STAR INDIA PRIVATE LIMITED v. DEPARTMENT OF INDUSTRIAL POLICY AND PROMOTION & ORS.

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A Act, as can be discerned from the Preamble to the Act. If, far from carrying out the purposes of the Act, a regulation is made contrary to such purposes, such regulation cannot be said to be consistent with the Act, for it must be consistent with both the letter of the Act and the purposes for which the Act has been enacted. In attempting to protect the interest of the consumer of B the telecom sector at the cost of the interest of a service provider who complies with the leeway of an average of 2% of call drops per month given to it by another Regulation, framed under Section 11(1)(b)(v), the balance that is sought to be achieved by the Act for the orderly growth of the telecom sector has been violated. C Therefore, we hold that the impugned Regulation does not carry out the purpose of the Act and must be held to be ultra vires the Act on this score.” (Emphasis supplied.)

23Copy pinpoint23. What is important to note from this judgment is that the balance D that was sought to be maintained between protecting the interest of service providers and consumers was destroyed by the impugned regulations. What is important from our point of view, however, is that under Section 36 of the TRAI Act, the Authority is empowered to carry out the purposes of the said Act as can be discerned from the Preamble E to the Act. What is clear from the amended Preamble to the Act is that the interests of service providers and consumers are of paramount importance, both of which have a role to play when regulations are framed under Section 36.

24Copy pinpoint24. Learned counsel for the appellants also relied upon Petroleum F and Natural Gas Regulatory Board v. Indraprastha Gas Ltd. (supra.). In this case, the Petroleum and Natural Gas Regulatory Board Act, 2006 was the subject matter of discussion by this Court. This Court, after construing the Act, held that where there is a cassus omissis, such lacuna cannot be filled up by the judicial interpretative process. Thus, entities which are neither “common G carriers” nor “contract carriers” within the tariff regulating powers of the Board under the Act were not held amenable to regulation. Further, the reach of the Act, as is clear from a reading of Sections 20 to 22 would make it clear that transportation tariffs for common carriers and contract carriers alone could be regulated by the H Board. This would naturally not include a regulation which will

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pertain to network tariff for city or local gas distribution network A as such a network is neither a common carrier nor a contract carrier covered by the Act. Further, the laying down of the compression charge for CNG gas would also, therefore, be wholly outside the reach of the said Act. This judgment again has no application to the facts of the present case, given the fact that the B Preamble read with Section 11(2) makes it clear that the Regulation and Tariff Order made thereunder would both be within the reach of TRAI under the TRAI Act.

25Copy pinpoint25. At this stage, it is also important to set out some of the provisions of the Indian Telegraph Act, 1885. This Act was amended in 2004 to include Section 3(1AA). The relevant sections of this Act are set out C hereinbelow: “3.(1AA) “telegraph” means any appliance, instrument, material or apparatus used or capable of use for transmission or reception of signs, signals, writing, images, and sounds or intelligence of any nature by wire, visual or other electro magnetic emissions, Radio D waves or Hertzian waves, galvanic, electric or magnetic means; Explanation.- “Radio waves” or “Hertzian waves” means electro magnetic waves of frequencies lower than 3,000 giga-cycles per second propagated in space without artificial guide. E xxx xxx xxx

4. Exclusive privilege in respect of telegraphs, and power to grant licences.— (1) Within India, the Central Government shall have the exclusive privilege of establishing, maintaining and working telegraphs: F Provided that the Central Government may grant a license, on such conditions and in consideration of such payments as it thinks fit, to any person to establish, maintain, or work a telegraph within any part of India: Provided further that the Central Government may, by rules made G under this Act and published in the Official Gazette, permit, subject to such restrictions and conditions as it thinks fit, the establishment, maintenance and working— (a) of wireless telegraphs on ships within Indian territorial waters and on aircrafts within or above India, or Indian H territorial waters, and

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A (b) of telegraphs other than wireless telegraphs within any part of India. Explanation.— The payments made for the grant of a licence under this sub-section shall include such sum attributable to the Universal Service Obligation as may be determined by the Central B Government after considering the recommendation made in this behalf by the Telecom Regulatory Authority of India established under sub-section (1) of Section 3 of the Telecom Regulatory Authority of India Act, 1997 (24 of 1997). (2) The Central Government may, by notification in the Official C Gazette, delegate to the telegraph authority all or any of its powers under the first proviso to sub-section (1). The exercise by the telegraph authority of any power so delegated shall be subject to such restrictions and conditions as the Central Government may, by the notification, think fit to impose.”

26Copy pinpoint26. Sections 2(2) and 5 of the Indian Wireless Telegraphy Act, 1933 are also set out hereinbelow: “2(2) “wireless telegraphy apparatus” means any apparatus, appliance, instrument or material used or capable of use in wireless communication, and includes any article determined by rule made under Section 10 to be wireless telegraphy apparatus, but does not include any such apparatus, appliance, instrument or material commonly used for other electrical purposes, unless it has been specially designed or adapted for wireless communication or forms part of some apparatus, appliance, instrument or material specially so designed or adapted, nor any article determined by rule made under Section 10 not to be wireless telegraphy apparatus; xxx xxx xxx

5. Licenses.—The telegraph authority constituted under the Indian Telegraph Act, 1885 (13 of 1885), shall be the authority competent to issue licenses to possess wireless telegraphy apparatus under this Act, and may issue licenses in such manner, on such conditions and subject to such payments as may be prescribed.”

27Copy pinpoint27. It is clear that only a person who is licensed under Section 5 of the Indian Wireless Telegraphy Act can use a teleport from India H from which a TV channel is to be uplinked to a satellite. Equally, to be

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uplinked to a satellite and thereafter downlinked from such satellite to an A MSO, permission would be required from the Central Government. This would be clear from a reading of the separate guidelines for uplinking and downlinking channels issued by the Government of India.

28Copy pinpoint28. So far as the uplinking guidelines are concerned, on 5.12.2011, the Ministry of Information and Broadcasting (Broadcasting Wing) set B out detailed conditions by which the uplinking of TV channels may be made. Under Clause 5.9 of the said guidelines, the Government of India shall have the right to suspend the permission of a company for a specified period in the public interest, or in the interest of national security, to prevent misuse. C

29Copy pinpoint29. Similarly, insofar as the policy guidelines for downlinking of TV channels is concerned, the Ministry has given detailed guidelines of the same date, i.e., 5.12.2011. Among other things, it is stated:- “2.4. No News and Current Affairs channel shall be permitted to be downlinked if it does not meet the following additional conditions: D 2.4.1.That it does not carry any advertisements aimed at Indian viewers; 2.4.2.That it is not designed specifically for Indian audiences; 2.4.3.That it is a standard international channel; E 2.4.4.That it has been permitted to be telecast in the country of its uplinking by the regulatory authority of that country; Provided that the Government may waive/modify the condition under clause 2.4.1 on a case-by-case basis. xxx xxx xxx F

5. BASIC CONDITIONS/OBLIGATIONS 5.1. The Company permitted to downlink registered channels shall comply with the Programme and Advertising Code prescribed under the Cable Television Networks (Regulation) Act, 1995. G 5.2. The company shall ensure compliance of the provisions of Sports Broadcasting Signals (Mandatory sharing with Prasar Bharati) Act 11 of 2007 and the Rules, Guidelines, Notifications issued thereunder. H

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A 5.3. The applicant company shall adhere to any other Code/ Standards guidelines/restrictions prescribed by Ministry of Information & Broadcasting, Government of India for regulation of content on TV channels from time to time. 5.4. The applicant company shall submit audited annual accounts B of its commercial operations in India. 5.5. The applicant company shall obtain prior approval of the Ministry of Information and Broadcasting before undertaking any upgradation, expansion or any other changes in the downlinking and distribution system/network configuration. C 5.6. The applicant company shall provide Satellite TV Channel signal reception decoders only to MSO/Cable Operators registered under the Cable Television Networks (Regulation) Act 1995 or to a DTH operator registered under the DTH guidelines issued by Government of India or to an Internet Protocol Television (IPTV) D Service Provider duly permitted under their existing Telecom License or authorized by Department of Telecommunications or to a HITS operator duly permitted under the policy guidelines for HITS operators issued by Ministry of Information and Broadcasting, Government of India to provide such service.

E 5.7. The applicant company shall ensure that any of its channels, which is unregistered or prohibited from being telecast or transmitted or re-transmitted in India, under the Cable Television Networks (Regulation) Act 1995 or the DTH guidelines or any other law for the time being in force, cannot be received in India through encryption or any other means. F 5.8. The Union Government shall have the right to suspend the permission of the company/registration of the channel for a specified period in public interest or in the interest of National security to prevent the misuse of the channel. The company shall immediately comply with any direction issued in this regard. G 5.9. The applicant company seeking permission to downlink a channel shall operationalise the channels within one year from the date of the permission being granted by the Ministry of Information and Broadcasting failing which the permission will liable to be withdrawn without any notice in this regard. However, H

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the company shall be afforded a reasonable opportunity of being A heard before such a withdrawal. 5.10. The company/channel shall adhere to the norms, rules and regulations prescribed by any regulatory authority set up to regulate and monitor the Broadcast Services in the country, 5.11. The applicant company shall give intimation to Ministry of B Information and Broadcasting regarding change in the directorship, key executives or foreign direct investment in the company, within 15 days of such a change taking place. It shall also obtain security clearance for such changes in its directors and key executives. 5.12. The applicant company shall keep a record of programmes C downlinked for a period of 90 days and to produce the same before any agency of the Government as and when required. 5.13. The applicant company shall furnish such information as may be required by the Ministry of Information and Broadcasting from time to time. D 5.14. The applicant company shall provide the necessary monitoring facility at its own cost for monitoring of programmes or content by the representative of the Ministry of Information and Broadcasting or any other Government agency as and when required. E 5.15. The applicant company shall comply with the obligations and conditions prescribed in the downlinking guidelines issued by the Ministry of Information and Broadcasting, and the specific downlinking permission agreement and registration of each channel. F 5.16. In the event of any war, calamity/national security concerns, the Government shall have the power to prohibit for a specified period the downlinking/reception/transmission and re-transmission of any or all channels. The Company shall immediately comply with any such directions issued in this regard.” G

30Copy pinpoint30. We are of the view that the provisions of the TRAI Act have to be viewed in the light of protection of the interests of both service providers and consumers. This being so, it is clear that no constricted meaning can be given to the provisions of this Act. It is important to remember that under Section 11(1)(a)(iv), one of the functions of the H

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A Authority, though recommendatory, is to facilitate competition and promote efficiency in the operation of telecommunication services (which includes broadcasting services) so as to facilitate growth in such services. What is also clear from Section 11(1)(b), is that terms and conditions of interconnectivity between different service providers have to be fixed, which necessarily includes terms that relate not only to carriage simpliciter as submitted by Dr. Singhvi, but to all terms and conditions of interconnectivity between broadcaster, MSO, Cable TV operator and the ultimate consumer, so as to ensure that the object of the Act is carried out, namely, that both broadcasters and consumers get a fair deal. Towards this end, Section 11(2) makes it clear that the Authority may, from time to time, notify the rates at which telecommunication services, including broadcasting services, within India and outside India, shall be provided under this Act. Dr. Singhvi argued that the literal language of this sub-section, which would undoubtedly bring in rates laid down in the Tariff Order, would have to be constricted by the language of the last part of the provision, viz., “including the rates at which messages shall be transmitted to any country outside India”. We are afraid that this is against basic canons of construction, as the expression “including” would only refer to a part of what precedes the expression and cannot therefore constrict the part that has gone before. The plain literal language of Section 11(2) makes it clear that rates at which broadcasting services are offered within and outside India can be fixed by TRAI. It is clear therefore that when rates are fixed after several rounds of consultations between various service providers and consumers, looking to the interest of each, it is impossible to say that any broadcaster’s rights have been impinged upon. Shri Dwivedi is absolutely right in saying that at no stage is content of a TV channel sought to be regulated, and that pricing relating to TV channels laid down in the Regulation and Tariff Order is a balancing act between the rights of broadcasters and the interests of consumers, which we may hasten to add has not been impugned on the ground that any right or fundamental right is violated, but only on the ground that the Regulation as well as the Tariff Order G are outside the “jurisdiction” of TRAI. Dr. Singhvi’s argument on this score must therefore fail.

31Copy pinpoint31. In fact, in Avishek Goenka v. Union of India, (2012) 5 SCC 275, this Court has already held:

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“18. If one examines the powers and functions of TRAI, as postulated under Section 11 of the Act, it is clear that TRAI would not only recommend, to DoT, the terms and conditions upon which a licence is granted to a service provider but has to also ensure compliance with the same and may recommend revocation of licence in the event of non-compliance with the regulations. It has to perform very objectively one of its main functions i.e. to facilitate competition and promote efficiency in the operation of the telecommunication services, so as to facilitate growth in such services. It is expected of this regulatory authority to monitor the quality of service and even conduct periodical survey to ensure proper implementation.” C

32Copy pinpoint32. We must also hasten to add that the power under Section 36(1) of the Act is very wide and not constricted by the provisions of Section 11, as was held in BSNL v. TRAI (supra.).

33Copy pinpoint33. Equally, in Hotel & Restaurant Assn. v. Star India (P) Ltd., (2006) 13 SCC 753, this Court has held:- D

“24. Section 11 of the TRAI Act provides for the functions of TRAI. Clause (a) of sub-section (1) of Section 11 of the TRAI Act empowers TRAI to make recommendations either suo motu or on the request from the licensor, on the matters enumerated therein. Clause (b) thereof empowers it inter alia to fix the terms and conditions of interconnectivity between the service providers.

25. Sub-section (2) of Section 11 of the TRAI Act contains a non obstante clause providing that TRAI may frame from time to time by order(s) notified in the Official Gazette the rates at which the telecommunication services within India and outside India shall be provided under the said Act including the rates at which messages shall be transmitted to any country outside India. Proviso appended to sub-section (2) thereof empowers TRAI to notify different rates for different persons or class of persons for similar telecommunication services and where different rates are fixed as aforesaid TRAI shall record the reasons therefor. xxx xxx xxx

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A 55. TRAI exercises a broad jurisdiction. Its jurisdiction is not only to fix tariff but also laying down terms and conditions for providing services. Prima facie, it can fix norms and the mode and manner in which a consumer would get the services.

56. The role of a regulator may be varied. A regulation may provide for cost, supply of service on non-discriminatory basis, the mode and manner of supply making provisions for fair competition providing for a level playing field, protection of consumers’ interest, prevention of monopoly. The services to be provided for through the cable operators are also recognised. While making the regulations, several factors are, thus required to be taken into account. The interest of one of the players in the field would not be taken into consideration throwing the interest of others to the wind.” (Emphasis supplied.)

34Copy pinpoint34. It is interesting to note, as has been stated by Shri Dwivedi, that in Star India’s response to the consultative paper of 29.1.2016, Star India itself has requested that the Regulation and Tariff Order be fixed on the basis of the principles that are now contained therein. For example, Star India’s response to whether a reasonable wholesale price cap can be ensured for mass genres, was as follows:- E “Reasonable wholesale price cap to be ensured for the mass genres Channels need to be incentivized for creating diverse and innovative content F Incumbent flagship channels have been suffering from legacy price and bouquet freeze. All channels should earn fair share of consumers’ ARPU. Our research findings reveal that basis current ARPUs, G share of viewership of flagship channels, and existing revenue share of the broadcasters in the addressable market, the value attributed by the market to the flagship channels is significantly more than the existing wholesale list prices of these channels.

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Accordingly, the retail value ascribed to flagship entertainment channels by consumers, translate into a wholesale price of Rs.11/- to Rs.28/-. For details refer to Annexure A. Therefore, the wholesale cap should be Rs.28/- to allow for optimum monetization of the flagship channels. If the channel values are allowed to be corrected basis consumer demand the share of the channel in the ARPUs shall be realigned to reflect their true value proposition without leading to any arbitrary or perverse price hikes. Further the proposed discount cap will effectively eliminate pricing distortions. C However, in the interest of enabling a smooth and seamless transition to full addressability without creating any unnecessary chaos we are proposing the following caps, in the transition phase. Any lower cap will not only stifle investments in innovative content but also continue to restrict D incumbent channels whose rates were frozen in 2003-2004 from realizing their real value. Mass Genre Proposed Price Cap (Rs.) E General 12.00 Entertainment (Hindi & Regional) Movies (Hindi & 10.00 Regional) Sports 18.00 F

These caps should be subject to automatic annual revision, basis inflation.” While answering whether broadcasters should offer wholesale discounts to distribution platform operators (hereinafter referred to as a “DPO”) G which should be transparently available as part of the reference interconnect offer (hereinafter referred to as “RIO”), Star India has stated: “Wholesale discounts to be subject to a maximum overall cap of 33% H

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A As explained above, there are wide variety of parameters that a single broadcaster may want to drive basis various business requirements 33% discount will be sufficient to effectively drive only a few business requirements B Any discounting cap lower than 33% will render the discounting structure ineffective/unworkable.” Similarly, so far as high definition channels are concerned, Star India had this to say:

C “1. HD channels offer a viewer experience that is distinctly different from SD channels - The production, transmission and re-transmission of HD channels entail substantial investments. - HD channels offer distinctly superior audio and video quality to the viewers through cutting edge technology used right from shooting of content, production, post-production, transmission & re-transmission. For detailed explanation refer to Annexure B. - The consumption of HD channel requires significant investment by the consumer in an HD TV and HD set-top box. As such, these channels are aspirational and for affluent audiences who demand better content & quality offering and have the capacity to pay for it.

2. Price forbearance for HD channels should continue F - HD channel can be subscribed by only those subscribers who can afford specialized HD set-top box as well as HD TV, which comes at a premium. - The HD channel market has witnessed a robust growth and has allowed broadcasters to invest in quality and innovative content. Over the last four years market forces have enabled the channels to discover their real prices and desired penetration. - This has been possible because of the laudable decision of the Authority to keep HD channels outside the regulatory purview. With upcoming 3D, 4D and virtual reality it would

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indeed be a regressive step if the Authority were to now regulate HD channels thereby sending out a negative signal to potential investments in these technologies. - Hence we recommend that the Authority should continue to keep HD channels outside the regulatory ambit. - In order to protect the interest of subscribers and to foster further growth in this segment, we recommend that HD channels should adhere to twin conditions and discounting caps at the wholesale and retail. - Discount on wholesale prices should be capped at 33% to ensure a viable a-la-carte fallback option for DPOs. C

- Retail a-la-carte prices should be linked to wholesale prices (same linkage multiplier as used for SD channels). - Discount at retail level also to be limited to 33% to ensure a viable a-la-carte fallback option for consumer. D

3. Bundling of HD and SD channels should not be allowed, both at wholesale and retail levels.

4. Charging of access fee for HD channels should not be allowed at retail level.

5. DPOs free to sell HD channels as a-la-carte as well as E bouquet(s) of HD channels.

6. Consumers and DPOs should have a choice to subscribe to only HD channels or only SD channels or both combined but purchased separately.” F Equally, insofar as whether free to air and pay channel bouquets are concerned, Star India itself stated that they should not be bundled together thus:- “FTA and Pay channels should not be bundled together - As has been highlighted in the Preamble, we believe that G FTA channels should be free to consumer. - Pay and FTA channels should not be bundled in the same bouquet.

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A - The declaration of a-la-carte rate is only with regard to pay channels, as per existing regulations. Allowing a-la-carte pricing of FTA channels is thus not in accordance with the extent regulatory constructs. - Pricing FTA channels at retail level and bundling them with B Pay channels leads to price distortions by bloating the bouquet size and price, which is not in consumer interest. Creating separate pay bouquets will ensure consumers are provided true visibility of pay channel pricing.”

35Copy pinpoint35. It is only when TRAI issued a second consultation paper dated C 4.5.2016 that Star India submitted its response in June, 2016 where it raised for the first time the issue relating to the Copyright Act as an afterthought. What is important to notice is that even in this response, Star India reiterated that discount caps should be provided for as this checks discriminatory behavior during negotiation and will facilitate designing of discount criteria based on intelligible differentia which will help serve the diverse needs of consumers. In a third response to the draft regulations and tariff order, Star India raised jurisdictional issues of TRAI.

36Copy pinpoint36. Pursuant to these and other inputs, TRAI has in its explanatory memorandum given reasons for the Tariff Order as follows:- “64. The Authority has noted that at present the uptake of channels on a-la-carte basis is negligible as compared to the bouquet subscriptions. Analysis yields that the prime reason for such poor uptake of a-la-carte channels is that the a-la-carte rates of channels are disproportionately high as compared to the bouquet rates and further, there is no well defined relationship between these two rates. As per data available with TRAI, some bouquets are being offered by the distributors of television channels at a discount of upto 80%-90% of the sum of a-la-carte rates of pay channels constituting those bouquets. These discounts are based on certain eligibility criteria/conditions to be fulfilled by the distributor of television channels in order to avails those discounts from broadcasters. Such high discounts force the subscribers to take bouquets only and thus reduce subscriber choice. As a result, while technically, a-la-carte rates of channels are declared, these H

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are illusive and subscribers are left with no choice but to opt for bouquets. Bouquets formed by the broadcasters contain only few popular channels. The distributors of television channels are often asked to take the entire bouquet as otherwise they are denied the popular channels altogether or given such popular channels at RIO rates. To make the matters worse, the distributors of television channels have to pay as if all the channels in the bouquet are being watched by the entire subscriber base, when in fact only the popular channels will have high viewership. In such a scenario, at the retail end, the distributors of television channels somehow push these channels to maximum number of subscribers so as to recover costs. This marketing strategy based on bouquets essentially results in ‘perverse pricing’ of bouquets vis-à-vis the individual channels. As a result, the customers are forced to subscribe to bouquets rather than subscribing to a-la-carte channels of their choice. Thus, in the process, the public, in general, end up paying for “unwanted” channels and this, in effect, restricts subscriber choice. Bundling of large number of unwanted channels in bouquets also result in artificial occupation of distributors’ network capacity. This acts as an entry barrier for newer TV channels.

65. In order to facilitate subscribers to exercise their options in line with intention of lawmakers to choose individual channels, in the new framework the broadcasters will declare to customers/ subscribers the MRP of their a-la-carte channels and bouquets of pay channels. In order to ensure that prices of the a-la-carte channels are kept reasonable, the maximum discount permissible in formation of a bouquet has been linked with the sum of the a- F la-carte prices of the of pay channels forming that bouquet. A broadcaster can offer a maximum discount of 15% while offering its bouquet of channels over the sum of MRP of all the pay channels in that bouquet so as to enable customer choice through a-la- carte offering and also prevent skewed a-la-carte and bouquet pricing (refer example 1). The bouquet(s) offered by the G broadcasters to subscribers shall be provided by the distributors of television channels to the subscribers without any alteration in composition of the bouquet(s). In case a broadcaster feels that

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A more discount can be provided in formation of the bouquet, it indirectly means that a-la-carte prices at the first stage has been kept high and there is a need to revise such a-la-carte prices downwardly. Full flexibility has been given to broadcasters to declare price of their pay channels on a-la-carte basis to correct such situations, if it may come. B

66. Some stakeholders are of the opinion that limiting the discount to subscribers while forming bouquets is anti subscriber. In this regard, while the Authority wants to facilitate the availability of a- la-carte choice to customers/subscribers, it does not intend to encroach upon the freedom of broadcasters and distributors to do C business. During the discussions in the Parliament on the motion for consideration of the Cable Television Networks (Regulation) Amendment Bill, 2011, the then Minister of Information and Broadcasting emphasised the need to establish a system for subscribers to choose a-la-carte channels of choice. The Authority D has also made several attempts in this regard, but for one or the other reason could not succeed. Here it is important to understand that the Authority has not been able to do pricing of channels in the absence of pricing of content. Present trends indicate that majority of channels are priced much below the prevailing ceiling, but higher ceilings were prescribed to give flexibility to broadcasters to monetise their channels and freedom to do business. Further, different channels even in the same genre may have varying cost of production and potential to monetise, but within the framework. A broadcaster may price even non-driver channels at a much higher value that they can command. Non-discovery of reasonable price of a channel in a market is one of the constraints that can be manipulated and misused to price a channel in a-la-carte from which is illusionary. Such high a-la-carte prices permits broadcasters/distributors to provide high discounts to push non- drivers channels in form of bouquets to the subscribers while reducing the probability of choosing the a-la-carte channels of choice as required by the lawmakers in the Parliament. The possibility to forcing bouquets over a-la-carte choice by using higher discounts can be further understood by following example, where a broadcaster has a total of 35 pay channels out of which only 5 are driver channels: H

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Channel Discount 75% Discount 60% Discount 45% Discount 30% Discount 15% A Channel 1 a-la-carte price 19 19 19 19 19

Channel 2 a-la-carte price 10 10 10 10 10

Channel 3 a-la-carte price 12 12 12 12 12

Channel 4 a-la-carte price 5 5 5 5 5 B Channel 5 a-la-carte price 4 4 4 4 4

Sum of a-la-carte prices of 5 50 50 50 50 50 driver pay channels

Sum of a-la-carte prices of 30 30 30 30 30 30 non-driver pay channels (@ Re 1) C Total price of 35 a-la-carte 80 80 80 80 80 pay channels

Pric e of bouquet of 35 pay 20 32 44 56 68 channels (with discount on sum of a-la-carte prices) D The above table clearly indicates that in case the amount of discount offered by the broadcaster, over the sum of a-la-carte prices of pay channels, while forming the bouquet of those pay channels is very high (75%), the price of bouquet becomes much lower than the sum of a-la-carte prices to the extent that it is almost equal to E a-la-carte price of one driver channel. Such amount of discount is anti customer/subscriber as it discourages a-la-carte selection of channels. As the amount of discount on formation of bouquet decreases, the difference between the prices of bouquet and the sum of a-la-carte prices also decreases. In case the amount of discount is fixed at 15%, the price of bouquet becomes higher than the sum of a-la-carte prices of driver channels; thereby encouraging a subscriber to choose a-la-carte channels of his choice.

67. In the present regulatory framework incidences have come to the knowledge where discount upto 90% on the declared RIO prices has been given by broadcasters. Obviously such efforts kill competition and reduce a-la-carte choice which is anti-subscriber. Accordingly, the Authority has prescribed a discount of 15% to be provided by broadcasters at wholesale level and further 15% to be provided by distributors at retail level. The net effect to H

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A subscribers at retail level will be a discount of approximately 30% on the bouquets of channels. Therefore flexibility of formation of bouquet has been given to broadcasters and MSOs both to such an extent that total permissible discount does not kill the a-la- carte choice. The Authority has been careful in prescribing a framework which does not encourage non-driver channel to be pushed to subscribers against their choice. Non-driver channels which are provided as part of bouquets not only kill choice of the ala-carte channels but also eat away the channel carrying capacity available with distributors which may result in artificial capacity constraints at distribution platforms for launch of new/competitive channels. Such restrictions are anti-subscriber and have to be carefully handled. Accordingly, the Authority has consciously decided the present framework of prescribing relationship between a-la-carte and bouquet prices to protect interest of customers/ viewers and as well as those of service providers. However, the Authority will keep a watch on the developments in the market and may review the maximum permissible discount while offering a bouquet, in a time period of about two years.

68. A broadcaster is free to offer its pay channels in the form of bouquet(s) to customers. While subscribing to bouquet, a customer may not be aware of the price of each channel forming the bouquet. Abnormal high price of a pay channel may result in higher price of a bouquet leading to adverse impact on subscribers’ interests. It is an established fact that bundling of channels complicates and obscures their pricing. Prices are obscured because subscribers do not always understand the relationship between the bundle price and a price for each component. However, the bundling of channels offers convenience to the subscribers as well as services providers in subscription management. Keeping in view these realties and to protect the interests of subscribers, the Authority has prescribed a ceiling of Rs. 19/- on the MRP of pay channels which can be provided as part of a bouquet. Therefore, any pay channel having MRP of more than Rs. 19/- cannot become part of any bouquet. The amount of Rs. 19/- has been prescribed keeping in view the prevailing highest genre wise ceilings of Rs. 15.12 for all addressable systems between broadcaster & DPOs at wholesale level and further enhancing it 1.25 times to account for DPOs

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distribution fee. Broadcasters also have complete freedom to price their pay channels which do not form part of any bouquet and offered only on a-la-carte basis. Similar conditions will also be applicable to DPOs for formation of the bouquets. However, the Authority will keep a watch on the developments in the market and may review the manner in which a channel can be provided as part of a bouquet, in a time period of about two years.”

(Emphasis supplied.)

37Copy pinpoint37. It can thus be seen that both the Regulation as well as the Tariff Order have been the subject matter of extensive discussions between TRAI, all stake holders and consumers, pursuant to which most of the suggestions given by the broadcasters themselves have been accepted and incorporated into the Regulation and the Tariff Order. The Explanatory Memorandum shows that the focus of the Authority has always been the provision of a level playing field to both broadcaster and subscriber. For example, when high discounts are offered for bouquets that are offered by the broadcasters, the effect is that subscribers are forced to take bouquets only, as the a-la-carte rates of the pay channels that are found in these bouquets are much higher. This results in perverse pricing of bouquets vis-à-vis individual pay channels. In the process, the public ends up paying for unwanted channels, thereby blocking newer and better TV channels and restricting subscribers’ choice. E It is for this reason that discounts are capped. While doing so, however, full flexibility has been given to broadcasters to declare the prices of their pay channels on an a-la-carte basis. The Authority has shown that it does not encroach upon the freedom of broadcasters to arrange their business as they choose. Also, when such discounts are limited, a F subscriber can then be free to choose a-la-carte channels of his choice. Thus, the flexibility of formation of a bouquet, i.e., the choice of channels to be included in the bouquet together with the content of such channels, is not touched by the Authority. It is only efforts aimed at thwarting competition and reducing a-la-carte choice that are, therefore, being interfered with. Equally, when a ceiling of INR 19 on the maximum G retail price of pay channels which can be provided as a part of a bouquet is fixed by the Authority, the Authority’s focus is to be fair to both the subscribers as well as the broadcasters. INR 19 is an improvement over the erstwhile ceiling of INR 15.12 fixed by the earlier regulation which nobody has challenged. To maintain the balance between the H

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A subscribers’ interests and broadcasters’ interests, again the Authority makes it clear that broadcasters have complete freedom to price channels which do not form part of any bouquet and are offered only on an a-la- carte basis. As market regulator, the Authority states that the impugned Regulation and Tariff Order are not written in stone but will be reviewed keeping a watch on the developments in the market. We are, therefore, clearly of the view that the Regulation and the Tariff Order have been made keeping the interests of the stakeholders and the consumers in mind and are intra vires the regulation power contained in Section 36 of the TRAI Act. Consequently, we agree with the conclusion of the learned Chief Justice and the third learned Judge of the Madras High Court that these writ petitions deserve to be dismissed.

38Copy pinpoint38. Since submissions have been made by Dr. Singhvi on the reach of various other Acts, it is a little important to deal with the same.

39Copy pinpoint39. Dr. Singhvi relied heavily upon the Sports Act. The Statement of Objects and Reasons of this Act makes it clear that the distribution of broadcasting signals of sporting events of public interest is not disseminated to persons who do not have access to satellite and Cable TV, most of whom are in rural areas. Since the downlinking and uplinking policy guidelines of the Government have been challenged in courts as lacking statutory sanction, it has become necessary that sporting events of national importance reach the general public on a free to air basis. It is for this reason that the definitions of “broadcaster”, “broadcasting”, etc. refer to content. The following are certain relevant terms as defined under the Sports Act: “2.(1)(a) “broadcaster” means any person who provides a content broadcasting service and includes a broadcasting network service provider when he manages and operates his own television or radio channel service; (b) “broadcasting” means assembling and programming any form of communication content, like signs, signals, writing, pictures, images and sounds, and either placing it in the electronic form on electro-magnetic waves on specified frequencies and transmitting it through space or cables to make it continuously available on the carrier waves, or continuously streaming it in digital data form on the computer networks, so as to be accessible to single or multiple users through receiving devices either directly or indirectly; and all its grammatical variations and cognate expressions;

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(c) “broadcasting service” means assembling, programming and placing communication content in electronic form on the electro- magnetic waves on specified frequencies and transmitting it continuously through broadcasting network or networks so as to enable all or any of the multiple users to access it by connecting their receiver devices to their respective broadcasting networks and includes the content broadcasting services and the broadcasting network services; (d) “broadcasting networks service” means a service, which provides a network of infrastructure of cables or transmitting devices for carrying broadcasting content in electronic form on specified frequencies by means of guided or unguided electro- C magnetic waves to multiple users, and includes the management and operation of any of the following: (i) Teleport/Hub/Earth Station; (ii) Direct-to-Home (DTH) Broadcasting Network, D (iii) Multi-system Cable Television Network, (iv) Local Cable Television Network, (v) Satellite Radio Broadcasting Network, (vi) any other network service as may be prescribed by the E Central Government; xxx xxx xxx (h) “content” means any sound, text, data, picture (still or moving), other audio-visual representation, signal or intelligence of any nature or any combination thereof which is capable of being created, processed, stored, retrieved or communicated electronically; (i) “content broadcasting service” means the assembling, programming and placing content in electronic form and transmitting or retransmitting the same on electro-magnetic waves on specified frequencies, on a broadcasting network so as to make it available for access by multiple users by connecting their receiving devices to the network, and includes the management and operation of any of the following: H

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A (i) terrestrial television service, (ii) terrestrial radio service, (iii) satellite television service, (iv) satellite radio service, B (v) cable television channel service, (vi) community radio service, (vii) any other content broadcasting services as may be prescribed by the Central Government.” C The heart of the Sports Act is contained in Sections 3 and 5 thereof, which state as follows:- “3. Mandatory sharing of certain sports broadcasting signals.—(1) No content rights owner or holder and no television or radio broadcasting service provider shall carry a live television broadcast on any cable or Direct-to-Home network or radio commentary broadcast in India of sporting events of national importance, unless it simultaneously shares the live broadcasting signal, without its advertisements, with the Prasar Bharati to enable them to re-transmit the same on its terrestrial networks and Direct- to-Home networks in such manner and on such terms and conditions as may be specified. (2) The terms and conditions under sub-section (1) shall also provide that the advertisement revenue sharing between the content rights owner or holder and the Prasar Bharati shall be in the ratio of not less than 75:25 in case of television coverage and F 50:50 in case of radio coverage. (3) The Central Government may specify a percentage of the revenue received by the Prasar Bharati under sub-section (2), which shall be utilised by the Prasar Bharati for broadcasting other sporting events. G xxx xxx xxx

5. Power of the Central Government to issue Guidelines.— The Central Government shall take all such measures, as it deems fit or expedient, by way of issuing Guidelines for mandatory sharing of broadcasting signals with Prasar Bharati relating to sporting H events of national importance:

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Provided that the Guidelines issued before the promulgation of A the Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Ordinance, 2007 (Ord. 4 of 2007) shall be deemed to have been issued validly under the provision of this section.”

40Copy pinpoint40. Shri Dwivedi is therefore right that the object of the Sports Act has nothing to do with the validity of the Regulation and Tariff Order B made by TRAI under the TRAI Act. Content is referred to in the Sports Act only for the reason stated in the Objects and Reasons. Secondly, as has correctly been argued by Shri Dwivedi and as has been held by us above, the TRAI Act, as well as the Regulation and Tariff Order, do not in any manner affect the content of the TV channels that are broadcast by the broadcasters in these cases. C

41Copy pinpoint41. Dr. Singhvi then relied upon the Cable TV Act as follows: “2.(a-i) “Authority” means the Telecom Regulatory Authority of India established under sub-section (1) of Section 3 of the Telecom Regulatory Authority of India Act, 1997 (24 of 1997); D (a-ii) “Broadcaster” means a person or a group of persons, or body corporate, or any organisation or body providing programming services and includes his or its authorised distribution agencies; (a-iii) “cable operator” means any person who provides cable service through a cable television network or otherwise controls or is responsible for the management and operation of a cable television network and fulfils the prescribed eligibility criteria and conditions; (b) “cable service” means the transmission by cables of programmes including re-transmission by cables of any broadcast television signals; (c) “cable television network” means any system consisting of a set of closed transmission paths and associated signal generation, control and distribution equipment, designed to provide cable service for reception by multiple subscribers; xxx xxx xxx 4-A. (3) If the Central Government is satisfied that it is necessary in the public interest so to do, and if not otherwise specified by the Authority, it may direct the Authority to specify, by notification in H

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A the Official Gazette, one or more free-to-air channels to be included in the package of channels forming basic service tier and any one or more such channels may be specified, in the notification, genre- wise for providing a programme mix of entertainment, information, education and such other programmes and fix the tariff for basic service tier which shall be offered by the cable operators to the B consumers and the consumer shall have the option to subscribe to any such tier: Provided that the cable operator shall also offer the channels in the basic service tier on a la carte basis to the subscriber at a tariff specified under this sub-section. C (4) The Central Government or the Authority may specify in the notification referred to in sub-section (3), the number of free-to- air channels to be included in the package of channels forming basic service tier for the purposes of that sub-section and different numbers may be specified for different States, cities, towns or areas, as the case may be. xxx xxx xxx Explanation.—For the purposes of this section— (a) “addressable system” means an electronic device (which includes hardware and its associated software) or more than one electronic device put in an integrated system through which signals of cable television network can be sent in encrypted form, which can be decoded by the device or devices, having an activated Conditional Access System at the premises of the subscriber within the limits of authorisation made, through the Conditional Access System and the subscriber management system, on the explicit choice and request of such subscriber, by the cable operator to the subscriber; (b) “basic service tier” means a package of free-to-air channels to be offered by a cable operator to a subscriber with an option to subscribe, for a single price to subscribers of the area in which his cable television network is providing service;

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(c) “encrypted”, in respect of a signal of cable television network, means the changing of such signal in a systematic way so that the signal would be unintelligible without use of an addressable system and the expression “unencrypted” shall be construed accordingly; (d) “free-to-air channel”, in respect of a cable television network, means a channel for which no subscription fee is to be paid by the cable operator to the broadcaster for its re- transmission on cable; (e) “pay channel”, in respect of a cable television network, means a channel for which subscription fees is to be paid to the broadcaster by the cable operator and due authorisation needs to be taken from the broadcaster for its re-transmission on cable; (f) “subscriber management system” means a system or device which stores the subscriber records and details with respect to name, address and other information regarding the hardware being utilised by the subscriber, channels or bouquets of channels subscribed to by the subscriber, price of such channels or bouquets of channels as defined in the system, the activation or deactivation dates and time for any channel or bouquets of channels, a log of all actions performed on a E subscriber’s record, invoices raised on each subscriber and the amounts paid or discount allowed to the subscriber for each billing period. xxx xxx xxx F

5. Programme code.—No person shall transmit or re-transmit through a cable service any programme unless such programme is in conformity with the prescribed programme code: [***]”

42Copy pinpoint42. He then referred to Rule 6 of the Cable Television Networks G Rules, 1994, as follows:- “6. Programme Code. – (1) No programme should be carried in the cable service which:- (a) Offends against good taste or decency: H

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A (b) Contains criticism of friendly countries; (c) Contains attack on religions or communities or visuals or words contemptuous of religious groups or which promote communal attitudes; (d) Contains anything obscene, defamatory, deliberate, false B and suggestive innuendos and half truths; (e) Is likely to encourage or incite violence or contains anything against maintenance of law and order or which promote-anti- national attitudes;

C (f) Contains anything amounting to contempt of court; (g) Contains aspersions against the integrity of the President and Judiciary; (h) Contains anything affecting the integrity of the Nation; (i) Criticises, maligns or slanders any individual in person or certain groups, segments of social, public and moral life of the country ; (j) Encourages superstition or blind belief; (k) Denigrates women through the depiction in any manner of the figure of a women, her form or body or any part thereof in such a way as to have the effect of being indecent, or derogatory to women, or is likely to deprave, corrupt or injure the public morality or morals; (l) Denigrates children; F (m) Contains visuals or words which reflect a slandering, ironical and snobbish attitude in the portrayal of certain ethnic, linguistic and regional groups; (n) Contravenes the provisions of the Cinematograph Act, 1952. G (o) is not suitable for unrestricted public exhibition Provided that no film or film song or film promo or film trailer or music video or music albums or their promos, whether produced in India or abroad, shall be carried through cable service unless it has been certified by the Central Board of Film Cetification H (CBFC)) as suitable for unrestricted public exhibition in India.

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Explanation – For the purpose of this clause, the expression A “unrestricted public exhibition” shall have the same meaning as assigned to it in the Cinematograph Act, 1952 (37 of 1952); (2) The cable operator should strive to carry programmes in his cable service which project women in a positive, leadership role of sobriety, moral and character building qualities. B (3) No cable operator shall carry or include in his cable service any programme in respect of which copyright subsists under the Copyright Act, 1972 (14 of 1972) unless he has been granted a licence by owners of copyright under the Act in respect of such programme. C (4) Care should be taken to ensure that programmes meant for children do not contain any bad language or explicit scenes of violence. (5) Programmes unsuitable for children must not be carried in the cable service at times when the largest numbers of children are D viewing. (6) No cable operator shall carry or include in his cable service any television broadcast or channel, which has not been registered by the Central Government for being viewed within the territory of India E PROVIDED that a cable operator may continue to carry or include in his cable service any Television broadcast or channel, whose application for registration to the Central Government was made on or before 11th May, 2006 and is under consideration, for a period upto 31st May, 2008 or till such registration has been granted F or refused, whichever is earlier PROVIDED further that channels uplinking from India, in accordance permission for uplinking granted before 2nd December, 2005, shall be treated as registered television channels and can be carried or included in the cable service.” G

43Copy pinpoint43. The argument of Dr. Singhvi is that since this Act regulates content downstream from the Cable TV operator to the consumer, its absence in the TRAI Act is eloquent testimony to the fact that content cannot be the subject matter of the TRAI Act. As has been held by us hereinabove, the same answer must obtain, namely, that this Act is also H

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A irrelevant in the present case as the TRAI Act does not, as has been held by us above, regulate the content of the TV channels that are broadcasted by the broadcaster.

44Copy pinpoint44. The main thrust of the arguments of both Dr. Singhvi and Mr. Chidambaram were also by copious reference to the Copyright Act, B 1957, which, according to them, showed that once the Copyright Act steps in, TRAI must necessarily step out. They referred to certain provisions of this Act stage-wise. The Copyright Act, 1957 as originally enacted stated in its Objects and Reasons that: “it is necessary to enact an independent self-contained law on the subject of copyright in the light of growing public consciousness of the rights and obligations of authors and in the light of experience gained in the working of the existing law during the last forty years. New and advanced means of communications like broadcasting, litho- photography, etc., also call for certain amendments in the existing law”, as a result of which certain rights akin to copyright are conferred on broadcasting authorities in respect of programmes broadcast by them. In this Act, as originally enacted, Section 2(v) defined “radio-diffusion” as follows: “2(v). “radio-diffusion” includes communication to the public by any means of wireless diffusions whether in the form of sounds or visual images or both.”

45Copy pinpoint45. Section 37, as originally enacted, recognised a broadcast reproduction right by radio-diffusion only by the Government or any other Authority of Government as follows: “37. Broadcast Reproduction Right F (1) Where any programme is broadcast by radio-diffusion by the Government or any other broadcasting authority, a special right to be known as “broadcast reproduction right” shall subsist in such programme. (2) The Government or other broadcasting authority, as the case may be, shall be the owner of the broadcast reproduction right and such right shall subsist until twenty-five years from the beginning of the calendar year next following the year in which the programme is first broadcast. (3) During the continuance of a broadcast reproduction right in relation to any programme, any person, who,-

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(a) without the licence of the owner of the right- A (i) rebroadcasts the programme in question or any substantial part thereof or (ii) causes the programme in question or any substantial part thereof to be heard in public; or B (b) without the licence of the owner of the right to utilise the broadcast for the purpose of making a record recording the programme in question or any substantial part thereof, makes any such record, shall be deemed to infringe the broadcast reproduction right.” C

46Copy pinpoint46. Section 38, as originally enacted prescribed as under : “38. Other provisions of this Act to apply to broadcast reproduction rights. (1) Sections 18, 19, 30, 53, 55, 58, 64, 65 and 66 shall, with any necessary adaptations and modifications, apply in relation to the broadcast reproduction right in any programme as they apply in relation to the copyright in a work : xxx xxx xxx”

47Copy pinpoint47. Sections 18 and 19 of the Copyright Act deal with assignment of copyright and royalty or other consideration payable to the owner for such assignment. Section 30 of the Copyright Act refers to the right to licence any interest in copyright by the author or his duly authorised agent.

48Copy pinpoint48. By the 1983 amendment to the Copyright Act, Section 2(v) defining radio-diffusion was deleted and instead Section 2(dd) was inserted defining “broadcast” as follows: “2(dd). “broadcast” means communication to the public – (i) By means of wireless diffusion, whether in any one or more of the forms or signs, sounds or visual images; or G (ii) By wire, and includes re-broadcast.”

49Copy pinpoint49. Section 2(ff) was also inserted, defining “communication to the public” as follows: H

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A “2(ff) “communication to the public” means communication to the public in whatever manner, including communication through satellite.”

50Copy pinpoint50. Consequently, Section 37 was also amended so as to replace the expression “radio-diffusion” with the expression “broadcast”.

51Copy pinpoint51. In 1994, consequent to treaty obligations imposed upon India, broadcast reproduction rights were expanded to include private broadcasting organisations. The Statement of Objects and Reasons for the aforesaid amendment made it clear that: “… The law relating to copyright and related rights has been under C comprehensive review of the Government for some time, taking into account the difficulties expressed by different groups of copyright owners and others, the experience gained from the administration of the existing law and the situation created by various technological developments that have taken place.

D 2. The Copyright Act, 1957 amended and consolidated the law relating to copyright in India. It was further amended by the Copyright (Amendment) Acts of 1983 and 1984 and certain improvements were effected. By the Copyright (Amendment) Act, 1992 the term of copyright was further extended by a period of ten years. Now, it is considered appropriate to further amend the provisions of the Copyright Act, 1957- xxx xxx xxx to further clarify the law in respect of cable, satellite and other means of simultaneous communication of works to more than one household or private place of residence, including the residential rooms of a hotel or hostel. xxx xxx xxx to further improve the functioning of the Copyright Board; G to simplify and improve the law relating to copyright and related rights, in the interests of the general public, and in particular of the users as well as the owners of such rights.”

52Copy pinpoint52. Section 2(ff) defining “communication to the public” was substituted with a more comprehensive definition as follows: H

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“2(ff) “communication to the public” means making any work A available for being seen or heard or otherwise enjoyed by the public directly or by any means of display or diffusion other than by issuing copies of such work regardless of whether any member of the public actually sees, hears or otherwise enjoys the work so made available. B Explanation: For the purpose of this clause, communication through satellite or cable or any other means of simultaneous communication to more than one household or place of residence including residential rooms or any hotel or hostel shall be deemed to be communication to the public.” C

53Copy pinpoint53. Section 37 was entirely recast as follows : “37. Broadcast reproduction right. - (1) Every broadcasting organisation shall have a special right to be known as ‘‘broadcast reproduction right’’ in respect of its broadcasts. (2) The broadcast reproduction right shall subsist until twenty- D five years from the beginning of the calendar year next following the year in which the broadcast is made. (3) During the continuance of a broadcast reproduction right in relation to any broadcast, any person who without the licence of the owner of the right does any of the following acts of the E broadcast or any substantial part thereof, - (a) re-broadcasts the broadcast; or (b) causes the broadcast to be heard or seen by the public on payment of any charges; or F (c) makes any sound recording or visual recording of the broadcast; or (d) makes any reproduction of such sound recording or visual recording where such initial recording was done without licence or, where it was licensed, for any purpose not envisaged by such licence; or (e) sells or hires to the public, or offers for such sale or hire, any such sound recording or visual recording referred to in clause (c) or clause (d), shall, subject to the provisions of section 39, be deemed to have infringed the broadcast reproduction right.”

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54Copy pinpoint54. Section 38 was substituted with a new Section 39A as follows: “39A. Other provisions applying to broadcast reproduction right and performer’s right. (1) Sections 18, 19, 30, 53, 55, 58, 64, 65 and 66 shall, with any necessary adaptations and modifications, apply in relation to the B broadcast reproduction right in any broadcast and the performers’ right in any performance as they apply in relation to copyright in a work: xxx xxx xxx”

55Copy pinpoint55. Sections 33 and 33A, which have been relied upon by the learned counsel for the appellants, read as follows: “33. Registration of copyright society.— (1) No person or association of persons shall, after coming into force of the Copyright (Amendment) Act, 1994 commence or, carry on the business of issuing or granting licences in respect of any work in which copyright subsists or in respect of any other rights conferred by this Act except under or in accordance with the registration granted under sub-section (3): Provided that an owner of copyright shall, in his individual capacity, continue to have the right to grant licences in respect of his own works consistent with his obligations as a member of the registered copyright society: Provided further that the business of issuing or granting licence in respect of literary, dramatic, musical and artistic works incorporated in a cinematograph films or sound recordings shall be carried out only through a copyright society duly registered under this Act: Provided also that a performing rights society functioning in accordance with the provisions of Section 33 on the date immediately before the coming into force of the Copyright G (Amendment) Act, 1994 shall be deemed to be a copyright society for the purposes of this Chapter and every such society shall get itself registered within a period of one year from the date of commencement of the Copyright (Amendment) Act, 1994.

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(2) Any association of persons which fulfils such conditions as may be prescribed may apply for permission to do the business specified in sub-section (1) to the Registrar of Copyrights who shall submit the application to the Central Government. (3) The Central Government may, having regard to the interests of the authors and other owners of rights under this Act, the interest and convenience of the public and in particular of the groups of persons who are most likely to seek licences in respect of the relevant rights and the ability and professional competence of the applicants, register such association of persons as a copyright society subject to such conditions as may be prescribed: C Provided that the Central Government shall not ordinarily register more than one copyright society to do business in respect of the same class of works. (3-A) The registration granted to a copyright society under sub- section (3) shall be for a period of five years and may be renewed D from time to time before the end of every five years on a request in the prescribed form and the Central Government may renew the registration after considering the report of Registrar of Copyrights on the working of the copyright society under Section 36: E Provided that the renewal of the registration of a copyright society shall be subject to the continued collective control of the copyright society being shared with the authors of works in their capacity as owners of copyright or of the right to receive royalty: Provided further that every copyright society already registered before the coming into force of the Copyright (Amendment) Act, 2012 shall get itself registered under this Chapter within a period of one year from the date of commencement of the Copyright (Amendment) Act, 2012. (4) The Central Government may, if it is satisfied that a copyright society is being managed in a manner detrimental to the interest of the authors and other owners of right concerned, cancel the registration of such society after such inquiry as may be prescribed. (5) If the Central Government is of the opinion that in the interest of the authors and other owners of right concerned or for non- H

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A compliance of Section 33-A, sub-section (3) of Section 35 and Section 36 or any change carried out in the instrument by which the copyright society is established or incorporated and registered by the Central Government without prior notice to it, it is necessary so to do, it may, by order, suspend the registration of such society pending inquiry for such period not exceeding one year as may be specified in such order under sub-section (4) and that Government shall appoint an administrator to discharge the functions of the copyright society. 33A. Tariff scheme by copyright societies.— (1) Every copyright society shall publish its tariff scheme in such manner as may be prescribed. (2) Any person who is aggrieved by the tariff scheme may appeal to the Appellate Board and the Board may, if satisfied after holding such inquiry as it may consider necessary, make such orders as may be required to remove any unreasonable element, anomaly or inconsistency therein: Provided that the aggrieved person shall pay to the copyright society any fee as may be prescribed that has fallen due before making an appeal to the Appellate Board and shall continue to pay such fee until the appeal is decided, and the Board shall not issue any order staying the collection of such fee pending disposal of the appeal: Provided further that the Appellate Board may after hearing the parties fix an interim tariff and direct the aggrieved parties to make the payment accordingly pending disposal of the appeal.” F

56Copy pinpoint56. Equally, Section 39, as substituted by the amending Act of 1994, reads as follows: “39. Acts not infringing broadcast reproduction right or performer’s right.— No broadcast reproduction right or performer’s right shall be deemed to be infringed by— G (a) the making of any sound recording or visual recording for the private use of the person making such recording, or solely for purposes of bona fide teaching or research; or (b) the use, consistent with fair dealing, of excerpts of a H performance or of a broadcast in the reporting of current events or for bona fide review, teaching or research; or

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(c) such other acts, with any necessary adaptations and modifications, which do not constitute infringement of copyright under Section 52.”

57Copy pinpoint57. The 2012 amendment to the Copyright Act was relied upon and placed with great emphasis by learned counsel appearing on behalf of the appellants. The Statement of Objects and Reasons of this amendment Act stated as follows : “The Copyright Act, 1957 was enacted to amend and consolidate the law relating to copyrights in India. To meet with the national and international requirements and to keep the law updated, the Act has been amended five times since then, once each in the years 1983, 1984, 1992, 1994 and 1999. The 1994 amendment was a major one which harmonized the provisions of the Act with the Rome Convention, 1961 by providing protection to the rights of performers, producers of phonographs and broadcasting organizations. It also introduced the concept of registration of Copyright Societies for collective management of the rights in each category of copyrighted works. The last amendment in 1999 introduced a few minor changes to copy with the obligations under the Trade Related Aspects of Intellectual Property Rights (TRIPS).

2. The Act is now proposed to be amended with the object of making certain changes for clarity, to remove operational difficulties and also to address certain newer issues that have emerged in the context of digital technologies and the Internet. The two World Intellectual Property Organisation (WIPO) Internet Treaties, namely, WIPO Copyright Treaty (WCT), 1996 and WIPO Performances and Phonograms Treaty (WPPT), 1996 F have set the international standards in these spheres. The WCT and the WPPT were negotiated in 1996 to address the challenges posed to the protection of Copyrights and Related Rights by digital technology, particularly with regard to the dissemination of protected material over digital networks such as the Internet. The member countries of the WIPO agreed on the utility of having the G Internet treaties in the changed global technical scenario and adopted them by consensus. In order to extend protection of copyright material in India over digital networks such as internet and other computer networks in respect of literary, dramatic, musical and artistic works, cinematograph films and sound H

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A recordings works of performers, it is proposed amend the Act to harmonise with the provisions of the two WIPO Internet Treaties, to the extent considered necessary and desirable. The WCT deals with the protection for the authors of literary and artistic works such as writings, computer programmes; original databases; musical works; audiovisual works; works of fine art and photographs. The WPPT protects certain “related rights” which are the rights of the performers and producers of phonograms. However, India has not yet signed the above-mentioned two treaties. Moreover, the main object to make amendments to the Act is that it is considered that in the knowledge society in which we live today, it is imperative to encourage creativity for promotion of culture of enterprise and innovation so that creative people realize their potential and it is necessary to keep pace with the challenges for a fast growing knowledge and modern society. xxx xxx xxx D (xvii) make provision for formulation of a tariff scheme by the copyright societies subject to scrutiny by the Copyright Board.”

58Copy pinpoint58. By this amendment, Section 2(ff) defining “communication to the public” was replaced as follows:- E “2(ff) “communication to the public” means making any work or performance available for being seen or heard or otherwise enjoyed by the public directly or by any means of display or diffusion other than by issuing physical copies of it, whether simultaneously or at places and times chosen individually, regardless of whether any member of the public actually sees, hears or otherwise enjoys the work or performance so made available. Explanation: For the purposes of this clause, communication through satellite or cable or any other means of simultaneous communication to more than one household or place of residence including residential rooms or any hotel or hostel shall be deemed to be communication to the public.”

59Copy pinpoint59. Certain amendments were made to Section 37(3)(e). Section 39A was amended to extend the provisions of Sections 33 and 33A to owners of the broadcast reproduction rights as follows:- H

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POLICY AND PROMOTION [R. F. NARIMAN, J.]

“39A. Other provisions applying to broadcast reproduction right and performer’s right. (1) Sections 18, 19, 30, 30A, 33, 33A, 34, 35, 36, 53, 55, 58, 63, 64, 65, 65A, 65B and 66 shall, with any necessary adaptations and modifications, apply in relation to the broadcast reproduction right in any broadcast and the performers’ right in any performance as they apply in relation to copyright in a work. xxx xxx xxx”

60Copy pinpoint60. A reading of the aforesaid provisions, according to the learned Senior Advocates for the appellants, makes it clear that broadcasters may, in fact, be the owners of the original copyright of a work – for example, if they themselves have produced a serial. They may also be the copyright owners of the broadcast of this serial which is a separate right under the Copyright Act which they are able to exploit, and if there is a re-broadcast of what has already been copyrighted, this again is protected by Chapter VIII of the Copyright Act. The argument, therefore, is that content that is carried by transmission from the broadcasters to the ultimate consumer is, therefore, regulated only by the Copyright Act and any royalties that can be charged for exploitation of the three rights as aforesaid are governed only by the Copyright Act. Further, the right to band themselves into a society is by virtue of Section 33, which mutatis mutandis applies to broadcasters alone. The tariff, therefore, that may be charged under Section 33A of the Copyright Act read with Rule 56 of the Copyright Rules is nothing but compensation that is payable to broadcasters for parting with their copyright in the manner indicated above. This being the case, when TRAI fixes rates and/or interferes with content, it is trespassing into the exclusive domain set out by Parliament under the Copyright Act. Since the TRAI Act and the Copyright Act, both being Acts passed by Parliament, have to be harmonised, such harmony can only be maintained if TRAI is kept out altogether from the domain covered by the Copyright Act. Learned counsel for the appellants also strongly relied upon the observations contained in Entertainment Network (India) Ltd. v. Super Cassette G Industries Ltd., (2008) 13 SCC 30, in which this Court explained as under: “125. Are the terms “royalty” and “compensation” not synonymous? “Royalty” means the remuneration paid to an author in respect of the exploitation of a work, usually referring to payment H

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A on a continuing basis (e.g. 10% of the sale price) rather than a payment consisting of a lump sum in consideration of acquisition of rights. It may also be applied to payment to performers. [See World Copyright Law, (2nd Edn.) by J.A.L. Sterling.]

126. The word “compensation”, however, must have been used keeping in view the fact that if it is a statutory grant; it is a case of statutory licence. We are not unmindful of the fact in cases of other statutory licences, the word “royalty” has been used. Even the word “usually” has been used. Mr Divan himself has referred to Rule 11-A and Form II-A appended to the Rules of 1958. Clauses (10) and (11) of the form which have validly been made used the word “royalty”. “10. Rate of royalty, which the applicant considers reasonable, to be paid to the copyright owner.

11. Means of the applicant for payment of the royalty.”

D 127. The legislature therefore for all intent and purport equates “compensation” with “royalty”. In the context of the Act, royalty is a genus and compensation is a species. Where a licence has to be granted, it has to be for a period. A “compensation” may be paid by way of annuity. A “compensation” may be held to be payable on a periodical basis, as apart from the compensation, other terms and conditions can also be imposed. The compensation must be directed to be paid with certain other terms and conditions which may be imposed.”

61Copy pinpoint61. Rule 56 of the Copyright Rules, 2013, also relied upon, is set out hereunder: “56. Tariff Scheme.— (1) As soon as may be, but in no case later than three months from the date on which a copyright society has become entitled to commence its copyright business, it shall frame a scheme of tariff to be called the “Tariff Scheme” under section 33A of the Act setting out the nature and quantum of royalties which it proposes to collect in respect of the right or the set of rights in the specific categories of works administered by it. (2) Every copyright society shall display its Tariff Scheme by posting it on its website. H (3) The Tariff Scheme shall indicate the separate rates for-

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POLICY AND PROMOTION [R. F. NARIMAN, J.]

(a) different categories of users; A (b) different media of exploitation, such as telephone, broadcast or internet; (c) different types of exploitation whether by an individual or by groups or whether single or multiple use or for advertising; B (d) different durations of use and territory; and (e) any other differentiation factor indicated by the society, as it may deem fit. (4) While fixing the tariff the copyright society shall follow the guidelines issued by any Court or the Board, if any, and may consult the user groups. (5) The copyright society shall collect the royalties from a licensee in advance where the Tariff Scheme provides for lump sum payment of royalties. In cases where the Tariff Scheme provides for payments in installments, each installment shall be collected in advance. However, in cases where the Tariff Scheme provides for the payment of royalties based on actual use, the copyright society may collect an advance at the time of issue of licence and settle the final payment based on actual use at the end of the period for which the licence is issued or granted. E Provided that the copyright society shall not receive any payment in the nature of minimum guarantee from a licensee whose royalty payments are based on actual use which are to be settled with the society at the end of the licence period except where, any exceptional circumstances are specifically included in the Tariff F Scheme and the individual case has been approved by the Governing Council. (6) The copyright society may revise the Tariff Scheme periodically but not earlier than a period of twelve months by following the rules. It shall publish the date of coming into of the revised Tariff Scheme at least before two months in advance and G the same shall be posted on its website.”

62Copy pinpoint62. At this juncture, it is of a little importance to compare and contrast Section 2(dd) of the Copyright Act with “broadcasting services” as defined in the impugned Regulation and Tariff Order. By Clause 2(j) of the impugned Regulation, “broadcasting services” is defined as follows: H

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A “2(j) “broadcasting services” means the dissemination of any form of communication like signs, signals, writing, pictures, images and sounds of all kinds by transmission of electro-magnetic waves through space or through cables intended to be received by the general public either directly or indirectly and all its grammatical variations and cognate expressions shall be construed accordingly;” B

63Copy pinpoint63. When the definitions of “broadcast” in Section 2(dd) of the Copyright Act and of “broadcasting services” in Clause 2(j) of the impugned Regulation are compared, what is clear is that the words “intended to be received by the general public either directly or indirectly” are completely missing from the definition of “broadcast” contained in C the Copyright Act. Also, Section 52(1)(b) of the Copyright Act indicates that transient or incidental storage of a work or performance purely in the technical process of electronic transmission or communication to the public is not an act that would constitute infringement of copyright. Section 52(1)(b) reads as follows: D “52. Certain acts not to be infringement of copright.- (1) The following acts shall no constitute an infringement of copyright, namely:- xxx xxx xxx

E (b) the transient or incidental storage of a work or performance purely in the technical process of electronic transmission or communication to the public;”

64Copy pinpoint64. The picture that, therefore, emerges is that copyright is meant to protect the proprietary interest of the owner, which in the present case is a broadcaster, in the “work”, i.e. the original work, its broadcast and/or its re-broadcast by him. The interest of the end user or consumer is not the focus of the Copyright Act at all. On the other hand, the TRAI Act has to focus on broadcasting services provided by the broadcaster that impact the ultimate consumer. The focus, therefore, of TRAI is that of a regulatory authority, which looks to the interest of both broadcaster and subscriber so as to provide a level playing field for both in which regulations can be laid down which affect the manner and carriage of broadcast to the ultimate consumers. Once the relative scope of both the enactments is understood as above, there can be no difficulty in stating that the two Acts operate in different fields. We do not find on a reading of the impugned Regulation as well as the Tariff Order made H

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that TRAI has transgressed into copyright land. This is for the reason, as has been stated hereinabove, that regulations which allegedly impact packaging TV channels, pricing of TV channels and the broadcaster’s right to arrange his business as he pleases, all have to be viewed with the lens of a regulatory authority, which is to provide a level playing field between broadcaster and subscriber. We have also noted how the broadcaster is free to provide whatever content he chooses for the TV channels that he chooses to transmit to the ultimate consumer. We have also noted how the broadcaster is free to arrange pricing of his TV channels so long as they are non-discriminatory and do not otherwise have the effect of unreasonably restricting the choice of a subscriber to choose bouquet or a-la-carte channels as has been held hereinabove. C We are satisfied that the impugned Regulation and Tariff Order have been passed by a regulatory authority after applying its mind to the objections of the various stakeholders involved after which the Regulation and Tariff Order have been laid down which have, by and large, been initially acceded to by the broadcasters themselves. In this view of the matter, we are of the view that the Copyright Act will operate within its own sphere, the broadcaster being given full flexibility to either individually or in the form of a society charge royalty or compensation for the three kinds of copyright mentioned hereinabove. TRAI, while exercising its regulatory functions under the TRAI Act, does not at all, in substance, impinge upon any of these rights, but merely acts, as has been stated hereinabove, as a regulator, in the public interest, of broadcasting services provided by broadcasters and availed of by the ultimate consumer.

65Copy pinpoint65. As Dr. Singhvi has repeatedly stressed that fixation of rates under Section 11(2) would directly impinge upon compensation payable for copyright to the broadcasters, it is important to note that both the F Copyright Act as well as the TRAI Act are central enactments which do not expressly provide that the one overrides the other. In this situation, a basic principle of interpretation of statutes is that both Acts be harmonized in the event of any clash/conflict between the two so that both may be given effect to. In fact, Section 38 of the TRAI Act reads as under:- G

“38. Application of certain laws. – The provisions of this Act shall be in addition to the provisions of the Indian Telegraph Act, 1885 (13 of 1885) and the Indian Wireless Telegraphy Act, 1933 (17 of 1933) and, in particular, nothing in this Act shall affect any H

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A jurisdiction, powers and functions required to be exercised or performed by the Telegraph Authority in relation to any area falling within the jurisdiction of such Authority.”

66Copy pinpoint66. Since the Telegraph Authority, acting under the Telegraph Act and the Indian Wireless Telegraphy Act, is required to act in public interest, B the jurisdiction of the said Authority is left untrammeled by the provisions of the TRAI Act. It can thus be seen that TRAI and the Telegraph Authority both act in public interest. The TRAI Act, the Telegraph Act and the Indian Wireless Telegraphy Act, being statutes in pari materia, form a Code, insofar as wireless telegraphy and broadcasting is concerned. C

67Copy pinpoint67. We are, therefore, clearly of the view that if in exercise of its regulatory power under the TRAI Act, TRAI were to impinge upon compensation payable for copyright, the best way in which both statutes can be harmonized is to state that, the TRAI Act, being a statute conceived in public interest, which is to serve the interest of both broadcasters and consumers, must prevail, to the extent of any inconsistency, over the Copyright Act which is an Act which protects the property rights of broadcasters. We are, therefore, of the view that, to the extent royalties/ compensation payable to the broadcasters under the Copyright Act are regulated in public interest by TRAI under the TRAI Act, the former shall give way to the latter. As there is no merit in these appeals, the same are, therefore, dismissed.

Devika Gujral Appeals dismissed.