MANU/TRAI/0034/2016

Department/Board : Telecom Regulatory Authority of India

Press Release No. : 28/2016

Date : 09.05.2016

Decision of the Authority relating to inflation linked hikes for TV tariffs

Telecom Regulatory Authority of India (TRAI) had issued tariff orders namely "The Telecommunication (Broadcasting and Cable) Services (Second) Tariff (Eleventh Amendment) Order, 2014 (no. 3 of 2014)" (hereinafter referred to as 'Eleventh T.A.O.') dated 31St March, 2014 and "The Telecommunication (Broadcasting and Cable) Services (Second) Tariff (Thirteenth Amendment) Order, 2014 (no. 9 of 2014)" (hereinafter referred to as 'Thirteenth T.A.O.') dated 31st December, 2014 respectively providing for inflation linked hike applicable to rates of TV services at wholesale level in the non-addressable (non-CAS) and addressable (DAS) systems.

2. To calculate the quantum of the inflation linked hike, TRAI worked out the change in the Wholesale Price Index (WPI) from December 2008 to February 2014, based on the monthly WPI data maintained by the Ministry of Commerce and Industry. This was done as per industry demand as no inflationary hike had been permitted since 2009. WPI as a relevant inflation index had been used in line with the earlier inflation linked hikes permitted by the Authority based on the same index. The effective inflation linked hike permitted was 27.5%. It was decided to implement the hike in two separate installments so as to give a reasonable time to all stakeholders to adjust to these hikes. The first installment of 15%, for the period from December 2008 to March 2014, was made effective from 01.04.2014 vide the Eleventh T.A.O. The second installment of 11%, accounting for the remaining part of the inflation linked for the same duration, was made effective from 01.01.2015 vide the Thirteenth T.A.O.

3. These tariff amendment orders were set-aside by the Hon'ble TDSAT vide its judgement in Appeal Nos. 1(C) to 6(C) of 2014 dated 28th April 2015 and TRAI was directed to re-consider the issue in light of the observations made in the orders of the Hon'ble TDSAT. Submissions of one of the appellants in this regard was as follows:-

"25 These negotiations take into account all aspects including growth in subscribers, inflation, etc. Each year the subscription charge goes up and the subscription re enues have increased by 130% as against the growth in subscriber of 34%. Yet these aspects have not been taken into account by the TRAL"

4. Further, Hon'ble TDSAT observed that TRAI should consider other inflation indices such as GDP Deflator in the calculation of inflation linked hikes. The relevant observations of Hon'ble TDSAT are as under:-

"43......... there are a few question........