DTH license extension, TRAI issues consultation paper

Dish TV was the first to start Direct-to-home (DTH) services on Ist October, 2013 and DTH broadcasting services license for Dish TV expired on 30th September, 2013. The other five DTH operators got license from 2006 to 2008 and licenses are expected to expire phase wise in 2016 to 2018.

TRAI has been given the mandate to come out with new guidelines for DTH license extension by Ministry of Information & Broadcasting, government of India.

Initially, DTH guidelines was silent on license extension and TRAI has been entrusted to work on DTH license extension, prescribing the eligibility criteria, the procedure for obtaining the license to set up and operate DTH services in the country, and basic terms and conditions/obligations reposed in the operators.

The consultation paper focuses on entry fee, annual license fee, and duration of license fees. On DTH license, TRAI is focusing on: Whether the entry fee of Rs 10 crore is required to be paid again by DTH company for the extension of the validity period of the license; Whether the period of extension of validity of DTH license should be for another period of 10 years; and whether the bank guarantee of Rs 40 crore is to be renewed for the entire period of the license again on extension of validity period of license.

As per the data provided by the DTH operators, the two leading DTH operators have paid an annual license fee of Rs 112 crore and Rs 121 crore for the year 2012-2013, and, till date, both have paid Rs 354 crore and 372 crore as license fee to the government.

Since the entry fee of Rs 10 crore paid by an existing DTH operator is quite small as compared to its recurrent payment in the form of annual license fees paid during the license period, there could be a view that existing DTH operators may not be asked to pay the entry fee again. However, for the sake of parity, entry fee should continue to be levied on new players who seek licenses for the first time.

The focus is on: should an entry fee be charged at the time of issue of a new license to the existing DTH licensees; and In case an entry fee is to be charged, what should be the quantum of such entry fee; What should be the period of the DTH licenses to be issued to existing DTH licensees on the expiry of the license period of 10 years; and What should be the period of extension/renewal of the licenses, to be prescribed in the DTH guidelines, for the extension/renewal of the new DTH licenses on their expiry; and What should be the quantum and the validity period of the bank guarantee to be furnished by an existing DTH licensee on the issue of a new license.

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