Cable industry in limbo as govt stays silent on AGR burden

The cable television industry is still waiting for a response from the government over what it calls wrongful and financially damaging licence fee demands on cable TV revenues under ISP (Internet Service Provider) licences. With no reply so far, operators say the continued silence adds to uncertainty while the sector is already under pressure from shrinking margins and rising costs.

The industry wrote to the government on 1 July 2025 and again on 22 September 2025, seeking urgent intervention and withdrawal of the disputed demands, but is yet to receive a response.

A senior executive from cable industry said, “We have been waiting for some response from the Ministry of Communication on this. It has been several months. It is an important issue for us since cable tv is already reeling under pressure financially.”

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What the cable industry told the government

In its July representation, AIDCF, which represents leading Multi System Operators reaching over 4.5 crore households and accounting for nearly 70 percent of the cable television market, framed the issue as one threatening the very survival of MSO-led ISPs and the broader momentum of broadband proliferation.

The federation stated that DoT has raised substantial and retrospective licence fee demands under the Adjusted Gross Revenue framework by including revenues from cable television and allied broadcasting services, even though these services are governed separately under the Ministry of Information and Broadcasting. According to AIDCF, this inclusion is legally untenable, contrary to established regulatory separation and inconsistent with both policy intent and judicial precedent.

It was pointed out that cable television services are regulated under the Cable Television Networks Regulation Act 1995 and the Cable Television Networks Rules 1994, and they require authorisation from the Ministry of Information and Broadcasting.

The ministry, in an Office Memorandum dated 17 February 2021 issued by its Digital Addressable System Section, clarified that it does not levy any licence fee on cable TV network operations and that revenue earned by MSOs from cable TV operations may not be clubbed with revenue earned under ISP licences for licence fee computation.

The memorandum further stated that broadcasting and ISP services operate under different guidelines issued by different ministries and therefore must be treated separately for licence fee computation. AIDCF enclosed this clarification as annexure and argued that the DoT demands run directly contrary to this formal communication.

How AGR applies to ISP licenses

Internet services in India were licensed by DoT under the Telegraph Act 1885, initially with a waiver of licence fee until October 2003 and thereafter with a nominal Re 1 annual fee for earlier licences. Following consultations with the Telecom Regulatory Authority of India, the ISP licence was amended in March 2006 to include internet telephony and a 6% licence fee on AGR was imposed from January 2006. However, revenue from pure internet services continued to enjoy exemption in terms of licence conditions.

According to AIDCF, MSOs holding ISP licences have always paid licence fee as a percentage of AGR calculated only on internet service revenues, while revenues from the cable business governed by MIB were excluded. The federation emphasised that ISP licensees were not part of the 1999 migration package applicable to telecom operators holding Unified Access Service Licences or Cellular Mobile Telephony Service licences and that the concept of AGR in their case arose only in a limited context linked to internet telephony.

AIDCF had argued that the dispute over AGR definition originally arose between DoT and telecom operators over the inclusion of items such as interest, dividend, sale of assets, handset sales and miscellaneous income.

Cable services were included as a service under the TRAI Act in 2004. The federation stated that MSOs have consistently maintained separate accounts for cable and ISP businesses and computed licence fee accordingly. Inclusion of cable revenue in ISP AGR would, in its view, be contrary to these rules and to DoT’s own earlier affidavits before TDSAT acknowledging that non telecom revenue cannot be counted towards AGR.

Why the September letter renewed urgency

In its September follow-up letter, AIDCF reiterated that the matter has remained unresolved for more than five years despite repeated representations, meetings with DoT officials, inter ministerial discussions and the 2021 clarification from MIB.

It also referred to the telecom reforms of May 2022 in which DoT introduced the concept of applicable gross revenue and prospectively exempted non telecom revenues, including revenues from MIB issued licences, from licence fee obligations. However, the retrospective demands raised prior to these reforms, along with accumulated penalties and interest, continue to hang over MSOs. The federation requested the minister to direct the Ministry of Communications to withdraw the erroneous licence fee demands on cable TV revenues under ISP licences prior to the telecom reforms of May 2022 and sought an in-person meeting to explain the urgency of the matter in light of potential recovery proceedings and legal pressures.

According to AIDCF, the continuation of these demands amounts to double jeopardy because cable TV services are not even permitted under Unified or ISP licences issued by DoT and are already licensed under a different ministry. Extracting licence fee from revenue derived from services outside DoT’s regulatory ambit, the federation argues, defeats regulatory compartmentalisation and denies a level playing field. It also stressed the strategic importance of MSOs in delivering last mile broadband infrastructure across urban and semi urban India and aligning with the national vision of Digital India powered by fibre. Unresolved and retrospective AGR liabilities, it said, jeopardise this potential and risk slowing broadband expansion.

With no response yet from the minister’s office to either the July or September letters, industry stakeholders say the issue continues to weigh heavily on balance sheets and business planning. AIDCF maintains that no additional licence fee is payable on revenue from cable services being accounted towards gross revenue under ISP licences and that the demands are unlawful, unreasonable and contrary to both policy intent and judicial pronouncements.

As the industry awaits clarity, the federation’s detailed representations lay out a comprehensive challenge to the application of AGR principles to cable television revenues and seek finality to a dispute that has lingered for years.