The Federation of Hotel & Restaurant Associations of India President : S.M. Shervani Member of Honour : Dr Ajit B Kerkar Hony. Secretary : Vivek Nair Hony. Treasurer : Garish Oberoi Vice President : Deepak Puri Jt. Hony. Secretary : Nitin S. Kothari Vice President : D.S. Advani Jt. Hony. Secretary : K. Murali Rao Vice President : K. Syama Raju Secretary General : M.D. Kapoor FHRAI VIEWS/COMMENTS TO THE CONSULTATION PAPER NO. 6/2004 DATED 11.6.2014 ON TARIFF ISSUES RELATED TO BROADCASTING AND CABLE TV SERVICES FOR COMMERCIAL SUBSCRIBERS ON BEHALF OF THE FEDERATION OF HOTEL AND RESTAURANT ASSOCIATIONS OF INDIA Regd. Office: B-82, 8th Floor, Himalaya House, 23 Kasturba Gandhi Marg, New Delhi - 110 001 Phones : (011) 40780780 Fax : (011) 40780777 E-Mail : [email protected] Website : www.fhrai.com 2 INDEX Particular Page Number I. Summary of Suggestions 3-5 II. Brief Factual Background 6-13 III. Summary of the Position in Law 14-22 II.A Non-CAS/ Analog II.B Direct to Home Services [DTH] II.C Digital Addressable Cable System [DAS] IV. Response to Issues/ Suggestions 23-44 Issues 1 and 2 Issue 3 Issue 4 Issues 5, 6 and 7 Annexure-A 46-133 Annexure-B 134-136 Annexure-C 137 Annexure-D 138-206 Annexure-E 207-211 Annexure-F-1A-1B 212-216 Annexure-F-2A-2B 217-225 Annexure-F-3A-3B 226-230 Annexure-F-4A-4B 231-242 Annexure-F-5A-5B 243-248 Annexure-F-6A-6B 249-256 Annexure-F-7A-7B 257-264 Annexure-G 265 3 I. Summary of Suggestions Telecom Regulatory Authority of India (“TRAI” or “Authority”) has circulated a Consultation Paper on “Tariff Issues Related to Broadcasting and Cable Services for Commercial Subscribers‖ on 11.6.2014. We are submitting the present suggestions on behalf of the Federation of Hotel and Restaurant Associations of India (“FHRAI”) which is the apex association of Hotels and Restaurants in India and represents over 3800 Hotels and Restaurants. The consultation paper discusses the background and issues which arise with respect to Tariff for Commercial Subscribers. At the outset it is submitted that at a policy level, the Authority has been tasked with the responsibility of regulating “broadcasting and cable TV”. The reason why such responsibility has been conferred on the authority is that by its very nature, a broadcaster and its channel enjoys a monopoly. Even if there are competing channels, each channel is unique and the channels are not substitute for each other. On the other hand, the consumers are at the mercy of the broadcasters and if they wish to receive any particular channel, they are bound to pay to the broadcaster the price that the broadcaster wants to charge. In the absence of regulation and fixing of tariff, the broadcaster could charge different amounts from different consumers arbitrarily and capriciously, based on whatever the market can bear. Broadcasting is a natural monopoly and is thus required to be regulated and thus the power has been given to the Authority to so regulate the industry. The question that then arises and which has been raised/ elaborated in the consultation paper is whether the Authority should forebear with respect to all or some customers and whether any distinction can be drawn between different categories of customers. In brief, FHRAI on behalf of its members submits as follows. It is submitted that the product/service that the broadcaster supplies namely the channel is the same whether the consumer is using it at his/her house or in any other establishment. There is no distinction in the channel being supplied either in terms of quality or in terms of cost to the broadcaster. 4 As far as the consumer is concerned, in our submission, again there is no real difference. Whether the consumer watches cable at his house or at a hospital or in a club or at a hotel or restaurant, it is the same consumer which is watching the same broadcast. The real question therefore, in our submission, is whether one or the other category of consumers have a better bargaining power vis–a-vis the broadcaster. It is FHRAI‟s submission, particularly with the experience in the past that in fact non-residential establishments have no better bargaining power then residential subscribers vis-a-vis the broadcasters. In fact the broadcasters have misused the forbearance of the Authority in the past, as further enumerated, wherein they have increased the tariff from time to time; they charge differing tariffs from different customers and do not allow some platforms to supply their channels (say DTH) to certain kinds of customers. The hotels and restaurants have not been able to assert/ show any bargaining power. In fact, as far as hotels are concerned, a Television is a necessity. Cable television has been recognised by the Telecom Dispute Settlement and Appellate Tribunal (“TDSAT”) as being in the nature of an essential service and a necessity in every household, in its judgment dated 27.02.2007. At the end of the day, if TV is not availed or some channel is not available, the loss will be of the customer and not to the hotel or the restaurant. The distinction between one category of consumer and another is also not at all clear or sustainable. As the consultation paper itself observes, the Hon‟ble Supreme Court of India has already found that the hotels are consumers or subscribers of cable broadcast. A few illustrations would show that there is no clear distinction between ordinary and commercial subscribers. Suppose a person calls over a few friends for dinner to watch a cricket match, would he become a commercial subscriber. Similarly, if a government or a charity hospital shows TV in their waiting lounge; but doesn‟t charge their customer, would they be ordinary subscribers. Again, suppose a Television Set is installed in the waiting lounge of a government Ministry or the District Magistrates office or a police station where people come to lodge their complaints, would it be an ordinary subscriber or a commercial subscriber. Is the Airports Authority of India an ordinary subscriber or a commercial subscriber based on the fact that Television sets display programmes both in the open area as also in executive lounges at the airports? Are the two kinds of TV sets in the airport (one in the paid lounge and the other in the open area) to be treated differently. Are five star hospitals and government or charitable or poor people hospitals to be treated differently? Is a TV 5 set installed at a government run Tuberculosis clinic to be treated as commercial subscriber or an ordinary subscriber? It is the submission of FHRAI that there is no real distinction between one category of subscriber and another. If Hotels and Restaurants are put at the mercy of broadcasters, the only ones who will suffer are the customers of the Hotel who will not get to watch their favourite programmes which they are used to watching and for which they have paid for in their own house; but they can‟t watch the same, as they are not in their own town, either for business or leisure. In fact, there is nothing to show that hotels and restaurants actually recover the cost of cable subscription from their guests. Also, the capacity of different hotels is also different. There are non-starred hotels and one star to five star hotels. Even within the same class, like heritage hotels, some are big and some are small. Not all of them have even similar paying capacity. There are some boutique hotels which may not even have one star; but charge more than what the 5 star hotels charge. As a matter of interest, there are some airport hotels (outside India) which do not have a bathroom or a bed, but they all have cable TV! The only real distinction that FHRAI believes to be permissible is if any organisation sells tickets for admission to watching any broadcast, then this would amount to commercial exploitation and in such a case, some distinction can be made. However, in this case also, the tariff must be fixed by the Authority as forbearance has not and cannot work. In fact, FHRAI would also like to bring to the notice of the Authority, the misuse and misbehaviour by various bodies. As enumerated hereafter, various intermediaries have been appointed by broadcasters and MSOs and so called copyright holders. Each one of them seeks to charge separate charge for the same broadcast. It needs to be clarified that there is only one charge that needs to be paid and that also only to the LCO or DTH operator or any other operator as fixed by the Authority. 6 II. BRIEF FACTUAL BACKGROUND The broad facts have been given in the consultation papers itself. However, some detailed facts which may be relevant are enumerated hereafter. 1. The issue of tariff payable by commercial cable subscribers was remanded to the Telecom Regulatory Authority of India (hereinafter referred to as “Authority”) vide the decision of the ld. Telecom Dispute Settlement and Appellate Tribunal (hereinafter referred to as “TDSAT”) dated 28.05.2010. This judgment arose from an appeal filed by the Federation of Hotels and Restaurants Association of India (hereinafter referred to as “FHRAI”) before the TDSAT challenging the distinction that was made in the then Tariff Orders [vide amendment orders dated 21.11.2006, namely the Telecommunication (Broadcasting and Cable) Services (Third) (CAS areas) Tariff (First Amendment) Order, 2006 and the Telecommunication (Broadcasting and Cable) Services (Second) Tariff (Seventh Amendment) Order, 2006 (hereinafter collectively referred to as “Amendment Tariff Orders dated 21.11.2006”)] whereby a maximum ceiling on cable charges payable by all commercial subscribers was fixed; other than three categories of hotels: (i) hotels with a rating of three star and above, (ii) heritage hotels and (iii) any other hotel, motel, inn, and such other commercial establishment providing board and lodging and having 50 or more rooms (hereinafter referred to as the “Aforesaid Three Categories of Hotels”).