M/s Noida Software Technology Park Ltd. Versus M/s Media Pro Enterprise India Pvt. Ltd. & Ors.

CASE ANALYSIS
M/s Noida Software Technology Park Ltd.
Versus
M/s Media Pro Enterprise India Pvt. Ltd. & Ors.
FACTS:
1. The petitioner had previously come to the Tribunal with the issue that Media Pro
who used to be the “agent or intermediary” of numerous broadcasters, including
two major broadcasters of the Star and Zee groups of channels was unfairly
denying it the supply of signals.
2. The Tribunal found that Media Pro was denying signals to the petitioner for noncomplying
with certain technical conditions. The tribunal, accordingly, held that
the denial of signals by Media Pro to the petitioner was unreasonable and hence
the following petition is allowed.
3. Accordingly the petitioner had repetitively asked Media Pro to reveal the
requisites and rates at which it was providing the signals of TV channels to other
similarly situated distributors of TV channels so as to form negotiations to an
agreement between the two parties.
4. Media Pro, however, completely refused the petitioner to unveil any information,
taking a somewhat probing position, as, according to the order of the Tribunal it
was obliged to give the petitioner the signals of its channels only in terms of its
Reference Interconnect Offer (RIO) as under the Interconnect Regulations, 2004.
5. The petitioner faced the situation where the only option was to accept the Media
Pro signals on its RIO terms and rates, and it so accordingly accepted and thus on
1st October, 2013 executed the RIO based agreement for the period 1st October
2013 to 30th September 2014.
6. However the 3 weeks time within which Media Pro was directed to enter into the
interconnect agreement had lapsed, but before Media Pro could file an
application for delay in execution of agreement by the petitioner, the petitioner
had already executed the RIO based agreement. To this Media Pro replied with
the agreement under examination and it had to be finalized within 10 days.
7. On 30th October 2013, the Tribunal was informed that the parties had entered
into an agreement in terms of the Media Pro RIO and the application was,
accordingly, dismissed as infructuous.
8. The following observations were henceforth made -:
· There was a clear dichotomy between Media Pro RIO and the various other
negotiated agreements that Media Pro enters into with many distributors of TV
channels, almost all of which, would be for bouquets of TV channels.
· Having executed an agreement, based on Media Pro RIO, NSTPL never informed
TDSAT that it was forced to enter into that agreement, despite having occasions
to do so.
· From the beginning, Media Pro and NSTPL had completely different ideas
regarding the nature of the interconnect agreement, and, the extent of
negotiations leading to it.
9. After execution of an agreement based on Media Pro RIO, NSTPL kept asking to
disclose the terms and conditions and the rates of its TV channels, in its
negotiated agreements with similarly situated distributors of TV channels, or, at
least, the concessions that it offered to other distributors of TV channels in its
published agreement, that was available on its website. Media Pro responded by
curt and indignant rejections.
10. As per Media Pro, it’s RIOs for all delivery platforms that were uploaded on its
website, were fully compliant with the applicable laws, including but not limited
to regulations framed by Telecom Regulatory Authority of India (TRAI). As per
Media Pro, the terms and conditions of its RIOs applied uniformly to all its
affiliates who subscribed to its TV channels, on RIO terms.
11. As per Media Pro, it was not obliged to disclose to NSTPL, or to any third party,
the rates and conditions of interconnect agreements executed by it, with other
distributors of TV channels, on the basis of mutually negotiated terms. As per
Media Pro, it was legally bound by its obligations of confidentiality to not share
the details of its negotiated agreements, with NSTPL, or with any third party.
12. The second event is the Tribunal’s decision in a case between Star and a large,
pan-India Multi System Operator (MSO), called Hathway, wherein one of the
main issues was in regard to the discriminatory rates given by Star to two MSOs
both of which had inter-connection arrangement with it on the basis of mutually
negotiated Petition No.47(C) of 2014 & other analogous cases agreements.
13. Initially in this case Star argued for its agreement on grounds of freedom of
contract but down the case it filed an affidavit stating that for a period of 1 year it
would enter into interconnect agreements with every distributor of channels
only on a la carte basis, on its RIO rates.
ISSUES:
The Tribunal in the present case raised following issues:
1. Whether or not, in the particulars of this case, is there a dispute requiring the
adjudication of issues framed by the Tribunal’s order dated 30th July 2015?
2. Whether the right to freedom of contract is embedded in the Interconnect
Regulations and whether mutually negotiated agreements are outside the
purview of the non-discrimination obligation under the Interconnect
Regulations, 2004 or even under the regulatory regime?
3. Whether, in light of the scheme of the Copyright Act and the fact that what is
being transmitted is licensed content, the Interconnect Regulations 2004 must
essentially be interpreted as according absolute freedom of contract and primacy
of mutual negotiations in matters of interconnection?
4. What elucidation ought to be sited on the diverse clauses of the 2004
Regulations? Specifically, what is contemplated by an RIO, and what is the extent
of negotiation that is acceptable in deviating from the terms of the RIO?
REASONING AND ANALYSIS -:
For the first issue
The provisions of the Regulations mentioned below were relied upon by the petitioner
and those interveners who argued for limiting the scope of mutual negotiations and to
bring it within the confines of the broadcasters RIO, for not putting any limitation or
control over mutual negotiations for entering into an agreement.
· Reference (13.2A.1) Interconnect Offers for direct to home service.
· Every broadcaster must in its Reference Interconnect Offer specify, inter-alia, the
technical and commercial terms and conditions for interconnection.
· Every broadcaster, who makes any modification to its Reference Interconnect
Offer referred to in sub-regulation 13.2A.1
· The RIO according to the above mentioned shall be the basis of all
interconnection agreements, provided, that such an agreement has been entered
on non-discriminatory basis.
· Under clause 13.2A.7, Time limit for entering into agreements between the
broadcasters and direct to home operators.
· Clause 13.2A.11 relates to Compulsory offering of channels on a-la-carte basis.
· Clause 13.2A.12 talks about the rates for pay channels on a-la-carte basis and
rates for bouquets shall be subject to the following conditions.
The tribunal clarified that the reference interconnect offer containing various terms and
conditions including commercial terms, published by a broadcaster for provision of
signals to ordinary subscribers shall apply to provision of signals to commercial
subscribers. Every broadcaster shall publish a copy of the Reference Interconnect Offer
(RIO).
For the second issue
The standard format of the interconnect agreement as prescribed by the Authority has
been seriously challenged as infringing freedom of contract, contrary is has been argued
correctly that in the contractual regime there is an absolute liberty for the parties to be
of the same mind upon mutually accepted terms and conditions and there seems no
scope for meddling by way of prescribing any standard format of agreement.
So far as this argument of complete freedom to contract is concerned -:
· Firstly, we have to note down that the approved interconnect agreement comes
into play only after the parties fail to reach an agreement on their own for which
they have absolute freedom.
· 10 days time has been allowed to parties to negotiate. If they fall short to arrive
at an agreement within such time period, only then the prescribed agreement
has to be entered into.
In case if either of the party thinks that the time period of 10 days is short enough, then
that party may approach the TRAI for extension of the period. Also, Rule 10(4) of the
CTN Rules, 1994 requires prescription of a standard interconnect agreement by the
Authority which the broadcasters and the MSOs have to enter into in case they fail to
arrive at mutually acceptable agreement.
In respect to freedom to contract, Article 19 (1)(g) of the Constitution gives the parties a
freedom to trade which includes freedom to contract as well. However, this freedom is
subject to reasonable restrictions. Accordingly, article 19 permits ‘reasonable
restrictions’ being imposed in the domain of freedom of contract. Both the acts, TRAI
and the CTN are primary legislations which assert to regulate the broadcasting services
and sufficiently provide for rational restrictions to be imposed, if any. Hence the
argument was seen to be without any merit, to be put aside.
Salar Jung Sugar Mills Ltd v. State of Mysore1 and in Star India P Ltd v. Telecom
Regulatory Authority & Ors2, the Division Bench at Delhi High Court rejected all grounds
of challenge, including those invoking Articles 19 (1)(a) and 19(1)(g) in lieu of
broadcasting and regulations by TRAI, wherein the court also discussed about the
public trust doctrine. The court was also of the view that in respect of the broadcasting
laws the freedom-of-contract argument has already been tested and repelled by the
courts and the matter is no longer res integra.
For the third issue
1. The court is seen of the view that it doesn’t find that the RIO regime amounts to a
compulsory license. Interconnect Regulations only require that similar offer be
made to all similarly situated distributors. It is upon the broadcasters to design
and customize their own RIO terms and conditions through which they enjoy a
large measure of freedom in the manner in which such RIOs are framed.
2. If Regulations, such as those prescribing a mandatory sharing ratio for CAS areas
are permissible, there is no rationale to find any fault with a far less intrusive
Regulation which gives broadcaster ample freedom.
3. The inclusion of Rule 6(3) is mainly to protect against piracy that no programme
must be shown without entering into an agreement with the copyright owner. All
such regulations have been made to create a non-discriminatory administration
where a broadcaster must offer the same terms to every distributor and this in
no way undermines the copyright that vests in the content owners.
“Section 39(A) of the Copyright Act does not make section 31 applicable to “broadcast
reproduction rights” and it is thus true that under the scheme of the Copyright Act,
“broadcast reproduction rights” do not come under compulsory licensing.”
For the fourth issue
The fourth issue draws our attention that the RIO based agreements and negotiated
agreements, are both totally separate and parallel rules which is to be set aside or say,
which are totally non maintainable. Further, as it was noticed in the Star’s case, it has
been correctly upheld even this case that, it is completely wrong to assume that any
publication of RIO on the website satisfies the condition to act non-discriminatory, as
such is not a case. It could turn out either wise as well. The judgment further delivers
that it is even wrong to assume that MSO has full freedom in negotiation agreements,
which includes right to maintain parity or even discriminate between comparable
seekers of television signals.
1
1972(1)SCC23
2
2007 SCC On Line Del 951
Further, as on page 62, it is noticed that same distributors of channels must be given
same commercial terms. It would rather be unappreciable if a particular distributor is
given special rates on any regional, cultural, linguistic or any other special
consideration, and another distributor is rather kept away for providing same.
However, that another similar distributor should only be able to claim the same
commercial terms, promising, in return, to give similar paybacks to the broadcaster if he
is well diverse with the special deal given to another distributor. And so to say, the issue
of disclosure becomes important for enforcement of non-discrimination.
CONCLUSION -:
The first petition on 10th July, 2014, NSTPL raised certain questions regarding RIO and
wanted the Tribunal to declare Clause 3.2 of The Telecommunication (Broadcasting and
Cable Services) Interconnection Regulation 2004, as amended from time to time should
order that all distributors be offered the same rate per subscriber per month which is
the rate specified in the broadcaster’s RIO, unless the conditions of Clause 3.6 of
Interconnection Regulation are fulfilled.
While the clause 3.6 of interconnect regulations 2004 speak out that, if any discounted
number related scheme, it must be disclosed in a clear as crystal manner, so as to not
facilitate the similarly located distributors to benefit of the same.
To the conclusion the court directs Media Pro to disclose the volume related schemes at
which it offers TV channel signals to distributors which are similarly placed with NSTPL
and it further permits NSTPL to avail of such schemes. However, to the second petition
on 12th December, 2014 is against Taj and TRAI, which impugned the disconnection
measures that had been initiated by Taj against NSTPL on account of suspected default
like non-payment of assured amounts of subscription fees.
The courts directions are however for the greatest interest of the broadcasting sector.
The regulation be interpreted in a way that there be a meaningful RIO be framed
wherein all bouquets as well as a-la-carte rates are listed out, along with it is to been
seen that there is still some scope for effective mutual negotiations between the parties
to the best of their interest.
BY
Kapil Dhyani – Batch of 2012-2017, Symbiosis Law School, Noida; Sushant Chaturvedi (Associate, K&T
Law Offices)

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