DTH operators, Centre set for clash over licence fees

The six private DTH operators are on course for a legal showdown with the government over the modalities of charging their annual licence fees.

This comes on the back of the decis ion taken by the information and broadcasting ministry to challenge a recent order by the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) in court which had given relief to the DTH operators by allowing them to pay their annual licence fees based on adjusted gross revenue (AGR) as opposed to gross revenue. The TDSAT order, experts said, would have meant not only a lower financial outgo for the operators but also at lower rate as opposed to the current formula. Currently, all private DTH operators have to pay 10% of their annual gross revenue to the I&B ministry as licence fees. However, the TDSAT order also indicates that AGR will be calculated at the rate of 8%.

?The government is in the process of filing civil appeal against the latest TDSAT order before the apex court,? I&B ministry said. The government had also filed a similar appeal against an earlier TDSAT order which also took into consideration the AGR as the mode of calculating the annual licence fees by the DTH industry in 2008.

According to the TDSAT order, AGR is defined as the revenue earned by the DTH operators without the inclusion of the revenue earned from the sale of DTH hardware (set top box) and carriage fees (charged from broadcasters). This, according to experts, would have substantially reduced the financial burden on the DTH industry which is pegged to post a collective loss of around Rs 6,000 crore this fiscal. However, the I&B ministry wants to include DTH hardware and carriage as part of the formula for calculating the gross revenue of the DTH operators.

Currently, the licence fees is collected by the I&B ministry from all private DTH operators based on the gross revenue as defined in DTH licence agreement and it includes the revenue earned from the sale of DTH set-top-boxes, hardware and the carriage fees. Private DTH operators like Dish TV, Tata Sky, Sun Direct, Digital TV among others have been demanding not only a reduction in the licence fees percentage–from 10% to 8%?but also the exclusion of DTH boxes and carriage fees from the calculation of their respective gross revenue.

?While the government will challenge the TDSAT order against the parties who benefited from it, we can also become an intervening party in the matter,? a source in Dish TV said. The TDSAT order was given in a case that involved Tata Sky and Airtel Digital TV, sources said.

So far, the government has managed to earn close to Rs 300 crore as licence fees from the private DTH operators.