The contentious issue of revenue sharing between MSOs and LCOs is likely to end soon with the Telecom Disputes Settlement & Appellate Tribunal (TDSAT) set to pronounce its order soon. The TDSAT court has been hearing the arguments of both sides for the last 10 days.
Delhi-based distribution company Indusind Media Communication and Digicable Services had submitted a petition against the Telecom Regulatory Authority of India (TRAI) order keeping the revenue sharing ratio between MSOs and LCOs at 65:35 for every Rs 100.
In their plea, MSOs have said that with 35 per cent the revenue share going to LCOs, it would be difficult for MSOs to compete in the market or even sustain themselves. The MSOs bodies further said that they have to make huge expenditure on infrastructure as well as downlinking, which increased their cost factor and hence, the sharing should be more than the allocated percentage.
Representing Indusind Media, CS Vaidyanathan said, “The situation is very difficult from our point of view as in Basic Service Tier we have to share our revenue with the LCOs, which is not feasible at all.”
While replying to this, TRAI’s advocate Saket Singh argued that the telecom regulatory had decided on the sharing ratio on a pro rata basis. At present, the revenue is divided between broadcasters, MSOs and LCOs in the ratio of 40:30:25. Once digitisation is implemented, the broadcaster will be out of the list and the revenue sharing will become 65:35.
Navin Chawla, also representing the Delhi distribution company, noted that carrying 500 channels will increase the cost for MSOs since they will have to enhance their technology. To this Singh replied, “TRAI has asked to build capacity for 500 channels, but it is not mandatory to carry all 500 channels.”
After listening to all the arguments of MSOs and TRAI, TDSAT has asked MSOs to submit their costing and investment data by September 21, 2012, following which the Tribunal will give its judgment in the coming week.