Section 77 in Telecommunication (Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff Order, 2017
77. Distributors of television channels have made significant investment in establishing and maintaining their networks which is independent of the broadcaster's requirements. Additional investment is further needed in the distribution networks to expand their reach and upgrade their capabilities to provide multi-media services including the broadband. In addition, distributors of television channels have to carry out various tasks such as subscriber management, billing, complaint redressal, collection of subscription revenue etc. In the present framework distributors of television channels do not have any fixed source of revenue and to a large extent depends on the revenue share earned from the pay channels of broadcasters distributed on their networks to subscribers. In order to recover network cost, distributor of TV channels also price the FTA channels to subscribers. The Authority has noted that in several cases the price of FTA channels notified to subscribers is higher than the prices of some pay channels. This is a wrong practice in principal. Broadcasters of FTA channels feel that such pricing to subscribers is detrimental to their business model which is totally dependent on advertisement revenue. Such prices to view FTA channels reduce the viewership, directly impacting the advertisement revenue. As a result chances of mutual mistrust and litigations increase in value chain. Therefore, the Authority is of the view that the distributors of television channels should have dedicated sources of revenue, independent of revenue share from pay channels' subscription revenue. Accordingly, the Authority has decided to separate the charges for TV channels and network. This will ensure reasonable rate of return on investments in the existing distribution networks as well as ramp up further investment to ensure better quality of service to the subscribers.
