TaxTMI 
TaxTMI 
2007 (4) TMI 677
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....to as New Channels Bouquet. Under the Agreement Moon Network Pvt. Ltd. a Multi-System Operator (for short MSO) was engaged in the business of transmission of TV channels through cables. Under the Agreement Moon Network Pvt. Ltd. was described as a distributor. Under the said Agreement Star India Pvt. Ltd. appointed Moon Network Pvt. Ltd. as the distributor on a sole and exclusive basis. The distributor was required to distribute the subscribed channels in the territory of Agra. Moon Network Pvt. Ltd. was thus appointed as the sole and exclusive distributor of the subscribed channels through the cable network owned by it and operated by it in the territory of Agra. It is interesting to note that under the Agreement, Star India Pvt. Ltd. excluded the distribution of the subscribed channels through DTH, CAS, Broadband or any medium other than through a ground cable network. The said Agreement came into effect from January 1, 2005. The Agreement is valid up to June 30, 2007, unless terminated in accordance therewith. Under the Agreement Moon Network Pvt. Ltd. could execute an affiliation agreement directly with its affiliate(s) in such form and manner to be approved by Star India Pvt. ....
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....s distributor. In the present case we are only concerned with the interpretation of the Interconnection Regulation 2004, and therefore, we are not required to go into any other aspect. However, it is made clear that in such cases the Appellate Tribunal ought to have called for the Distributor Agreement, if any, and not decide conceptually they do not go by the facts of the individual cases. In the present case at one stage it was argued vehemently by the appellants that Star India Pvt. Ltd. had entered into an Agreement with Moon Network Pvt. Ltd. and that Moon Network Pvt. Ltd. was therefore exclusive agent for the territory of Agra. It was argued that Star India Pvt. Ltd. was required to appoint an agent in different territories looking to the economies of scale of operations carried out by Star India Pvt. Ltd. throughout India. However, when the Court perused the contents of the Agreement we find that the Agreement is a Distributor Agreement. As stated above the Agreement expressly stated that Moon Network Pvt. Ltd. was an independent contractor and that the relationship between the parties was on principle to principle basis and that there was no relationship of principal and a....
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....ided inadequate protection to broadcasters. It is, therefore, disorganized ultimately having an adverse effect on the consumers. According to the learned counsel there is in the Indian market large-scale under declaration regarding number of subscribers which results in an inequitable sharing of subscription revenues. According to the learned counsel on a proper interpretation of the Interconnection Regulation it is clear that a broadcaster is obliged to provide its signals to all distributors of TV channels on non-discriminatory basis. But the manner of providing signals has been left to the discretion of the broadcaster. According to the learned counsel the Interconnection Regulation for establishing a must provide regime under which every distributor is entitled to the signals of every broadcaster on account of the heavy distribution costs widespread under-declaration of number of subscribers and the fragmented nature of the market the Regulations have given the broadcaster the flexibility to decide whether to provide signals directly or through an agent. According to the learned counsel therefore, there is no particular business model prescribed by the said Interconnection Re....
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....arned counsel the words make available in Regulation 2(b) would include giving of Decoders and supply of signals through cable feed. According to the learned counsel there is no functional difference between re- transmission of signals and making available the TV channels. According to the learned counsel there is hardly any difference in the quality of signals that can be received by a distributor through Decoders and through a cable feed. For a distributor to obtain TV channels through Decoders the distributor must possess a dish-antena for downloading the signals from the satellite of the broadcaster and a divider which divides the signals into various channels. The distributor also requires separate Decoders for each channels with an activated viewing card. A distributor who obtains the signals through the cable amplifies it and distributes it to the other distributors and subscribers through the ground cable. That, the quality of signals transmitted through the cable is comparable to the quality of signals obtained through the Decoders. According to the learned counsel a distributor who obtains signals through Decoders is required to invest in the infrastructure consisting of....
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....ed to a cable operator, direct to home operator, multi system operator, head ends in the sky operator; (m) multi system operator means any person who receives a broadcasting service from a broadcaster and/or their authorised agencies and re-transmits the same to consumers and/or re-transmits the same to one or more cable operators and includes his/her authorised distribution agencies. (n) service provider means the Government as a service provider and includes a licensee as well as any broadcaster, multi system operator, cable operator or distributor of TV channels. 3. General provisions relating to non- discrimination in interconnect agreements 3.1 No broadcaster of TV channels shall engage in any practice or activity or enter into any understanding or arrangement, including exclusive contracts with any distributor of TV channels that prevents any other distributor of TV channels from obtaining such TV channels for distribution. 3.2 Every broadcaster shall provide on request signals of its TV channels on non- discriminatory terms to all distributors of TV channels, which may include, but be not limited to a cable operator, direct to home operator, multi system operator, head e....
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....on. There is another pay DTH platform which is awaiting approval from the Government that also has a degree of vertical integration. DTH is the platform most likely to provide effective competition to cable operators. Restriction of vertical integration could therefore, lead to a situation where the DTH roll-out could be affected and hence competition. It is for this reason that the alternative route has been looked at; controlling anti-competitive behaviour wherever it manifests itself. These issues are dealt with in the following paragraphs. 5. Generally, TV channels are provided to all carriers and platforms to increase viewership for the purpose of earning maximum subscription fee as well as advertisement revenue. However, according to some opinions, if all platforms carry the same content, it will reduce competition and there will be no incentive to improve the content. Some degree of exclusivity is required to differentiate one platform from the other. 6. Exclusivity had not been a feature of India's fragmented cable television market. However, the roll-out of DTH platform has brought the question of exclusivity and whether it is anti competitive to the forefront. Star Indi....
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....hannel signals on the grounds of piracy. Discrimination in providing TV channel signals 17. In case any distributor of TV channel feels he/she has been discriminated on terms of getting TV signals compared to a similarly based distributor of TV channel, then a complaint must be filed with the broadcaster or multi system operator, as the case may be. In case the complainant is not satisfied with the response, he/she may approach the appropriate forum for relief. We do not find any merit in the civil appeal for the following reasons : Firstly, we do not find any error in the judgment which has held that in providing signals to a distributor through an agent who is also in turn a distributor is per se discriminatory. We agree with the contention of Mr. Rohtagi learned senior counsel that in the case of overlap of functions to be performed by each entity under the Interconnection Regulations like a Distributor, MSO, agent/ intermediary, one has to go by the facts of each case and the terms of Agreement between the broadcaster and his agent cum distributor. Every contract under the Interconnection Regulations has two aspects. One concerns the commercial side whereas the other concer....
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.... in the territory of Agra. (See clause 1.1). This is where the difficulty comes in The object of Interconnection Regulation is to eliminate monopoly. If Sea T.V. respondent No.1 carries on business in competition with Moon Network Pvt. Ltd. and if it is to depend on the Feed provided by its competitor and if the quality of the signals available through that Feed is poorer than the quality of the signals available through Decoders, then the Tribunal is right in holding that the above arrangement is per se discriminatory. It is important to bear in mind that Sea T.V. Network and Moon Network Pvt. Ltd. are in turn MSOs. When Moon Network Pvt. Ltd. is appointed as sole and exclusive distributor with a direction to distribute the signals through the infrastructure of Moon Network Pvt. Ltd. then the quality of the signals receivable by Sea T.V. Network may not be the same as the quality of signals through Decoders. In this connection fudging of data (voice and picture) is possible. Even the speed of data-transmission to Sea T.V. Network could get affected. In such cases it is the subscribers of Sea T.V. Network who would be adversely affected. The picture quality would be affected. The r....
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.... who re-transmits T.V. channels through electromagnetic waves through cable. When signals are provided through Decoders the matter comes under the expression make available T.V. channels in terms of clause 2(b)of the Interconnection Regulations. Clause 2(b) is applicable because the broadcaster makes available the T.V. channels to its distributor namely Moon Network Pvt. Ltd. On the other hand between Moon Network Pvt. Ltd. and Sea T.V. Network clause 2(j) would apply because after receiving signals through the cable from the broadcaster the distributor (Moon Network Pvt. Ltd.) re-transmits the T.V. channels through the Feed to Sea T.V. Network. Therefore, there is vital distinction between what is received by an agent-cum-distributor from the broadcaster and what is subsequently re-transmitted by that agentcum- distributor to other MSOs/Cable Operators like Sea T.V. Network. In our view the Tribunal, has therefore, correctly drawn a distinction between what is called as making available of T.V. channels and re-transmission of T.V. channels under the above two clauses. Keeping in mind the above distinction it is clear that although a broadcaster is free to appoint its agent under t....