| SooperKanoon Citation | sooperkanoon.com/941480 |
| Court | Telecom Disputes Settlement and Appellate Tribunal TDSAT |
| Decided On | Apr-08-2011 |
| Case Number | Petition No. 250(C) of 2009 |
| Judge | S.B. SINHA, CHAIRPERSON, THE HONOURABLE MR. G.D. GAIHA, MEMBER & THE HONOURABLE MR. P.K. RASTOGI, MEMBER |
| Appellant | Sun Direct Tv Pvt. Ltd. |
| Respondent | Neo Sports Broadcasters Pvt. Ltd. |
| Advocates: | For Petitioner: Mr. Atul Sharma, Advocate. For Respondent: Mr. Vadivelu Deenadayalan, Advocate. |
S.B. Sinha
1. Reasonableness of some of Clauses in the RIO issued by the respondent herein is in question herein. Before however, we deal with the same, we may notice the factual matrix of the matter.
2. The petitioner is a DTH operator. For the purpose of transmission of signals of the channels of the respondent, it entered into a contract with the petitioner. Inter alia on the premise that the respondent had issued notices under Clause 4.1 and 4.3 of the Telecommunication (Broadcasting and Cable Services) Interconnection Regulations, the petitioner herein filed a Petition on or about 19.11.2008 which was marked as Petition No. 243 (C) of 2009. The said Petition was disposed of by an order dated 18.12.2008 in the following terms.
“By this petition the petitioner has prayed that the respondent be directed to supply on reasonable terms signals of its channels for being aired on the petitioner’s DTH platform. The dispute between the parties is really on the terms of the RIO published by the respondent. According to petitioner some of the terms of the RIO are onerous and, therefore, liable to be deleted or modified. During the course of hearing, we find that the parties are at variance on certain commercial terms in the RIO. Therefore, we have put it to the parties that in the first instance they should make another effort to sort out the issues. Both the learned counsels appearing for the parties have very fairly agreed to our suggestion and they submit that the commercial teams of both the parties will sit together during the next two weeks in order to make a sincere effort to sort out the issues.
The petitioner prays that in the meanwhile the respondent be directed to start supply of signals. Therefore, as an interim measure and without prejudice to the rights and contentions of the parties, we direct the petitioner to sign the RIO, if so desired, under protest and on the petitioner signing the same, the respondent will start supply of signals to the petitioner within two days as per Regulations. The learned counsel for petitioner has particularly referred to one of the terms of RIO as per which the petitioner is required to make an advance interest free deposit of Rs. 3 Crores with the respondent. According to petitioner since this an interim measure the petitioner should not be burdened with making deposit of such a big amount.
Keeping in view that this is an interim arrangement, we permit the petitioner to deposit a sum of Rs. 1 Crore with the respondent and for the balance amount of Rs. 2 Crores the petitioner may furnish a bank guarantee.”
3. The parties hereto thereafter entered into an agreement on or about 13.1.2009 in term whereof the subscription fee fixed was Rs. 19.37 for a Bouquet consisting of Neo Cricket and Neo Sports.
4. According to the respondent the petitioner however had been charging a sum of Rs. 51 per channel.
5. The respondent herein brought the same to the notice of this Tribunal contending that the rate fixed by the respondent herein being 40% more than the rate fixed by the respondent herein which is in breach of Clause II-H-3C of the interconnect agreement dated 13.1.2009, this Tribunal should pass an order directing the petitioner to abide by the RIO based agreement dated 13.1.2009 entered into by and between both the parties and furthermore directing the petitioner to offer respondent’s channel at a reasonable price in terms of the said agreement.
6. The respondent herein indisputably had been issuing invoices to the petitioner. A dispute also arose as to whether the respondent is bound to offer the subscription rate at 50% of the non CAS rate which, however, was ultimately agreed as would appear from a respondent’s letter dated 10.7.2009.
7. The principal question which arose for consideration in view of the aforementioned dispute between the parties was to whether the terms and conditions of the agreement as was specified with the respondent in his RIO are correct.
8. By reason of a letter dated 25.9.2008 the petitioner sought for the intervention of TRAI on certain issues on the premise that the same was not keeping with the Regulations framed by it.
9. By another letter dated 19.9.2008 certain Clauses of the Neo Sports’s RIO were questioned with its comments contending that the said Clauses were not acceptable to them. It is on the aforementioned premise that the petitioner has approached this Tribunal being Petition 250 (C) of 2009.
10. By reason of an order dated 9.12.2009 it was directed as under.
“The petitioner, in this application, has, inter-alia, prayed for a direction upon the first respondent to enter into an interconnection agreement with it and supply of signals on its DTH platform on reasonable terms in accordance with the Interconnection Regulations. It appears that the petitioner itself, by a letter dated 25.9.2008, addressed to the Telecom Regulatory of India (the Authority) asked for its intervention on the premise that the Reference Interconnect Offer submitted by the respondent is not in keeping with the Telecom Regulatory of India regulations. The Authority acknowledged the receipt of the said letter in terms of its letter dated 30.9.2008 asking it to indicate which specific clauses of Reference Interconnect Offer are violative of the regulations framed by the Authority. The petitioner again, by its letter dated 1.10.2008, annexed a copy of the Reference Interconnection Offer of the respondent and its earlier letter dated 19.9.2008 addressed to the respondent highlighting the key issues for its ready reference. It is, therefore, evident that the matter is pending before the Authority. The petitioner, thus, having approached the Authority, in my opinion, should await its decision in the matter.
Mrs. Indu Malhotra, the learned senior counsel appearing for the respondent states that the respondent shall file its reply to the said letter of the petitioner before the Authority within one week. We would request the Authority to consider the desirability of giving opportunity of hearing to the parties and dispose of the matter within 4 weeks thereafter. It goes without saying that any party aggrieved by or dissatisfied with the order of the Authority, may take such action is available to it in law.
Ms. Malhotra further assures that the signals of the petitioner shall not be disconnected till the decision of the Authority in terms of the public notice dated 24.10.2008. The petition is disposed of with the aforementioned observations and directions.”
11. Pursuant thereto or in furtherance of the said request made by this Tribunal to TRAI, the parties were heard negotiations were also held between the parties and various issues between them were settled.
12. Inter alia on the premise that certain issues were not settled which required determination, a M.A. was filed by the petitioner whereupon by an order dated 7.09.2010 it was observed: -
“Mr. Saket Singh, the learned counsel appearing on behalf of TRAI has drawn our attention to an application filed before this Tribunal being M.A. No.277 of 2010 and prays for three weeks’ further time to submit a report in terms of orders dated 09.12.2009 and 13.08.2010, inter alia, on the premise that the written submissions have been filed between 28.08.2010 to 30.08.2010.
As agreed to by the learned counsel for the petitioner, put up the matter on 01.10.2010 for orders.
CDs, if not filed, may be filed within a week.”
13. We may notice that the following issues remained unresolved and examined by the TRAI in the light of the Regulations and Tariff orders.
14. Discussions/decisions on the said issues are to be found in Annexure B of the Report of TRAI. We may notice the same.
(i) Issue at Sl. No. 1 of the said Annexure –B relates to page 1 of the RIO –
(ii) Introduction (para 4). The relevant provision reads as under: -
“In the interests of harmonious commercial relationship, any DTH Operator that wishes to accept NEO’s RIO must ensure that the said DTH Operator and its Affiliate/related Companies have cleared any outstanding payments due to NEO and/or its Affiliate/related Companies.
Conversely, should any DTH Operator or Affiliate/related Company be owed any overdue payments are cleared before entering into an agreement pursuant to this RIO.”
(iii) Issue at Sl. No. 2 of the said Annexure – B relates to Section II Caluse (G) (J) (iv) of the RIO which deals with remote access. The said provision reads as under: -
“…Remote access (e.g. through dial up or otherwise) to Addressable System of the Affiliate should be provided to NEO in order to verify the Subscriber numbers by NEO;…”
“On the above provisions, M/s. Sun Direct TV Pvt. Ltd. have submitted that their Subscriber Management System is tamper-proof and a fool system, that there is no necessity of remote access when the SMS is proper and that other broadcaster have conducted audit and they are fully satisfied with Sun Direct’s SMS system. They have also submitted that the clause in question exposes Sun Direct to serious security risks and threats. It was also submitted that Sun Direct’s technical system does not permit the facility to incorporate the technology of remote access.”
(iv) “Issue at Sl. No. 3 and 5 of the said Annexure – B relate to Section II Clause (H) (3) and Section II Clause (H) (4) regarding fixation of MRP and payment of subscriber fee as per the price fixed by broadcaster. Provisions in the RIO at Sl. No. 3 and 5 are interlinked. Therefore, both these issues have been taken up together.
(a) The provisions of Section II Clause 2 (H) (1) it is hereby agreed that in the event the Affiliate decides to (provided the applicable Regulations permit the Affiliate to do so) offer all sports Channels on its platform to its subscribers outside of the basic tier/package (whether as a part of a sports bouquet/package/tier or any other bouquet/package/tier or on an a la carte basis, whether voluntarily or otherwise), the Affiliate shall consult with obtain the approval of NEO with respect to the fixation of the Maximum Retail Price (MRP) of the NEO Channels and/or bouquet/package/tier containing the NEO Channels.
If the Affiliate proposes to distribute/offer all sports Channels to it subscribers on an a la carte basis it shall offer NEO Channels on the following basis: -
The MRP will be fixed by the Affiliate in consultation with and after obtaining the approval of NEO. If the Affiliate and NEO cannot reach an agreement on the MRP, The Affiliate may fix the MRP such that it does not exceed the wholesale price as listed at Annexure A Para 1 (a) of this Agreement by more than 40%.”
(v) Issue at Sl. No. 4 of the Annexure – B statement relates to Section II Clause – H (3) (d) of the RIO. The provisions of the clause read as under: -
“…If the Affiliate proposes to distribute/offer all sports channels to it subscribers on an a la carte basis it shall offer NEO Channels on the following basis. The NEO Channels will be offered to subscribers on an annual contract basis (i.e. 12 months from the date of commencement of subscription)…”
(vi) “Issue at Sl. No. 6 of the Annexure – B statement relates to Section III (C) of the RIO. The provision in question reads as under: -
“The Affiliate shall pay the then prevailing price for the Extended Term and agrees that the monthly subscription fee to be paid by the Affiliate in the Extended Term shall not be less than the average of the monthly subscription fee paid by the Affiliate to NEO during last six (6) months of the Initial Period.”
15. By a letter dated 21.10.2010 TRAI has sent its report as contained in Appendix 1 thereto containing its views on the issues raised by the petitioner.
The petitioner has not filed any objection thereto.
16. However in regard to the lock in period, Mr. Gopal Jain, the learned counsel appearing on behalf of the petitioner submitted that a similar Clause by another broadcaster namely ESPN being subject matter of a Petition filed by it as also M/s. Tata Sky Ltd. before this Tribunal being Petition 159 of 2010 and Petition No. 112 of 2010 wherein orders have been reserved, the said issue may be governed by the orders which may be passed therein.
17. The respondent however, had filed certain objections.
18. We may notice the following chart wherefrom it would appear the Clauses which were in dispute as also the opinion of TRAI therein.
CLAUSES IN DISPUTE Stand of the parties TRAI’s OPINION
(G)(J),(iv) – Remote access to addressable system of the affiliate should be provided to Neo in order to verify the Subscriber numbers by Neo. NEO – The twice a year access provided under the schedule is not a binding provision. Hence the same is not binding on NEO. NEO wants to know the exact number at all possible time.
Schedule – III to the Telecommunication Regulation dated, 17.3.2009 provides a right to the broadcaster not more than twice in a calendar year. The regulation does not contemplate any remote access to the SMS of the DTH operator on a continuing basis. The RIO therefore needs to be amended.
H(3) and H(4) – MRP of a channel to be determined by NEO
Affiliate has to subscriber to the new channels. NEO – This is only meant to ensure non-discriminatory treatment of its channels.
SUN – There are the prerogative of the DTH operator.
Under CL-6 (1) of the tariff order dated 21.7.2010 these are the prerogative of the DTH operator. Hence, the clause needs to be amended accordingly.
D(C) – Security deposit of 3 crs. NEO – This is a safe guard against default in payment by the DTH operator.
SUN – The demand of Rs. 3 crs. Is unreasonable. Suggests to secure the broadcaster against default by giving Bank Guarantee of either 15 days payment or 1 month.
Demand of 3 crs. Is unreasonable. Accepts the suggestion made by SUN.
G – Marketing promotion and research NEO – To ensure that its channels are not discriminated.
SUN – Unreasonable as it is not required in an interconnection agreement. Doesn’t have any link to the same. Imposition of clause relating to marketing and promotion unreasonable as it is not necessary for an interconnect agreement. Hence, the clause needs to be amended.
19. Mr. Vikram Mehta, the learned advocate appearing on behalf of the respondent would submit: -
(1) The remote access Clause has nothing to do with the 3rd Schedule appended to the Regulation framed by TRAI dated 17.3.2009 in terms whereof broadcasters had been provided with a right to make audit in as much as by reason of such a Clause, the respondent only wanted access of its account as prevalent in the Banking sector. By reason of non grant of access, the respondent would not be able to know the account of the others so far as the subscriber base is concerned and/or other details which for may be required by it.
(2) Clauses H3 and H4 are required for fixing the MRP of a channel to be determined and the said Clauses have been inserted only to ensure non discriminatory treatment of its channels by the DTH operator and an approval of the broadcaster is necessary only when a DTH operator takes recourse to excessive charging.
(3) Re:- Security deposit - the suggestions made by the TRAI is wholly illogical as the respondent has merely been asking the DTH operators to deposit the amount of security which is only reasonable but also in keeping with in ordinary law of contract.
(4) Re:-Clause G – the marketing promotion and research provisions have been incorporated only to ensure that the channels of the respondent are not discriminated against.
20. Mr. Gopal Jain, the learned counsel appearing on behalf of the petitioner, on the other hand, urged: -
(a) The respondent intends to arrogate to itself the power to monitor the implementation of contract entered into by the parties and the terms and conditions, which is impermissible in law having regard to the prevalent provisions as contained in Third Schedule of the Regulations so far as the same relates to remote access is concerned.
(b) So far as Clauses H3 and H4 are concerned, keeping in view the fact that in terms of the Clause 6 (1) Tariff Order dated 21.7.2010 the retailed tariff is not controlled, the Clauses in question must be held to be wholly illegal being in breach of the Regulations.
(c) So far as the Clause D(C) is concerned the demand of Rs. 3 Crore by way of security deposit is unreasonable, as thereby the broadcaster seeks to secure against a default in respect whereof giving bank guarantee of either 15 days payment or one month provides for sufficient safeguard.
(d) So far as the marketing promotions and research Clause is concerned as contained in Clause G the same is unreasonable as it is not required in an Interconnection Agreement.
21. Before averting to the aforementioned rival contentions, we may notice the legal framework. The power of the authority to make Regulations is under Section 11(b) (i) to (iv) of the 1997 Act.
“recommend the need and timing for introduction of new service provider;
a. recommend the terms and conditions of licence to a service provider;
b. ensure technical compatibility and effective inter-connection between different service providers;
c. regulate arrangement amongst service providers of sharing their revenue derived from providing telecommunication services;”
22. Pursuant thereto and in furtherance thereof, the Regulator has made a Regulation known as the Telecommunication (Broadcasting and Cable Services) Interconnection Regulations, 2004. It works in two ways as provided for in the standard Interconnection Agreements meant for the CAS area. It provided for an Regulation 5.2 it reads as under.
“In case any of the service providers in the areas as notified by the Central Government vide notification no. S.O. 1231(E) dated 31.7.2006, are not able to arrive at the mutually acceptable interconnection agreement within a time-period to be specified by the Authority through a direction, then they shall enter into interconnection agreements in terms of the standard interconnection agreements as specified in Schedule – 1 (between broadcaster and multi system operator) or in Schedule II (between broadcaster and multi system operator) to this Regulation, as the case may be, within a time period to be specified by the Authority for entering into standard interconnection agreements.”
23. We may also notice that the terms and conditions of the said agreement are governed by the standard terms fixed and the First Schedule.
24. So far as the manner of dealing with the interconnection agreement between a broadcaster and a DTH operator is concerned, the broadcaster is obligated to make its reference interconnect order known to the DTH operator.
25. The provision in question being the Regulation 13.2A has been inserted by TRAI by an amendment brought in the year 2007.
26. In terms of Clause13.2A 8 the Regulator has arrogated to itself the power to facilitate the processes without prejudice to the provisions contained in the Section 14 and 14A of the said Act.
27. TRAI, however, has power to modify any such term and condition, in terms of the Regulation 13.3 of the Regulation. It reads as under.
“In case the Authority is of the opinion that the Reference Interconnect Offer requires modifications so as to protect the interests of service providers or consumers of the broadcasting sector and cable sector or to promote or ensure orderly growth of the broadcasting sector and cable sector or the Reference Interconnect Offer has not been prepared in accordance with the provisions of these regulations, it may, after giving an opportunity of being heard to the concerned broadcaster, require the concerned broadcaster to modify the said offer and such broadcaster shall make such modifications and publish within fifteen days of receipt of requirements of for the modifications, the said offer after incorporating such modifications.”
28. Mr. Mehta has rightly contended that the Regulator thought it fit to frame repetition in respect of the RIO so far as the DTH operator are concerned and not for the standard Interconnection Agreement. There cannot, therefore, be any doubt or dispute that the parties were at liberty to enter into any agreement which they think fit and proper.
29. TRAI has made further amendments in the said Regulations known as Fifth Amendment which came into force w.e.f. 17.3.2009. By reason of the said amendment a schedule was added providing for certain Clauses which were required to be inserted in a contract between a broadcaster and a DTH operator. They are, however; in the nature of guidelines.
30. They are not imperative in character. It is in the aforementioned factual and legal backdrop, we may notice the order of TRAI as contained in Appendix 1 to its aforementioned letter dated 21.10.2010.
31. By reason of its determination, evidently TRAI opined that Section 2 Clause 2J4 should be suitably amended. It may or may not be in tune with the provision of the Third Schedule of the Regulations as amended on 17.3.2009.
32. By reason of the said provision a broadcaster had a right to review the subscriber management system twice in a calendar year.
It reads as under: -
“_______(name of the Broadcaster)’s representative shall have the right, not more than twice in a calendar year, to review and/or audit the subscriber management system, conditional access system, other related systems and records of Subscriber Management System of the DTH operator relating to the Channel(s) provided by the broadcaster for the purpose of verifying he amounts properly payable to ___________ (name of the Broadcaster) under the Agreement, the information contained in Subscriber Reports and full compliance with the terms and conditions of the Agreement.”
33. The purpose for inserting such a Clause was to have an access to the network of the DTH Operator.
34. The access to the system might have been required if otherwise SMS had not been full proof.
35. An access to the SMS system of the petitioner may or may not attract Audit Clause but the same can not in our opinion be compared with the Internet Banking. By reason of an Internet Banking merely a customer of the bank would know the details of his accounts. However, if the said Clause is given effect to, not only security may be in jeopardy but also it is possible for a broadcaster to make attempts to know the subscriber base of the DTH operator so far as the other broadcasters are concerned.
36. We therefore, find that the opinion of the TRAI to be fully justified.
37. So far as the Clauses H3 and H4 as discussed in Clauses C and D of the Appendix 1 of the letter dated 21.10.2010 by the Regulator is concerned, the same are interconnected.
38. It is accepted by Mr. Mehta that so far as Section 2 Clause H3D of the RIO is concerned the same requires to be amended, in view of the Tariff Order dated 21.7. 2010 framed by TRAI to the effect that the annual contract basis mentioned therein should be substituted by a quarterly contract basis. The said provisions are in two parts. By reason thereof all channels are required to be supplied on ala carte basis only.
39. Submission of Mr. Mehta is that the price offered by the DTH operators should be regulated in as much as it has been noticed that the DTH operators are charging Rs. 46 to Rs. 56 for the bouquet Neo Sports and Neo Channels. It is, however accepted that so far as the DTH operators are concerned only signals of Neo channel of bouquet has been transmitted.
40. The question which arises for consideration is as to whether it is permissible in law to obtain approval of the broadcaster in the event DTH operator intend to keep more than 40% profit margin.
41. It may be true that demand for sports channel is elastic. So far as the DTH operators are concerned, they are entitled to charge any price in view of the fact that retail price is not regulated.
42. So far as sports channel is concerned, this Tribunal in Petition Zee Turner Vs. TRAI has categorically held that that the Tariff Order dated 21.7.2010 does not provide for a retail tariff.
43. It is possible as has been contended by Mr. Mehta that the subscriber may not Subscribe to a sports channel if the contents are not good, and the demand for sports channel reaches a height when a special event is shown; the price of the channel however, is not flexible. The respondent has given an example in its objection to the said report which is as under:-
“Their content acquisition cost is extremely high; however, the content acquired by the Sports Broadcaster at such a high cost is concentrated in a few months in the whole year. For eg. The cost of every one day cricket match in which India participates and which is played in India, the Respondent has to pay Rs. 31 cores approx to the BCCI. Thus, for a series of five one day matches, which would be played over a period of five days, the cost of content comes to Rs. 155 crores. That an additional sum of about Rs. 15 crores is spent on producing/marketing and other overhead expenses for the said period. Thus, the total cost of broadcasting five one day matches comes to Rs. 170 crores. On the revenue side, however, the maximum revenue that can be generated through advertisement in these five days of cricket is only about Rs. 85 crores which leaves a deficit of Rs. 85 crores to be recovered through subscription revenues.”
44. It has furthermore been contended that whereas in other countries like United States of America (USA), ESPN sells a package for the entire season for $135, the price for individual match about is $ 39. Forbearance is also a part of the Regulation. Whether the price content either at a wholesale level or retail level should be regulated or not is the prerogative of TRAI. If the Regulator does not intend to regulate the retail tariff, this Tribunal may not have much say in the matter. Moreover the broadcaster can not be permitted like the role of a regulator. If the submissions of Mr. Mehta are accepted; the broadcaster would have a higher bargaining power and it would be in a position to offer different prices to different DTH operators albeit above 40% of the rate fixed by it.
45. We are not concerned with the commercial interests of either the DTH operators or the broadcaster in a case of this nature.
46. If that be so the submission of Mr. Mehta with reference to the example which has been given at page No. 20 of the objection may not have much relevance.
47. However we may notice the same.
“For example, the purchase cost of a channel by the DTH Operators is Rs. 2 and the DTH Operator sells the same at Rs. 6. In that event, for selling the said channel for 5 months, the DTH Operator would earn Rs. 30 from which it would have to pay only Rs. 10 to the broadcaster and would make a profit of Rs. 20 from the subscription of the said channel minus its operating cost, whereas, under the formula given in the RIO of the Respondent, the DTH Operator would earn only Rs. 3 per month per subscriber which would translate into Rs. 36 for the whole year out of which also it would have to pay Rs. 24 to the broadcaster and thus, the DTH Operator would be left with only Rs. 12 in 12 months instead of in five months. Thus, it is in the interest of the DTH Operator to price sports channels exorbitantly so that the end-consumer subscribe the same only for a few months and not for the whole year, which as mentioned above is detrimental to the broadcaster and only helps the DTH Operator in profiteering.”
48. The example is an imaginary one. It may not have any real or factual basis. How the respective parties would protect their commercial interests is a matter of their own concern; this Tribunal may not have any role to play in relation thereto. Keeping in view the categorical stand taken by TRAI we are of the opinion that it can not be said that fixing of a maximum retail price is the prerogative of the producer.
49. In any event, by reason of the said provision, a maximum retail price is not being fixed.
50. However this aspect of the matter may be considered by TRAI and as stated by it in its affidavit before us in the matter of Tariff Regulation relating to Tariff Order of 21.7.2010, we have no doubt that the regulator shall monitor the same.
51. Mr. Mehta would furthermore submit that entry package of SUN Direct is being sold at Rs. 99 per subscriber whereas the cost of such bouquet is much more than Rs. 99 and thus, the loss which is being suffered by SUN Direct from the entry level package, would be covered from other channels including that of the respondent. If however, in the event, the petitioner is acting contrary to the Regulations, there can not be any doubt that the respondent may bring the same to the notice of the regulator for appropriate actions.
52. The matter relating to security deposit has been considered in Clause E. The said Clause reads as under.
“Issue at Sl. No. 10 of the said Annexure-B relates to Section V clause D (C) of the RIO. The clause reads as under: -
“An interest free security deposit at the time of execution of this Agreement, of Rs. 30,000,000/- (Rupees Three Crores Only), which shall be refunded by NEO to the Affiliate upon expiry of the term of this Agreement………”.
53. Mr. Mehta would submit that from a perusal of determination of TRAI it would be evident that the logic for asking the DTH operator to deposit the security amount has been accepted by TRAI.
54. We may notice the same.
“In this context, the Authority noted that the Interconnection Regulations do not have any provisions relating to Security Deposit. The clause is thus found to be not in contravention of any provision of TRAI’s orders/regulations. However, the insistence of the broadcaster on the payment of the security deposit of Rs. 3 crores would appear to be unreasonable and arbitrary, particularly, having regard to the fact that the contention of M/s. Sun Direct that it had been making payment promptly to M/s. Neo Sports and that there has been no single default on its part, has not been denied by M/s. Neo Sports Broadcast Pvt. Ltd. Upon considerations of equity and fairness and in the interest of promotion of orderly growth of the sector, the Authority is of the view that provisions for security deposit should have some linkage with default in making payments by a DTH operator. The relevant clause of the RIO may therefore be reworded so as to provide for the following.
(i) Within one week of First Default (for continuation of signals) – Bank Guarantee equivalent to 15 days billing of the default payment.
(ii) Within one week of Second Default (for continuation of signals) – Bank Guarantee equivalent to 30 days billing of the default payment.
(iii) Within one week of Second Default (for continuation of signals) – Bank Guarantee equivalent to 60 days billing of the default payment.
(iv) Cash Guarantee equivalent to 30 days billing after continuous 30 days default in a single instance.”
55. Security deposit is not the minimum guarantee. Security is asked to be deposited only for the purpose of covering a risk when a DTH operator commits a default. The same may become known to the broadcaster but before actual disconnection is effected the provisions of the Clause 4.1 as also Clause 4.3. of the Regulations must be complied with. Furthermore, for the recovery of the amount a petition is required to be filed before this Tribunal. Thus it cannot be said that asking for deposit of the security amount is beyond the purview of the Regulation.
56. Mr. Jain, however would urge that this Tribunal in ASC Vs. Star has opined that no security deposit is permissible in law. We do not think that such is the decision of this Tribunal. Mr. Jain urged that the broadcaster had not raised any grievance that the DTH operators are not paying the bills. Such a question does not arise in as much as we are concerned with the validity and/or reasonableness of a RIO and not the actual contract and/or actual compliance of the provisions of the contract. We are, however, of the opinion that to ask the DTH operators to deposit a sum of Rs. 3 Crores is unreasonable. A reasonable amount of security, therefore, may be allowed to be deposited as may mutually be agreed upon.
57. The last Clause which is in question relates to the marketing promotion and research. It reads as under.
“Issue at Sl. No. 11 of the Annexure-B statement relates to Section V clause G of the RIO. The clause reads as under: -
“Marketing, Promotion and Research”
(1) The Affiliate shall market and promote the Channels (including any new NEO Channels) and content thereof in a non discriminating manner which shall be materially similar to the manner that other channels of the same genre(s) are being marketed/promoted by the Affiliate.
(2) The Affiliate shall market and promote the Channels (including any NEO Channels) via third party mass media, its own DTH platform, trade channels and by way of direct marketing.
(3) The Affiliate undertakes in particular to promote and market the Channels (including any new NEO Channels) with respect to pricing and the benefits of subscribing to the Channels should the Affiliate place the channels in any tier/package outside of the basic tier/package. Such marketing and promotion will be in consultation with NEO and NEO’s views will be taken into account by the Affiliate.
(4) The Affiliate agrees and undertakes to ensure that the size and prominence of the name and logos of the NEO channels on all its advertising and marketing/promotional material or campaigns shall be similar to that of any other channel’s being distributed by the Affiliate.
(5) In any event NEO decides to conduct any market research with respect to its Channels; the Affiliate shall render the necessary co-operation to NEO for such research.”
The opinion of the TRAI is as under.
“After examination of the contents of the clause and the submissions made by both parties, the Authority is of the view that in the name of securing non-discriminatory treatment, a broadcaster can not be seen to be putting restrictions on the conduct of the business of the DTH operator. An interconnection agreement is a document which primarily concerns with issues relating to terms and conditions associated with the supply of TV signals to the distributor of TV channels and has nothing to do with business promotion/market strategy and research. Viewed form this angle, the clause in the RO forcing the DTH operator to accept conditions relating to marketing, promotion and research are found to be unreasonable. As already noticed above, in terms of second proviso to regulation 3.2 of the Interconnection Regulations, any imposition of terms which are unreasonable shall be deemed to constitute a denial of request for signals. In view of this, the provisions in Section V Clause G of the RIO are found to be unreasonable and should be deleted.”
58. We agree with the observation of the Regulator. It is entirely regulatory in nature and broadcaster can not insist on such a Clause being inserted in the agreement.
59. For the reasons aforementioned the opinion of the regulator is accepted to the extent mentioned herein before.
60. This petition is disposed of on the above terms. In the facts and circumstance of the case there shall be no order as to costs.