge the correctness of the said submissions, we may notice the definition of ‘Placement Fee’ It reads as under:- “(v) ‘Placement Fee’ means any fee paid by a broadcaster to a distributor of TV channels for placement of the channels of such broadcaster vis-a-vis channels of other broadcasters on the distribution platform owned or **WP(C) NO.2879/20** 8 operated by such distributor of TV channels.” 49. The Placement Fee, therefore, does not mean a fee payable only when a channel is placed on a better frequency. It may be necessary to put a particular channel at a better place so as to attract a higher viewership. Moreover, if the contention of the Respondent to that extent is accepted, there is absolutely no reason as to why the DTH operators have been allowed to collect placement charges. We, therefore, are of the opinion that the restriction placed on placement charges cannot be upheld. It is set aside accordingly. 50. Charging of any ‘Placement Fee’ has been prohibited in terms of Regulation 3 (11)(A) of the Regulations. It is not in dispute that the Respondent herein is enjoined with the duty to follow a transparent process before making a Regulation or bringing about a change therein which would have a direct impact on fixation of tariff. Transparency, there cannot be any doubt, is required to be maintained for the purpose of advancing the principles of natural justice. By reason of the impugned 2012 Amending Regulations, admittedly the requirements of Section 11(4) have not been followed. 51. The Amendment has been carried out suo motu. The 2012 Regulations were notified on 30.4.2012. Only after a period of 14 days the amendment is sought to be introduced. 52. It is difficult to comprehend as to if the Placement Fee is an evil for DAS operators; why it has not been found to be so for the DTH operators? Even in viewer wise classification, Placement Fee in view of its definition cannot be said to have lost all its relevance. If that be so, there is absolutely no reason as to why the same has expressly not been done away with for the DTH operators. “ **WP(C) NO.2879/20** 9 10. Further in **Bennet Coleman v. Telecom Regulatory Authority of India** [2019 SCC online TDSAT 133], the TDSAT held that the word 'interconnection' cannot be taken as equivalent of placement either in the literal sense or technically. Both are different concepts and placement always follow interconnection. There may be interconnection without placement but there can be no placement without interconnection. It is admitted that the said judgment is in appeal before the Apex Court and an interim order dated 30.7.2020 has been passed in Civil Appeal No.60016003/2019 as follows:- “Heard the learned counsel appearing for the parties at length. After hearing the learned counsel with respect to interim stay, we direct that the appellant shall not enforce Landing Page Regulations/directions against the respondents and other similarly situated members of the Association. Subject to the aforesaid, the operation of the impugned Judgment shall remain stayed.” It is stated that the said appeal is still pending. 11. The following are the submissions with regard to lack of consultation informing the amendment:- **WP(C) NO.2879/20** 10 “Impugned Amendment Regulations 2020 at Reg.6(b) introduces an amendment in the original Reg.18(4), whereby the LCN for a channel is locked in for perpetuity, unless a change thereof is approved by TRAI without any consultation. There is no discussion or suggestion in the Consultation Paper that TRAI will assume the authority to give permission for changing LCN number and LCN once assigned shall be perpetual. Explanatory Memorandum for the aforesaid unamended regulations expressly states that “ _the listing of the channel on the basis of TRP is not being mandated and is it is left open to the distributor to decide the listing of channels within the prescribed framework_ ”. Further at para 140, the Explanatory Memorandum notes that the prescribed period of one-year lock-in for LCN of a channel is adequate to avoid inconvenience to consumers arising out of changes to LCN. Therefore, from a consumer stand point, an LCN assignment remaining unchanged for one year has been found sufficient and there is no suggestion otherwise. The Consultation Paper dt. 25.09.2019 for the Impugned Amendment Regulations 2020 at paras 3.7-3.14 lays out the issues relating to LCN. At para 3.7, it specifically noted that the one-year lock-in is an adequate regulation and provides necessary protection. The only discussion in the consultation paper pertains to general complaints (with no specific instance) regarding “distributors” asking broadcasters to enter into placement as a condition for carrying their channels, which, if true, is a breach of the regulation. There is no rationale or proposal for making placement perpetual subject to approval of TRAI. After further discussion the issue framed for consultation is as follows: “ _Should there be a well-defined framework for Interconnection Agreements for placement? Should placement fee be regulated? If yes, what should be the parameters for regulating such fee? Support your answer with industry data/reasons._ ” There is not even an iota of suggestion that TRAI is contemplating expropriating the right of placement and taking away the right to place from the distributor and to **WP(C) NO.2879/20** 11 provide that TRAI, without any guideline, would be able to decide the assignment of LCN. There was no consultation on the proposal that LCN once assigned would remain assigned for perpetuity unless change is permitted by TRAI. The explanatory memorandum states that the amendment in the Amendment Regulations 2020 is a “ _minor modification_ ” over the regulation of LCN under the 2017 Regulations to justify the lack of consultation for the fundamental policy change. The Petitioners submit that the Impugned Amendment Regulations abolishes placement and as conceded in the explanatory memorandum it will mean that “ _An LCN once allotted will remain allocated to such television channel in perpetuity. Therefore, the authority is of the view that pursuant to such amendments there is hardly any obligation for a broadcaster to enter into placement agreements”_ (Page 59, EM to Impugned Amendment Regulations)”. ## 12. It is contended that the Impugned Amendment Regulation is ## liable to be set aside on the following grounds: “(i) Placement is outside the scope of interconnection and is an independent agreement outside the ambit of interconnection and hence outside the jurisdiction of TRAI. (ii) TRAI has failed to consult the Petitioners before bringing in a drastic change that effectively abolishes placement and the right of distributors to place channels in the EPG. The Impugned Amendment Regulation therefore is arbitrary and liable to be set aside under Article 14 of the Constitution read with Section 11(4) of the TRAI Act. (iii) Impugned Amendment Regulation thereby violates freedom of trade under Article 19(1)(g) of the Constitution. Further, the Impugned Regulations also impinge on the right to property under Article 300A of the Constitution. **WP(C) NO.2879/20** 12 (iv) Even otherwise, the stipulation that LCN will be changed only with permission of TRAI is arbitrary as it effectively bestows a bounty on those broadcasters who currently have the best LCN assigned. A broadcaster which has paid placement fee for one year placement of their channel on the Number 100 will now enjoy that placement in perpetuity free of cost if the Impugned Amendment Regulation is implemented. (v) There is no guideline whatsoever in the regulation as to how TRAI will, if at all exercise its power to change the LCN. It amounts to a completely arbitrary delegation of unfettered administrative discretion to TRAI which can now decide to allot a preferred LCN number to any broadcaster.” 13. The second point argued by the learned Senior Counsel was with regard to the removal of discount to distributions by effecting amendments to Regulation 7. The learned counsel raised the following arguments with regard to the said amendments. 1. The Interconnect Regulations 2017 in Regulation 7(3) and Regulation 7(4) deal with the revenue that a distributor may earn from a broadcaster for the distribution of a pay channel. The regulation provides that: (i) Regulation 7(3) provides that a minimum distribution fee will be declared which would be 20% payable to the distributor on the cost of a pay channel. (page 136) (ii) Regulation 7(4) provides that a Broadcaster is permitted to provide a discount of 15% in the MRP on pay channel or bouquet of pay channels to the distributor. (page 137) **WP(C) NO.2879/20** 13 2. Therefore, the Interconnect Regulations 2017 allowed a discount to be provided on both the bouquet and the a la carte channel. Regulation 7(4) of the Interconnect Regulations 2017 does not address the differential between price of al la carte and bouquet channel, but the discount that the distributor can draw from the broadcaster. 3. In the consultation paper dated 25.09.2019 issued for the purpose of discussing the issues on the Interconnection Regulation 2017 there is no mention of any change of Regulation 7(4) The Consultation Paper on the Regulation does not deal with the issue of removing the discount on Bouquets. Therefore, it is a case of complete lack of consultation. Even the formality of consultation has not been undertaken. 4. Counsel for TRAI conceded that no discussion on amending Regulation 7(4) in the consultation paper on the Interconnection Regulation. However, he pointed to a general question Q.5 at page 454 of the Tariff Consultation Paper dated 16.08.2019 based on which the Tariff Order was amended to justify that consultation had been undertaken. Reference to the Tariff 5. Consultation paper is totally irrelevant as that consultation paper considered amendments to Tariff Order and these amendments are not in challenge in the Writ. The Tariff Order earlier provided in Clause 3 that price of a bouquet of pay channels will not be less than 85% of the combined cost of pay channels. (Page 308). The Tariff Order amendment provides that the total cost of a la carte channels in a boquet will not be more than 1.5 times the bouquet (Page 63). 5. The consultation paper on the changes to the Tariff Order (which pertains to a different issue) regarding difference between a la carte price and bouquet price offered to the customer cannot be used as a basis to bring in a change through the back door on a different aspect i.e. the _interse_ discount between a broadcaster and a distributor. 6. Therefore, the discount that DPOs could get from a broadcaster always had to be within the limits of Regulation 3 of the Tariff Order as regards differential between bouquet v. a la carte. The deletion of Regulation 7(4) without consultation is arbitrary and violative of Section 11(4) of the TRAI Act. It is otherwise liable to be set aside under Article 14 and Article 19(1) (g) as without any consultation and without following the process of law a right of the Petitioner has been infringed by the Respondent authority. **WP(C) NO.2879/20** 14 ## 14. The next challenge urged is with regard to cap on carriage fee, target market and discontinuation threshold:- The following, in short, are the submissions on this point:- 1. The Amendment Regulations 2020 have on one hand capped the carriage fees for channels, and on the other hand delimits the target market for DPO’s to a single State/UT, regardless of the total reach of the head-end catering to the concerned area. In addition, the said Amendment also introduces a Discontinuation Threshold, the method of calculation whereof forces DPO’s to carry channels despite them having low circulation. There are three amendments impugned in which the issue is interlinked: 1. Cap on carriage fees where Regulation 8 has been amended such that Carriage Fee which was chargeable on the basis of number of subscribers in a target market has been de-linked from number of subscribers and capped at a fixed fee of INR 4 Lakhs and INR 8 lakhs per SD and HD channel respectively. 2. The target market whose size determined the number of subscribers has been limited to only one single State for MSOs only (permitting national target market for DTH operators) 3. A discontinuation threshold determined the number of subscribers needed by a channel to avail of the “ _must carry_ ” obligation of a distributor. A language multiplier has been introduced in the discontinuation threshold without any consultation on the subject. In the new regime, a channel can be discontinued only if subscription is less that (5*x)/100 % of the subscriber base. Where x represents the percentage of language speakers in a state as per census data. 2. It is contended that these amendments are entirely unreasoned and arbitrary, and the combined effect thereof is an unreasonable and debilitating fetter on the freedom of trade of the Petitioners. Further, delimitation of target market to a single State/UT is not made applicable to DTH operators, which is an arbitrary distinction and lacks any reasonable nexus with the stated object of such delimitation, thereby violating **WP(C) NO.2879/20** 15 Article 14 of the Constitution. 3. The issues are addressed in the Consultation Paper dated 25.09.2019 under the head “Target market”. However, the decisions taken are completely contrary to the proposal put forth for consultation in the consultation paper. The issues that emerge from the consultation paper are: 1. Since target market is declared PAN India by certain distributors, regional channels have to pay very high carriage fee on a per subscriber basis. 2. Para 2.16, Page 527, it is the DTH operators alone who are declaring a PAN India target market. Target Market of MSOs (Multi System Operators) like the Petitioner is a combination of states in the same region that are serviced from a single-head-end. 3. Para 2.26 – Average channel carrying capacity is between 250 to 600 Channels and there are currently 902 licensed channels. 4. Conclusion – “ _**One may opine that the threshold of 5% may be done away with especially for DTH platforms as their target market is Pan India, however in case of MSOs the condition may remain**_ ” ## **(i) Target Market** 4. As seen above, both the vice identified and the solution proposed by TRAI in the Consultation Paper related to DTH operators. Despite the same the impugned Amendment Regulations 2020, vide amendment to Regulation 4 introduces a system, whereby the target market for every operator, aside from DTH operators cannot go beyond 1 state/UT. **5.** The introduction of the limitation on MSOs that their target market will be one state is completely arbitrary and discriminatory. There is no technical justification for the **WP(C) NO.2879/20** 16 same. Just like a DTH operator has pan-india reach from its system, the head-end of the MSO also technically and naturally reaches multiple states. It is for this reason that the MSO was permitted in the unamended regulation to declare target market for upto its technical coverage area. The limitation on coverage area introduce by way of amendment to Regulation 4 is arbitrary, discriminatory and liable to be set aside under Article 14 being discriminatory to MSOs. The amendment is also liable to be set-aside for lack of transparency as the Consultation paper never proposed any change to target market for MSOs and therefore the amendment that impacts only MSOs does not meet requirement of Section 11(4) of the TRAI Act. 6. The high carriage fee at rate of 20p per subscriber in the target market is used as justification for limiting the target market to one state. However, at the same time the carriage fee is being capped as a lump sum carriage fee of INR 4 Lakhs per month for SD channels and INR 8 lakhs per month for HD Channels. ## **(ii) Discontinuation Multiplier has been introduced without any consultation** 7. Under the unamended Regulation 4, Discontinuation Threshold is 5% of the subscribers in the Target Market subscribing to a Channel. If a channel has subscription less than 5% in a Target Marker, then Distributor is released from must carry obligation. 8. A reasonable threshold is required by the Distributors for discontinuing a channel as the number of channels that a distributor can carry is less than the total universe of channels and in order to run a profitable business a distributor should be able to carry those channels that have demand amongst its subscribers and eliminate those channels that do not have demand. 9. The entire consultation paper nowhere mentions that the Discontinuation Threshold will be changed for MSOs. On the other hand the proposal is that for MSOs the threshold will remain “unchanged”, The fact is that the discrimination on target market above highlighted is further compounded by the arbitrary introduction of a language multiplier. **WP(C) NO.2879/20** 17 - 10.The lack of consultation on language multiplier which is a fundamental and new change is self-evident from the consultation paper itself. The change can also not to be attributed to “comments” as no comment is placed on record where any stakeholder suggested a language multiplier. It is also not appropriate to say that the change is minor as earlier the discontinuation was linked to 5% subscribers and now it is a channel can be discontinued only if subscription is less that (5*x)/100 % of the subscriber base. Where x represents the percentage of language speakers in a target market (i.e. one state for MSOs) as per census data. (Page 38) - 11.The illustration at Exhibit P-12 to the Writ the application of the threshold is clearly demonstrated as ex-face arbitrary as it results in a Punjabi Channel requiring to be carried in UP even if it has 9 subscribers. - 12.TRAI’s argument in Reply (which was not subject to any consultation) was that the regional channel with only 9 subscribers will have to pay a carriage fee as per Reference Interconnect Offer which can be as high as 20 paise per subscriber in the target market. This does not address the arbitrariness of the threshold and TRAI’s argument is incorrect as under the new amendment to Carriage Fee, the distributor can no longer charge carriage fee per subscriber but has to offer a lump sum carriage fee which is capped at INR 4 Lakh only. Moreover, TRAI fails to consider that channels do not run on revenue from subscribers but on revenue from advertisers. Therefore, a broadcaster may have incentive to force his channel upon a distributor without any demand and distributor will not be able to refuse the channel leading to additional costs on the Distributor and using up of the limited bandwith. - 13.The amendment and introduction of “discontinuation multiplier” is manifestly arbitrary and also liable to be set-aside as violative of Article 14 of the Constitution of India and violative of Section 11(4) of the TRAI Act. ## **(iii) Cap on carriage fees** - 14.The un-amended 2017 Interconnect Regulations, at Reg.8(2) [@ pg.138, WP] provides that the carriage fees for SD channels, per month shall not exceed 20 paise per subscriber; and for HD channels, per month shall not exceed 40 paise per subscriber. The rationale for the above is stated at paras 87-92 [@ pg. 220-221, WP] **WP(C) NO.2879/20** 18 - 15.The impugned Amendment Regulations 2020, vide Reg.4 [@ pg. 39, WP] amends Reg.8(2) of the principal regulations, to prescribes a cap of ( _**irrespective of number of subscribers**_ ): - a) Carriage Fees of Rs.4 lakhs per month for SD Channels; and - b) Carriage Fees of Rs.8 lakhs per month for HD Channels. 16. Though the consultation paper has posed a question “Should there be a cap on carriage fee that a broadcaster maybe required to pay a DPO? However, there is no suggestion about how the cap will be fixed. 15. Following are the submissions on Cap on Network Capacity Fees. ## **3. CAP ON NCF** 1. Impugned 2020 Tariff Order arbitrarily and without consultation reduces NCF and provides an absolute cap thereon. The said reduction and provision of an absolute cap is an unreasonable and arbitrary fetter on the freedom of trade of the Petitioners under Article 19(1)(g) of the Constitution, and beyond the jurisdiction of TRAI, having been introduced without due consultation. 2. The un-amended 2017 Tariff Order, at Reg.4 [@ pg.309-310, WP] provides that Maximum NCF of Rs.130 for upto 100 SD channel, maximum Rs.20 NCF for each 25 channel thereafter. 3. The Explanatory Memorandum to the 2017 Tariff Order, at para 80 [@ pg.347, WP] provides that the rationale for fixing Rs.130 as the cap is: the cost of carrying 100 SD Channels is Rs.100 and the associated overhead is Rs.50. 4. The Consultation Paper dated 16.08.2019 [@pg.414, WP], despite raising the issue of NCF, especially with regard to Multi-TV Homes does not specify any basis for the calculation of the cap. **WP(C) NO.2879/20** 19 5. The 2020 Tariff Amendment Order, at Reg.4 therein [@ pg.64, WP] now provides that: - a. Maximum NCF for **200 SD channels** shall be Rs.130; - b. **Absolute cap** of Rs.160 for **any number of SD channels beyond 200** ; 6. The Explanatory Memorandum to the 2020 Tariff Amendment Order, lays out the reasons for the aforesaid amendment from para 72-84 [@ pg.92-96, WP]. Pertinently, the amendments are justified with vague and unsubstantiated statements, e.g.: 1. At para 72 [@ pg.92, WP] it is stated that “ _some DPO’s_ ” are offering large number of FTA channels without additional NCF. 2. At para 81 [@ pg.95, WP], it is merely asserted that there is no additional cost if a DPO offers 200 channels instead of 100, and hence NCF of Rs.130/- is adequate. 3. At para 82 [@ pg. 96, WP] it is merely asserted that on an average 300 channels are offered, and hence an absolute cap of Rs.160 on NCF is justifiable. 7. The amendment in relation to the cap on NCF were introduced without due consultation and hence are _ultra vires_ the TRAI Act. In particular the cap on incremental channels i.e. more than 200 channels was neither proposed notr discussed. 8. The Explanatory Memorandum to the 2020 Tariff Amendment Order does not explain how the rationale in the EM for the 2017 Tariff Order, that the cost of carrying 100 channels is Rs.80 and additional cost is Rs.50 has been reassessed. **WP(C) NO.2879/20** 20 16. The submissions with regard to Multi TV homes are as follows:- ## **MULTI-TV HOMES** 1. The impugned amendment in the 2020 Tariff Amendment Order introduces ‘MultiTV Homes’, and provides for a mandatory discounting of NCF for such connections, wherein only 40% of the standard NCF can be charged for additional connections in Multi-TV Homes. The Petitioners submit that such mandatory discounting has no rational basis and is based on a vague definition of Multi-TV Homes, which is susceptible to rampant misuse. The consequence of the said amendment is an unreasonable and arbitrary fetter on the freedom of trade and right to property of the Petitioners under Article 19(1)(g) and 300A of the Constitution. 2. The unamended 2017 Tariff Order contained no provisions in this regard. 3. The impugned 2020 Tariff Amendment Order, provides: 1. Vide clause 2 [@ pg. 63, WP] introduces Reg. 2(xa) of the principle regulations to define Multi-TV Homes, as “ _household having more than one TV connection or set top box in the name of one person._ ” 2. Vide clause 4 [@ pg. 64-65, WP] amends Reg. 4(1) of the principle regulations to add a third proviso, which states that the NCF, per month, for each additional TV Connection in a Multi-TV Home shall not exceed 40% of the declared NCF. 4. Each Set Top Box is a separate unit for the Broadcasters, and hence the DPO’s have to still pay full fee for each additional connection within the Multi-TV Home. This is aside from the various overhead expenses that will still have to be borne by the DPO’s for such additional connections. 5. The capping of costs at 40% is irrational. As per the Explanatory Memorandum to the 2017 Tariff Order, at para 80 [@ pg.347, WP], the cost of carrying a channel is **WP(C) NO.2879/20** 21 Rs.100 and the overheads is Rs.50. None of this can now be fully recovered by the DPO in case of additional connections in a Multi-TV Home. 6. Vague definition of Multi-TV Homes, as 'household' not defined will lead to loss of revenues for MSOs as they have to depend on Local Cable Operators to collect the revenue and make declarations about Multi-TV homes. 17. It is submitted by the learned Senior Counsel for the petitioners that the Apex Court held that mere holding of consultations with the stake holders and permitting them to make their submissions alone would not satisfy the requirement of transparency in the framing of subordinate legislation where such power is delegated to the executive or to regulatory bodies like the respondent. It was held that to be proper, consultation must be undertaken at a time when proposals are still at a formative stage and it must include sufficient reasons of causes to allow those consulting to give intelligent consideration and intelligent response; adequate time must be given for this purpose and the product of consultation must be conscientiously taken into account when the ultimate decision is taken. It is stated that the decision of the Apex Court has been followed and applied by the High Court of Delhi in **Syniverse Technologies India Pvt. Ltd v. TRAI** [ 2019 (174) DRJ 432] and it was held that **WP(C) NO.2879/20** 22 to be meaningful the consultation must be full and proper with proper opportunities to all stake holders to raise their contentions. It is stated that a Division Bench of the High Court of Madras in **TATA Communications Ltd.** v. **TRAI** [2018 SCC Online Mad 1991] held that whenever TRAI makes Regulations by exercise of its regulation making power under Section 36 of the TRAI Act, the same should be absolutely transparent and this transparency is imperative to avoid arbitrariness. The High Court of Delhi has also applied the decision in **Vodafone India Ltd. and others** v. **Telecom Regulatory Authority of India** [LPA No. 592/2017]. 18. Detailed counter affidavits have been placed on record by the 1[st] respondent in this writ petition. Sri.Saket Singh, the learned Senior Counsel addressed exhaustive arguments in this writ petition. The primary contention was with regard to the jurisdiction and authority of TRAI to regulate placement. It is submitted that Section 11 enumerates the functions of the TRAI. The contention that Section 11(2) does not specifically make a reference to the power of the TRAI to regulate placement of channels, according to the learned Senior Counsel, is an erroneous premise. Relying on Section 36 of the TRAI Act, the learned Senior Counsel would **WP(C) NO.2879/20** 23 contend that the power to make regulations conferred on the TRAI is a much wider power. Section 36 empowers the TRAI to make regulations consistent with the Act and the Rules to carry out the purposes of the Act. It is stated that sub-section (2) is only an illustrative provision and that the power of the TRAI under Section 36 is not restricted by Section 11, Section 12, Section 13 or Section 36 (2). The purpose of the Act as discernible from the preamble is to regulate broadcasting services. It is, therefore, contended that the TRAI has wide and pervasive power to make regulations to carry out the purposes of the Act and that the contention that there is no jurisdiction in terms of Section 11 of the Act is, therefore, completely fallacious. It is, therefore, contended that placement is also an element which can be regulated by the TRAI by making regulations under Section 36. It is stated that irrespective of whether placement is a part of interconnection or not, there is power under Section 36 read with Section 11(1)(b)(ii) to regulate any aspect of broadcasting services which would take in placement as well. It is submitted that it is the consistent stand of the TRAI that placement is a part of interconnection. However, since the issue is pending before the Apex Court at the moment, even assuming, without admitting, that placement is not **WP(C) NO.2879/20** 24 interconnection, the power of the TRAI to regulate placement which is traceable to Section 36 cannot be denied. 19. The learned counsel places reliance on paragraph 36 of the Star India judgment, that is, **Star India Private Limited v Department of Industrial policy and promotion and others [(2019) 2 SCC 104]** wherein it was held that Section 11(1)(b) provides power to the 1[st] respondent to fix all terms and conditions of inter-connectivity between broadcaster, MSO, Cable TV operator and the ultimate consumer so as to ensure that the object of the Act is carried out, namely, that both the broadcasters and consumers get a fair deal. 20. It is further contended by the learned Senior Counsel that the submission that placement is not interconnection is flawed since it is based on the definition of interconnection which is extracted from the parent regulation itself. It is submitted that it is on the basis of the restricted meaning of interconnection given in the Regulation that the 'TDSAT' has held that placement is not part of interconnection and that the order of the 'TDSAT' stands stayed by the Apex Court. It is contended that placement agreements are mutually **WP(C) NO.2879/20** 25 negotiated agreements which are entered into by the MSO's and the broadcasters de hors the regulatory framework. It is submitted that the question was specifically put to consultation and after inviting suggestions on whether placement agreements are to be curbed, the authority decided that greater supervision is required in the matter of placement so that untoward practices and profiteering could be curbed. The relevant portions of the consultative papers are relied on by the learned counsel to contend that there was full and proper consultation on the question. It is stated that the larger question was put up for consultation and it was after considering all the opinions of all the stake holders that a decision to have a closer scrutiny of placements by requiring a sanction from the TRAI for change of LCN was arrived at. It is submitted that since the LCN could not be changed even under the unamended regulations at the whims and fancies of the MSO and had to be retained for a year, there is no major change brought about by the amendment as apprehended by the petitioners. It is submitted that the decision of the TRAI on the question will be in the form of a speaking order and therefore, there is no merit in the contention that there will be arbitrary exercise of power. **WP(C) NO.2879/20** 26 21. The contentions with regard to target market, carriage fee and discontinuation threshold have been addressed together. The issue is with regard to the Amendments to Regulation 4 (3), 4 (8), 8 (2) and the first and second provisos thereto. It is submitted that a reading of explanatory memorandum from paragraph 6 onwards would show that the issue raised was with regard to the target market and discontinuation in respect of multiple state MSOs as well and not only to Pan India operators. It is stated that a reading of paragraph 6 of the explanatory memorandum would show that representations with regard to declaration of bigger target markets was not confined to Pan India players and distributors who declared combination of some states together as their target market were also a part of the consultative process. It is stated that views were sought from all stake holders, the views of all concerned were considered and an analysis of revenue and expenses was carried out and the large MSO's specifically agreed to declare target market on the basis of linguistic agency/state during the consultations. It was after considering all these aspects that the appropriate decision was taken by the authority with regard to the carriage fee as well as target **WP(C) NO.2879/20** 27 market. With regard to the discontinuation threshold also, it is submitted that the entire matter had been put to consultation and all views were considered before the decisions had been taken. It is submitted that the fixing of 5% as the discontinuation threshold was taken after all due discussions and after consideration of the relevant data on the basis of the census. It is submitted that the hypothetical arguments raised by the petitioners with regard to the need to carry a channel even with a minuscule number of subscribers is a figment of the petitioner's imaginations. 22. With regard to the amendment made to the Tariff Order also, it is contended that the network capacity fee was specifically made subject to review after two years by the previous Tariff Order. Specific issues had been put to consultation with regard to the cap on network capacity fee and a full fledged cost analysis had been carried out taking note of the views of all the stake holders including that of the MSOs and paragraph 81 of the explanatory memorandum contains a conclusion which is a decision informed by due consultation. It is submitted that the finding in the consultation was that an amount of Rs.130/- is sufficient for the entire capacity of an MSO and the MSOs had suggested a cap of Rs.150/- for **WP(C) NO.2879/20** 28 200 channels. It is submitted that apart from the hypothetical arguments raised, there is absolutely no data produced by the MSOs in support of the contention that there is any loss of revenue or arbitrariness in the fixing of the cap on the network capacity fee. 23. With regard to the fixing of 40% of the NCF for the second connection in a Multi TV household onwards, it is contended that the issue was specifically put to consultation and the MSOs had agreed, in principle, to the suggestion that discounts are liable to be given for the second TV onwards in the same household. The percentage of discount has been decided by the 1[st] respondent after considering all the relevant aspects of the matter. It is contended that in this case also, the details of the actual cost in providing a second connection and the details of loss, if any, are completely absent in the pleadings of the petitioners and in the absence of the same, the challenge on the ground of arbitrariness must fail. It is stated that there is no loss whatsoever occasioned due to the fixing of 40% of the NCF in respect of the second TV onwards in a Multi TV household. It is further contended that the fixing of tariffs is admittedly a part of the regulatory function of the TRAI and the TRAI has only **WP(C) NO.2879/20** 29 considered the views raised with regard to the fixing of the tariff, considered all the opinions of the relevant stake holders and taken due regulatory measures and made amendments, where required. 24. It is submitted that the TRAI has taken into account the best interest of all the stake holders and the attempt is only to see that all the stakeholders, especially the end consumers are given a fair deal. It is submitted that the regulations are intended as dynamic exercises and that they are not cast in stone by any stretch of imagination. It is submitted that once the regulations are rolled out and become operative, any problems which are noticed in the functioning of the same would be liable to be corrected by the respondent itself by further consultative processes and by corrections and amendments wherever found required. 25. With regard to the question of transparency, it is contended that the consultation with regard to the issues faced in the telecom industry is a vast consultative process and arithmetic precision cannot be expected out of any authority in a process of that nature. It is submitted that the consultative process is undertaken to try and arrive at a **WP(C) NO.2879/20** 30 consensus as to how the regulatory mechanism should progress. It is submitted when an issue was raised by any of the stake holders the same is put up for consultation and after examining all the relevant aspects of the matter, including the different points of view, a plausible solution to the problem is worked out which does not require to be completely precise. The only requirement is that the regulation must be consistent with the Act and the Rules and should be framed to carry out the broad purposes of the Act. It is, therefore, contended that the arguments raised are not liable to be accepted and that there is no illegality as far as the amendments to the regulations or the Tariff Order are concerned. It is further contended that the consultation process comprises of the consultation paper, comments, counter comments, open house discussions, data and materials which may be shared by the stakeholders. It is therefore contended that reading the consultation paper alone to decide on the breadth and depth of consultation would be an erroneous exercise. It is stated that the entire consultation process has to be looked at comprehensively and no conclusions can be arrived at based on the consultation paper alone, which is only the starting point of the consultation. The learned counsel places reliance on **WP(C) NO.2879/20** 31 **Shri.Sitaram Sugars and others v. Union of India** [(1990) 3 SCC 223] on the question of judicial review of delegated legislation. **M/s. Laxmi Khandsari & others v. State of U.P. And others** [(1981) 2 SCC 600] and **Health for Millions v. Union of India and others** [(2014)14 SCC 496. 26. The decision of the Delhi High Court in **Vodafone India Ltd and others v. Telecom Regulatory Authority of India** [order dated 4.9.2017 in W.P.(C).No.6388/2017 and CM Nos.26428/2017 & 28403/2017] and the judgment of a Division Bench of the Delhi High Court in L.P.A.No.592/2017 in the same matter are also produced and relied on. 27. The learned counsel for the respondents has made available a note containing consultation timelines and categorisation of stakeholders who furnished their comments. The contents of the note are extracted below:- ## **“1. Timelines of consultation.** A. Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) (Second Amendment) Regulations, 2020 (1 of 2020) - Consultation Paper on Issues related to Interconnection Regulation, 2017 issued on 25.09.2019. - Last date of comments: 23.10.2019 extended till on request of stakeholders: 04.11.2019 - Last date of counter-comments: 06.11.2019 extended till on request of stakeholders: 13.11.2019 - • Comments received: 30 - Counter-comments:1 **WP(C) NO.2879/20** 32 ## B. Telecommunication (Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff (Second Amendment) Order, 2020 (1 of 2020). ## **(a) Timelines of consultation** . |<br>S.<br>No<br>.|<br>Activity|Time line| |---|---|---| |1|Consultation Paper|16/08/2019| |2|Last date for submission of comments|23/09/19| |3|Last date for submission of counter - comments|07/10/19| |4|Open House Discussion (at New Delhi)|18/10/19| |5|Notification of Tariff Order|01/01/20| ## **(b) Timelines of constitution of the committee** . |S.<br>No.|**Activity**|Timeline| |---|---|---| |1|Committee constituted on issues related to New Regulatory<br>Framework under the aegis of TRAI consisting of<br>representatives from IBF, NBA, AIDCF, DTH Operators|15/04/19| |2|First Meeting of the Committee|16/04/19| |3|Second Meeting of the Committee|24/04/19| |4|Third meeting of the Committee|02/05/19| |5|Fourth meeting of the Committee|31/05/19| |6|Report of the committee submitted to the Authority|01/07/19| **WP(C) NO.2879/20** 33 ## **Category wise List of those who submitted comments/ counter comments.** A. Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) (Second Amendment) Regulations, 2020 (1 of 2020) **Comments on consultation paper on issues related to Interconnection Regulation 2017 dated 25.9.2019** ||<br>**Comments on consultation paper on issues related to Interconnection**<br>**Regulation 2017 dated 25.9.2019**| |---|---| |**A. Associations**|| |1|Indian Broadcasting Foundation| |2|All India Digital Cable Federation| |3|News Broadcasters Association| |**B. Broadcasters**|| |4|Star India Pvt.Ltd.| |5|Zee Entertainment Enterprises Ltd.| |6|Sony Pictures Netwoks India Pvt.Ltd.| |7|ABP News Network Pvt.Ltd| |8|Discovery Communications India| |9|Times Network| |10|Odisha Television| |11|Mathrubhumi News| |12|9XM Media Pvt.Ltd.| |13|Shreya Broadcasting Private Limited| |14|MM TV Ltd| |15|Republic TV| ||| **WP(C) NO.2879/20** 34 |**C. MSOs**|**C. MSOs**| |---|---| |16|Den Networks| |17|Hathway Cable and Datacom Ltd| |18|GTPL Hathway Ltd| |19|Asianet Digital Network Pvt.Ltd| |20|Atria Convergance| |21|NT Broadcasting| |22|Siti Networks Ltd| |23|Fastway Transmission Pvt.Ltd| |**D. DTH operators**|| |24|Tata Sky| |25|Bharti Telemedia Ltd| |26|Dish TV India Ltd| |**E. Individual Stakeholders**|| |27|Vinod Khare| |28|P.S.Natarajan| |29|R.B.Sahajpal| |30|Abhishek Yeola| |**Counter- Comments on Consultation Paper on Issues related to Interconnection Regulation-**<br>**2017 dated 25.09.2019.**|| |1|Shreya Broadcasting Private Limited (Broadcaster)| **WP(C) NO.2879/20** 35 B. Telecommunication (Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff (Second Amendment) Order, 2020 (1 of 2020). |<br>S.No.|<br> Comments from the Stakeholder|Numbers| |---|---|---| |1|Association|33| |2|Company/Organization/Firm|12| |3|Individual|52| |4|Service<br>Providers<br>(MSOs/LCOs/DTH<br>Operators)|190| |5|Consumer Advocacy Groups|2| ||**Total**|**289**| |**S.No. **|**Counter-comments from the Stakeholders**|**Numbers**| |1|Association|8| |2|Individual|7| |3|Service Providers (Broadcasters)|5| ||**Total**|**20**| |||| 28. It is the contention of the respondents that the consultation was comprehensive and transparent and that the amendments effected after such a process are not liable to be interfered with. **WP(C) NO.2879/20** 36 29. On a consideration of the contentions raised and provisions and precedents relied on, the following matters are clear. Section 11 of the Telecom Regulatory Authority of India Act, 1997 provides the powers and functions of the respondent. Section 11(i)(a) provides for the recommendatory functions of the Authority. Section 11(b) enumerates the functions of the Authority. Section 11(b)(ii) reads as follows:- “(ii) notwithstanding anything contained in the terms and conditions of the licence granted before the commencement of the Telecom Regulatory Authority of India (Amendment) Act, 2000, fix the terms and conditions of inter-connectivity between the service providers. (iii)ensure technical compatibility and effective inter-connection between different service providers. - (iv) regulate arrangement among service providers of sharing their revenue derived from providing telecommunication services. 30. Section 11(d) states that the Authority shall perform such other functions including such administrative and financial functions as may be entrusted to it by the Central Government or as may be necessary to carry out the provisions of the Act. Section 11(4) provides that the Authority shall ensure transparency while exercising its powers and discharging its functions. **WP(C) NO.2879/20** 37 31. Section 36 provides for the power of the Authority to make regulations and reads as follows:- - “ Section 36. **Power to make regulations-** (1)The Authority may, by notification, make regulations consistent with this Act and the rules made thereunder to carry out the purposes of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for all or any of the following matters, namely:— - (a) the times and places of meetings of the Authority and the procedure to be followed at such meetings under sub-section (1) of section 8, including quorum necessary for the transaction of business; - (b) the transaction of business at the meetings of the Authority under sub-section (4) of section 8 - [***] - (d)matters in respect of which register is to be maintained by the authority [under sub-clause (vii) of clause (b)] of sub-section (1) of section 11; - (e) levy of fee and lay down such other requirements on fulfilment of which a copy of register may be obtained [under sub-clause (viii) of clause (b)] of sub-section (1) of section 11; - (f)levy of fees and other charges under clause (c) of sub-section (1) of Section 11. 32. The challenge to the amendment to Regulation 18(4) is being considered first, since that was the point which was first raised and argued by the counsel on both sides. 33. The regulation, prior to its amendment, provided that the channel number once assigned to a particular television **WP(C) NO.2879/20** 38 channel shall not be altered by the distributor for a period of at least one year from the date of such assignment. Ext.P1 amended sub-regulation substituted the words “without prior approval of the Authority” for the words “for a period of at least one year from the date of such assignment”. For the second proviso to sub-regulation (4), the following proviso was substituted: “Provided further that if a broadcaster changes its genre or language of a channel, then the channel number assigned to that particular television channel shall be changed in order to place that channel with the channels of the new genre or language in the electronic program guide.” 34. It is the provision that the LCN cannot be changed without prior permission of the Authority, that is principally under challenge. The consultation paper on the issue which is produced along with the writ petition as Ext.P9 provided as follows:- ## **“** ## Chapter-III ## Issues related to Placement and other agreements between broadcasters and Distributors 3.1 The Interconnection Regulation’ 2017 promotes transparency, fairness, level playing field and non-discrimination as core principles. In the new regulatory framework, the emphasis has increased on consumer choice. **WP(C) NO.2879/20** 39 ## Placement Agreements 3.2 In addressable systems, the technology provides for an Electronic Program Guide (EPG) wherein channels being carried on a DPO’s network can be arranged in a simple and easy to understand manner so that the subscriber can easily go through this guide and select the channel of choice instead of flipping through all the channels. 3.3The issue of placement agreements essentially relates to listing of channels in the Electronic Programme Guide (EPG). In order to curb the practice of frequent change in LCN number and address other issues related to placement of channels, the Interconnection Regulation 2017 mentions the following: *18. Listing of channels in electronic programme guide.(1) Every broadcaster shall declare the genre of its channels and such genre shall be either ‘Devotional’ or ‘General Entertainment’ or ‘Infotainment’ or ‘Kids’ or ‘Movies’ or ‘Music’ or ‘News and Current Affairs’ or ‘Sports’ or ‘Miscellaneous’. (2) It shall be mandatory for the distributor to place channels in the electronic programme guide, in such a way that the television channels of same genre, as declared by the broadcasters, are placed together consecutively and one channel shall appear at one place only: Provided that all television channels of same language within the same genre shall appear together consecutively in the electronic programme guide: Provided further that it shall be permissible to the distributor to place a channel under sub-genre within the genre declared for the channel by the broadcaster. (3) Every distributor of television channels shall assign a unique, channel number for each television channel available on the distribution network. **WP(C) NO.2879/20** 40 (4) The channel number once assigned to a particular television channel shall not be altered by the distributor for a period of at least one year from the date of such assignment: Provided that this sub-regulation shall not apply in case the channel becomes unavailable on the distribution network: Provided further that if a broadcaster changes the genre of a channel then the channel number assigned to that particular television channel shall be changed to place such channel together with the channels of new genre in the electronic program guide.” 3.4 Thus, as per the Interconnection ‘Regulation, 2017 the DPOs are mandated to list all the channels available on the platform in the EPG, in such a manner that a consumer can easily select the channel of his/her choice. The genre and language-wise listing of TV channels in the EPG is done so as to ensure placement of a channel among similar channels. 3.5 Further, as per Interconnection Regulation 2017, a broadcaster cannot put any pre-condition for providing signals to the DPOs to place his channels at a particular position in the EPG or to assign a particular number to his channel as such stipulation may not be practically possible to implement. For example, if any two broadcasters insist for the same position in the EPG as a precondition before providing signals of their TV channels then it is not practically possible for a DPO to meet the precondition. 3.6 According to the Interconnection Regulation 2017, the broadcasters were given complete freedom to declare the genre of their channels and in terms of the regulations, it was mandated that a DPO shall place the channels in the EPG under the respective genres so declared by the broadcasters. Further, it was also mandated that DPOs shall place the channels of the same genre in such a manner that all TV channels of the same language within the same genre shall appear together consecutively in the EPG. 3.7 In order to curb the practice of frequently changing LCN number, it was mandated that LCN number once allocated will not be changed for **WP(C) NO.2879/20** 41 the duration of at least one year. Therefore, the placements of channels were adequately regulated and necessary protection were granted to the broadcaster so that their channels were not placed at any disadvantageous position in the EPG. Hence as such, there was no requirement for-a broadcaster for asking for a specific position in the EPG 3.8 Consumer choice,is the, fulcrum of the new regulatory framework. Therefore, when consumers choose channels which they want to view; the importance of the placement of the channel reduces drastically. 3.9 However, in case, a broadcaster still wishes to place its channel at a particular position or a specific number assigned to its channel, subject to the provisions of these regulations, the broadcaster may offer discount within the prescribed framework or pay the mutually agreed fee, after signing the interconnection agreement, to a distributor for placing the channel. 3.10 Interconnection Regulation 2017, prescribes that the DPO can’t alter the LCN for a channel for at least a period of one year. Further that no channel should be placed outside its defined language/genre. Hence, it was expected that there was no need for the placement agreements, unless a broadcaster seeks a particular LCN within its category (language/genre). 3.11 The objective of such scheme was that consumer who is interested in one specific type of genre is not forced to move across all channels to get TV channel of his choice. Further, the regulation also endeavors that the malfeasance by some DPO to arm-twist the Broadcasters by unilaterally changing the LCN of their channel is curbed. Frequent changes in LCN of a channel put a consumer to inconvenience. Unregulated allocation of LCN also impacted the viewership of channel. The regulation therefore balances the stakeholders’ interests, keeping in view of the consumer convenience, and ensures level playing field for both the broadcasters and DPOs. 3.12 But representations have been received from many broadcasters where they have mentioned: that the DPOs are arm-twisting these **WP(C) NO.2879/20** 42 broadcasters to sign placement fee deals dehors the interconnection regime.” 35.The explanatory memorandum appended to Ext.P1 on the subject of placement and other agreements between broadcasters and distributors reads as follows:- “ 66. In the Interconnection Regulation 2017, the provision related to listing of the channels in the Electronic Program Guide (EPG) were made so that visibility of a channel in given genre can be ensured, This was done primarily to protect the interest of the broadcaster, However, as per details herein-above there were certain issues with the allocation of LCN to various channels while following the regulatory provisions. Therefore, quite-a-few stakeholders did not fully implement the EPG regulations. 67. Quite a few complaints were received from various broadcasters whereby it was alleged that some DPOs are pushing for signing of marketing/placement/promotion agreement. Such instances were also the result of very high carriage fee arising out of much larger target market, so declared by the DPOs. 68. Accordingly, in the consultation paper on ‘Interconnection Issues’ the authority had sought opinion of the stakeholders in regard to placement/ marketing agreement. Stakeholders were asked whether there should be a well-defined framework for Interconnection Agreements for placement, should placement fee be regulated and if yes, what should be the parameters for regulating such fee. In addition, the authority also asked **WP(C) NO.2879/20** 43 the stakeholders on ways and means to restrain the possible misuse of flexibility presently available with DPOs as regards the placement and marketing agreements. 69. In response, a group of stakeholders submitted that there should be a framework for Interconnection Agreements for placement and the placement fee should be regulated as news channels are being forced to sign placement / marketing agreements. Further that in some instances exorbitant fees are being charged under these heads by the DPOs. The arbitrary demands of the DPOs by whatever label leads to the blackmailing of the news channel. News channels are expected to pay the fees as demanded or face removal from the platforms, One of the stakeholders commented that it is necessary to cover placement/marketing/any other arrangements under the Regulations to ensure a level- playing field amongst stakeholders and to ensure transparent and non discriminatory arrangements between broadcasters and DPOs. The objective should be that all business arrangements between a DPO and a broadcaster should be transparent and nondiscriminatory. To ensure a fair and transparent distribution margin, the Authority should ensure that the total pay-out from broadcaster to DPO (under any head Including distribution fee, Incentives, placement, marketing or any other arrangements) should not exceed 35% of the MRP. Otherwise, the MRP to consumers will be Illusory. However, one stakeholder has opined that there is no need for the Authority to define a framework for agreements for placement. Another group of stakeholders **WP(C) NO.2879/20** 44 referred to the order of Hon'ble TDSAT dated May 29, 2019 regarding the issues related to the landing page. The said order held that the subject matter of placement of a channel of broadcaster, by the distributor on the landing page of a subscriber is not “interconnection” and hence outside the power and Jurisdiction of the Authority. Since the appeal on said order is pending, the matter remains sub-judice and the Authority should not proceed with the consultation process on these issues/agreements or define a framework for agreements for placement. One broadcaster suggested that in the new regulatory framework, carriage and placement have been clearly distinguished. The carriage fee has been regulated and the must carry provisions are made to ensure access to the distribution networks in a transparent and non-discriminatory manner. Detailed provisions relating to placement are already provided, however, if a broadcaster still wishes to place its channel at a particular position or on a specific number, subject to the provisions of new regulations, the broadcaster may offer discount within the prescribed framework or pay the mutually agreed fee, after signing the interconnection agreement, to a distributor for placing the channel. The regulations already disallow placement as a precondition to provide signals. In view of the above, the stakeholder is of the opinion that the present provisions relating to placements are adequate and the Authority should not consider any further regulation in this aspect. 70.It is pertinent here that the regulations related to EPG have now been duly amended. The regulations so revised will ensure that no DPO **WP(C) NO.2879/20** 45 changes the allocated LCN of a channel number unless it is approved by the authority. After the revisions, it is envisioned that there is hardly any instance where a DPO may force a broadcaster to seek any specific placement agreement. Though there are probable scenarios where a broadcaster may seek a certain easy to remember/identify LCN within the allocation scheme adopted by a DPO. In such circumstance also, an LCN once allocated will remain allocated to such television channel in perpetuity. Therefore the Authority is of the view that pursuant to amendments there is hardly any obligation for a broadcaster to enter into placement agreements. 71.Another factor driving the signing of placement agreements was occurring due to very high carriage fee instances or discontinuation of channels. As a commercial & pragmatic alternative to very high carriage fee agreement some stakeholders were entering into placement agreements. The authority having reviewed the carriage fee provisions has specified a ceiling on the maximum carriage fee. Similarly the provisions related to the ‘discontinuation threshold’ have been duly incorporated to address the concerns of regional/niche channels. The authority is of the view that now broadcasters will have no reason to look for alternative arrangements. The framework explicitly provides that a channel can be provided to or removed from a customer only on the basis of an explicit choice. Every DPO is required to provide and ensure complete freedom to its subscribers for making their choice(s). Therefore, it is envisioned that no placement agreement can be done with the DPO **WP(C) NO.2879/20** 46 with an intention to forcibly promote/ assign a channel to subscribers. Considering all the factors and provisions together, the instance of placement fee agreement will be minimal like cases where a broadcaster is keen on a certain LCN. Therefore, the Authority does not consider it expedient to bring-in restrictions on the placement/ marketing agreements. 72.While prescribing the regulations, the authority is aware that the two entities (The Broadcaster and the DPO) may wish to work together to promote/ advertise a channel. Having considered various submissions, the Authority is of the view that marketing measures by a broadcaster may be of varied character and types. The present provisions seem sufficient to maintain a level playing field among the broadcasters and DPOs. In addition, the Register of Interconnection regulations provide for submission of placement/ marketing/ other agreements to the Authority. This will help the Authority to maintain an oversight over such agreements. The Authority is also of the view that marketing and other agreements may continue to be in forbearance as at present. The Authority will continue to keep an eye on markets and will review the situation as-and-when deemed necessary.” 36. The argument, therefore, is that the consultative process was not full or proper and that there was no specific consultation with regard to obviating the right of the DPO in **WP(C) NO.2879/20** 47 the matter of placement. It is argued that placement being a property right which has value, any attempt at intervention would have to meet the requirements of non arbitrariness and fairness failing which such intervention must fail. It is further submitted that the question put to consultation was only whether placement fee should be regulated. There was no consultation on the question of freezing of the LCN is perpetuity and making changing of LCN subject to prior permission of the authority. There appears to be no corresponding benefit or implication of any nature to the end consumer in the matter of freezing of local channel numbers. The explanatory memorandum is conspicuously silent about the views of the DPO regarding placement apart from stating that DPOs contended that the issue is sub judice. Relying on the decisions of the Apex Court in **Cellular Operators** **Association of India and others v Telecom Regulatory Authority of India and others** [AIR 2016 SC 2336] as followed by the Apex Court as well as various High Courts, it is contended that the requirements of proper consultation have been observed only in its breach in the instant case. It is contended that the explanatory memorandum is completely divorced from the consultative process and that there was no proper consultation whatsoever on the question **WP(C) NO.2879/20** 48 of regulation of placement before the amendment was effected. 37. Having considered the contentions advanced on the point, I find that the consultation paper had proceeded on the basis that placement agreements are becoming redundant in view of the provisions in the regulation as to the placement of the channels in the electronic program guide. The question raised in the consultation paper was whether “placement fee should be regulated and, if yes, what should be the parameters regulating such fee ?”. The present amendment which makes the fixing of an LCN virtually an act in perpetuity subject, of course, to the approval by the regulator on unknown parameters, was an exercise which was not a part of the consultative process at all. 38. Even if the contention raised by the respondent that in view of the language of Section 36 of the Act, the TRAI has the power to regulate all matters including placement is accepted, it cannot be disputed that such regulation in the matter of placement could have been carried out only after due consultative process. It is trite that consultation does not mean concurrence. However, for the consultative **WP(C) NO.2879/20** 49 process, to be meaningful and complete, there must be a proper reference made in the consultation paper as to the specific question put to consultation, a consideration of the views of all the stakeholders and a clear decision as to how the issue is being regulated. I find that such consultation is absent or lacking in the instant case, since there was no proposal for a perpetual locking of LCN in the consultation paper. The amendment which provides for seeking permission for any change in the LCN number is therefore, evidently vitiated for want of proper consultation. 39. The next question which is raised by the learned counsel for the petitioners is with regard to the coverage area, carriage fee and the target market. The said interconnected issues are being decided in common, since arguments were also raised cumulatively. Questions 2.33 to 2.35 of the consultation paper raise the question of deciding the target market. The questions read as follows:- - “2.33 Do you think that the flexibility of defining the target market is being misused by the distribution platform operators for determining carriage fee? Provide requisite details and facts supported by documents/ data. If yes, please provide your comments on possible solution to address this issue? **WP(C) NO.2879/20** 50 2.34 Should there be a cap on the amount of carriage fee that a broadcaster may be required to pay to a DPO? If yes, what should be the amount of this cap and the basis of arriving at the same? 23.5 How should cost of carrying a channel may be determined both for DTH platform and MSO platform? Please provide detailed justification and facts supported by documents/ data.” 40. A reading of the consultation paper would show that a problem was being faced by regional channels and niche channels that due to declaration of large target market and calculation of carriage fee based on such target market, such broadcasters are not able to pay huge carriage fee which forces them to sign exploitative placement/marketing agreements. It is stated that big Multiple Systems Operators who are part of the petitioner association declare multiple states as their target market and therefore the problem is relevant to such MSOs as well and is not limited to DTH operators. The explanatory memorandum to the 2020 Amendment notices the difficulties faced by regional and niche channels in paying the carriage fee calculated on the basis of target market in case the MSO is a multi state operator. It is stated that if carriage is calculated on the basis of the target market of the larger MSOs it becomes an exorbitant amount and regional channels and smaller broadcasters are either pushed out of the reckoning or **WP(C) NO.2879/20** 51 forced to enter into negotiations or alternate agreements. With regard to the target market, it is specifically recorded in the explanatory memorandum that during the consultation process, the MSOs have, in principle, agreed to declare target market on the basis of linguistic regions/state. It is stated that many of the MSOs have already declared their target markets as aligned to a state or to an area having similar linguistic and cultural essence. It is therefore contended that it is only after a due consultative process that the target market has been fixed as a state. 41. In view of the detailed consultations as are evident from the consultation paper and the explanatory memorandum, I am of the opinion that the challenge raised against Regulation 4(3) 4(8) and 8(2) as well as the provisos thereto are not sustainable. This is more so in view of the fact that there does not appear to have been any dissent raised by the MSOs with regard to restricting the target market to align to a state or linguistic territory. The Amended Regulations which are informed by proper consultation are only a part of the normal regulatory process and cannot be held to be arbitrary or excessive. The same are upheld. **WP(C) NO.2879/20** 52 42. With regard to the capping of the Network Capacity Fee in the case of Multi TV households also, it is evident that a consultative process had been carried out and it was agreed by the MSOs, in principle, that a discount has to be provided on the NCF in the case of the 2[nd] TV onwards in the same households. The Authority appears to have undertaken a costing process to decide as to the expenses incurred for carriage in the case of 2[nd] connection onwards in the same households. Apart from contending that such calculation is erroneous, no material is placed by the petitioners to show that there is an error in the computation by the Authority as to the percentage of discount to be offered to the 2[nd] connection onwards. In the above factual situation, I am unable to accept the contentions raised by the petitioners with regard to the said provision as well. 43. In the result, the challenge to the Amendment of Regulation 18(4) succeeds on the ground of want of proper consultative process. Regulation 18(4) as amended by Ext.P1 is set aside. It is made clear that the respondent is free to carry out proper consultations as to the regulation of placements, if found necessary in future, subject of course to the decision of the Apex Court in the SLP pending as against the order of **WP(C) NO.2879/20** 53 the TDSAT. The challenges raised to the other regulations and the provisions of the tariff order are repelled. The writ petition is ordered accordingly. **==> picture [28 x 15] intentionally omitted <==** ANU SIVARAMAN, JUDGE sj **WP(C) NO.2879/20** 54 ## **APPENDIX OF WP(C) 2879/2020** ## PETITIONER ANNEXURE |EXHIBIT P1|TRUE COPY OF THE IMPUGNED REGULATIONS,| |---|---| ||I.E THE TELECOMMUNICATION (BROADCASTING| ||AND CABLE) SERVICES, INTERCONNECTION| ||(ADDRESSABLE SYSTEMS) SECOND AMENDMENT)| ||REGULATIONS, 2020 DATED 01-01-2020 ISSUED| ||BY THE RESPONDENT.| |EXHIBIT P2|TRUE COPY OF THE TELECOMMUNICATION| ||(BROADCASTING AND CABLE) SERVICES (EIGHT)| ||(ADDRESSEABLE SYSTEMS) TARIFF (SECOND| ||AMENDMENT) ORDER, 2020 DATED 01-01-2020| ||ISSUED BY THE RESPONDENT.| |EXHIBIT P3|TRUE COPY OF THE CERTIFICATE OF| ||INCORPORATION DATED 13-06-2014 ISSUED BY| ||THE MINISTRY OF CORPORATE AFFAIRS, GOVT.| ||OF INDIA, TO THE 1ST PETITIONER.| |EXHIBIT P3|COPY OF THE LIST OF MEMBERS OF THE 1ST| ||PETITIONER.| |EXHIBIT P4|TRUE COPY OF THE TELECOMMUNICATION| ||(BROADCASTING CAND CABLE) SERVICES| ||INTERCONNECTION (ADDRESSABLE SYSTEMS)| ||REGULATIONS, 2017 DATED 03-03-2017 ISSUED| ||BY THE RESPONDENT.| |EXHIBIT P5|TRUE COPY OF THE TELECOMMUNICATION| ||(BROADCASTING QUALITY OF SERVICE AND| ||CONSUMERE PROTECTION (ADDRESSABLE| ||SYSTEMS) REGULATIONS, 2017 DATED 03-03-| ||2017 ISSUED BY THE RESPONDENT.| |EXHIBIT P6|TRUE COPY OF THE TELECOMMUNICATION| ||(BROADCASTING AND CABLE) SERVICES (EIGHT)| ||(ADDRESSABLE SYSTEMS) TARIFF ORDER, 2017| ||DATED 03-03-2017 ISSUED BY THE| ||RESPONDENT.| |EXHIBIT P7|TRUE COPY OF THE TELECOMMUNICATION| ||INTERCONNECTION REGULATIONS, 2018 DATED| ||01-01-2018 ISSUED BY THE RESPONDENT.| **WP(C) NO.2879/20** 55 |EXHIBIT P8|TRUE COPY OF THE CONSULTATION PAPER| |---|---| ||BEARING NO. 10/2019 DATED 16-08-2019| ||ISSUED BY THE RESPONDENT.| |EXHIBIT P9|TRUE COPY OF THE CONSULTATION PAPER| ||BEARING NO. 16/2019 DATED 25-09-2019| ||ISSUED BY THE RESPONDENT.| |EXHIBIT P10|TRUE COPY OF THE RESPONSE TO THE| ||CONSULTATION PAPERS DATED 16-08-2019| ||SUBMITTED BY THE PETITIONER NO. 1 HEREIN| |EXHIBIT P11|TRUE COPY OF THE RESPONSE TO THE| ||CONSULTATION PAPERS DATED 25-09-2019| ||SUBMITTED BY THE PETITIONER NO. 1 HEREIN.| |EXHIBIT P12|THE CALCULATIONS OF DISCONTINUATION| ||THRESHOLD TO SHOW THE DISPARATE IMPACT OF| ||THE SAME ON VARIOUS STATES.| |EXHIBIT P13|THE COMPUTATION OF AVERAGE LOSSES ARISING| ||OUT OF THE MANDATORY DISCOUNT FOR| ||ADDITIONAL CONNECTIONS IN MULTI TV HOMES.| |EXHIBIT P14|TRUE COPY OF THE LETTER ISSUED BY THE| ||RESPONDENT DATED 13/02/2020.| RESPONDENT'S EXHIBITS |EXHIBIT R2(A)|A TRUE COPY OF THE BOARD RESOLUTION DATED<br>22.01.2020.| |---|---| |EXHIBIT R2(B)|A TRUE COPY OF THE MULTI SYSTEM OPERATION<br>REGISTRATION DATED 6.7.2015.| |EXHIBIT R2(C)|RELEVANT SECTION OF THE RIO OF SONY<br>PICTURES NETWORKS INDIA PVT.LTD.| |EXHIBIT R2(D)|THE RIO OF M/S DISCOVERY COMMUNICATIONS<br>INDIA.| |EXHIBIT R2(E)|A TRUE COPY OF THE E-MAIL DATED 12/03/2020<br>ALONG WITH THE ANNEXURES.| |EXHIBIT R2(F)|A TRUE COPY OF THE LETTER DATED| **WP(C) NO.2879/20** 56 ||14/09/2020.| |---|---| |Exhibit R1(G)|TRUE PHOTOCOPY OF THE TARIFF ORDER, 2004.| |Exhibit R1(H)|TRUE PHOTOCOPY OF THE TARIFF ORDER, 2010.| |Exhibit R1(I)|TRUE PHOTOCOPY OF THE MINUTES OF MEETING<br>DATED 15/04/2019.| |Exhibit R1(J)|TRUE PHOTOCOPY OF THE LETTER DATED 16TH<br>SEPTEMBER 2019 SENT BY THE 1ST PETITIONER.| |Exhibit R1(K)|TRUE PHOTOCOPY OF THE ORDER DATED<br>29/07/2019 PASSED BY THE HON'BLE TDSAT.| |Exhibit R1(L)|TRUE PHOTOCOPY OF THE DECLARATION UNDER<br>SECTION 4(4) OF THE 2017 REGULATIONS.| |Exhibit R1(M)|TRUE PHOTOCOPY OF THE TABLE SHOWING<br>TIMELINES FOR COMPLETION OF IMPORTANT<br>ACTIVITIES TO CARRIED OUT BY VARIOUS<br>SERVICE PROVIDERS INCLUDING THE<br>PETITIONERS.| |Exhibit R1(N)|TRUE PHOTOCOPY OF THE COMMUNICATION SENT<br>BY RESPONDENT DATED 28/01/2020.| |Exhibit R1(O)|TRUE PHOTOCOPY OF THE LETTER DATED<br>11/02/2020 ALONG WITH MINUTES OF THE<br>MEETING DATED 10/02/2020, ALONG WITH THE<br>PHOTOCOPY OF THE REPRESENTATION OF THE 1ST<br>PETITIONER DATED 20/01/2020.| ||True copy| PS to Judge