TIFF BETWEEN TRAI AND BROADCASTERS: COPYRIGHT AND PRICING

ISSUE

INTRODUCTION

The Telecom Regulatory Authority (‘TRAI’) was established to regulate issues related to
telecom services including the fixation of tariffs for telecom services which were earlier
vested in the Central Government. Such was done under the aegis of the Telecom Regulatory
Authority Act, 1997. Vide a notification dated 9 th January 2004 the ambit of the TRAI Act
was also extended to broadcasting services. Through such, certain functions were allocated to
TRAI in addition to those mentioned in Section 11(1) (a) of the Act itself. 1 Among such
functions were to specify norms and rates at which pay channels operated.

The TRAI had recently amended its tariff order for the broadcasting and cable service sector
which can into force during February last year. Differences arose when the authority in the
third proviso to clause 3(3) of the Tariff order of 2017, prescribed that a bouquet of channels
formed by a broadcaster should not be less than 85% if the sum of MRPs of the individual
channels forming a part of the bouquet. 2 As a result, writ petitions were filed by some
stakeholders in the Hon’ble Madras High Court about TRAI’s power to regulate tariffs and
the quantum of discount that was being offered on the sum of prices of individual channels
forming part of the bouquets. Analysis of issues regarding copyright and pricing will be
made in the subsequent sections.

ISSUE RELATED TO INFRINGEMENT OF COPYRIGHTS

In the decision rendered by the Madras High Court in Star India Pvt. Ltd. Vs. Department of
Industrial Policy and Promotion & Ors., the judges opined that there is a sufficiency of
power in the TRAI act as against the Indian Copyright Act. It was contended by the
petitioners that if section 2(1)(k)3,114 and 365 of the TRAI act are analysed properly it could
be inferred that the TRAI has limited regulation of service in transmission alone and cannot
extend its functions to include subject matter or content of the transmission.

1
Telecom Regulatory Authority of India Act 1997, s 11(1) (a) (TRAI Act).
2
Star India Pvt Ltd v Department of Industrial Policy and Promotion & Ors [Civil Appeal Nos.7326-7327 of
2018]
3
TRAI Act, s 2(1) (k).
4
TRAI Act, s 11.
5
TRAI Act, s 36.
It was further contended that the copyright act on the other hand being content-centric, dealt
with intellectual property rights which the broadcasters had under copyright as well as
broadcasting reproduction right under the aegis of Section 37 of the Copyright Act itself. 6
The petitioners also heavily relied on the Broadcasting Signals Act, 2007 and stated that the
definitions of “broadcaster”7, “broadcasting”8, and broadcasting service9 made it clear that the
reach of the Act was not limited to signals provided by the petitioners but their content as
well, and argued that this was not in sharp contrast to the TRAI who’s reach was limited and
did not encompass content.

Several other such assertions were made including placing reliance on the Sports Act and
Cable TV act. According to the learned petitioners, the impugned Regulation and Tariff
Order went beyond the jurisdiction of TRAI in that they sought to regulate "content" which
would mean the original work such as a book, which could then be made into a film and
finally broadcasted by the appellants. Anything which impinges upon the aforesaid "content"
in terms of making, buying, packaging or marketing, including licensing and assignment,
would directly be covered by the Copyright Act and would, therefore, be outside the
jurisdiction of the TRAI Act. 

The Hon’ble Court, however, iterated section 11(1) (b)10 in particular and stated that in order
to ensure effective interconnection between different service providers, it was necessary to
lay down regulations made under Section 3611 of the Act that balanced the interest of
broadcasters with the interest of consumers. At no stage does either the Regulation or the
Tariff Order seek to regulate, directly or indirectly, the content of the matter contained in the
television channel that is beamed. The impugned Regulation as well as the Tariff Order made
by TRAI did not transgress into copyright land. All it did was provide a level playing field
between broadcaster and subscriber. The broadcaster is free to provide whatever content he
chooses for the TV channels that he chooses to transmit to the ultimate consumer. The
broadcaster is also free to arrange pricing of his TV channels as long as they are non-
discriminatory and do not otherwise have the effect of unreasonably restricting the choice of
a subscriber to choose bouquet or a-la-carte channels as has been held hereinabove.

ISSUE ABOUT DISCOUNT CAP IMPOSED ON BOUQUET CHANNELS

6
TRAI Act, s 11 (1) (b).
7
Sports Broadcasting Signals (Mandatory Sharing With Prasar Bharati) Act 2007, s 2(a). ( Broadcasting Act)
8
Broadcasting Act, 2(b).
9
Broadcasting Act, 2(c).
10
TRAI Act, s 11 (1) (b).
11
Copy Right Act, 1957, s 36.
The actions being perpetrated by the distributors of television channels amount to conditional
pricing practices. Conditional pricing practices are pricing strategies in which a seller
conditions its prices on factors such as volume, the set of products purchased, or the buyer’s
share of purchases from the seller. To put it differently, a pricing practice is a “conditional
pricing practice” if the price is conditioned on quantities or shares, examples of such, include
bundled discounts, quantity discounts, and market share discounts. Themes for doing the
same include promoting cost savings and investment, aiding in price discrimination,
excluding potential rivals to maintain a monopoly, or softening competition with rivals.12

In the present scenario, the rationale of the service providers can be understood as the same
would prove beneficial in the sense that, it would simplify production and help reduce the
consumers search and sorting costs but the reason for concern is it will leverage the service
provider’s monopoly position in the market by protecting an existent market against entry or
expansion. The need to potentially enhance competition and balance potentially negative
effects of such conditional pricing is why the TRAI wanted to impose a cap of 15% discount
on bundled television bouquets so that first-mover advantage does not have adverse impacts
on competition and smaller-newer television channels providers offering good content also
get an opportunity to compete with the bigger more established ones. This is for this reason
why the Supreme Court while rendering its decision, though not a matter of adjudication, in
paragraph 37 remarked that when high discounts are offered by the broadcasters, the effect is
that subscribers are forced to take bouquets only as the a-la-carte rates of the pay channels
that are found in these bouquets are much higher. It remarked that this resulted in perverse
pricing which resulted in the public paying for unwanted channels, blocking newer and better
channels and restricting subscriber choice.

The new tariff order while keeping in mind the above-mentioned dilemmas had ensured that
full flexibility was provided to broadcasters towards their pay channels on an a-la-carte basis.
It has gone to show that the authority does not encroach upon the freedom of the broadcasters
to arrange their business as they choose. Thus, the flexibility of the formation of a bouquet
provided to a subscriber together with the content of such channels is not hampered by the
authority. The only efforts are being made towards risking of thwarting competition and
reducing a-la-carte choice.13 However, when TRAI filed an SLP before the Supreme Court

12
https://www.ftc.gov/system/files/documents/reports/conditional-pricing-practices-shortprimer/conditio nal_p
ricing_ practices_-_a_short_primer_-_sept_2017.pdf.
13
Star India Pvt Ltd v Department of Industrial Policy and Promotion & Ors [Civil Appeal Nos. 7326-7327 of
2018 and 7328-7329 of 2019].
for clarification on the third proviso to Clause 3(3) of the Tariff Order, 2017 related to
capping prices of bouquets at 85% of the sum of a-la-carte prices of TV channels, the
Supreme Court vide its order dated 3rd January 2019 dismissed the same.14 Given the above,
the present regulatory framework has been implemented without any cap on permissible
discount on the sum of the a-la-carte channels forming part of the bouquet.

CONCLUSION

It can thus be seen that both the regulation as well as the tariff order have been the subject
matter of extensive discussions between TRAI, all the stakeholders and consumers. What
needs to be preserved is the sacrosanct right of consumers to choose and pay for only those
channels they want to watch as informed persons. Studies undertaken by the TRAI have
revealed that in earlier frameworks, due to discounts in bouquets, consumers were confused
and misled to find more illusionary value for money in bouquets. Discounts up to 80-90%
were offered based on certain eligibility criterion that needed to be fulfilled by Multi-service
operators. If the operators did not take all the channels of a broadcaster they were denied
popular channels altogether. This resulted in multi service operator’s having to somehow
push all the channels upon the subscribers which were effectively restricting consumer
choice. The TRAI’s initiative could therefore be seen as a welcomed step as such practices
will be put to a halt. Therefore, a ceiling on the discount available in bouquets against the
total of the maximum retail price of a-la-carte channels should actually be imposed. This will
not only ensure that stand-alone channels are reasonably priced but will also promote
consumers with the choice of subscribing to channels they are interested in viewing.

14