The Telecom Regulatory Authority of India (TRAI) has released its recommendations on "License Fee and Policy Matters of DTH Services" following a request from the Ministry of Information and Broadcasting (MIB). The MIB sought TRAI's guidance under the TRAI Act, 1997.
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Amendments to Unified License Agreement
The reference pertains to amendments made by the Department of Telecommunications (DoT) in the Unified License (UL) Agreement. These amendments, carried out on October 6th 2021 and October 25th 2021 focused on rationalizing the definitions of Adjusted Gross Revenue (AGR) and Bank Guarantee (BG) quantum under structural reforms.
License Fee and Bank Guarantee Framework
According to Ministry of Communications, DTH operation in India is governed by policy guidelines that prescribe a License Fee (LF). DTH operators are required to pay 8 percent of Adjusted Gross Revenue (AGR) as LF on a quarterly basis to MIB. Additionally, a Bank Guarantee (BG) is mandated to ensure payment compliance and fulfillment of license agreement terms.
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TRAI's Involvement
In response to the reference, TRAI issued a Consultation Paper on "License Fee and Policy Matters of DTH Services" on January 13th 2023. Feedback from stakeholders was gathered through written comments and counter-comments. An Open House Discussion was also conducted on April 20th 2023. On Wednesday, TRAI issued recommendations on License Fee and Policy Matters for DTH Services.
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Key Recommendations
The recommendations aim to enhance transparency and efficiency in the DTH sector. Some of the key recommendations include:
- Defining Gross Revenue (GR): GR includes all revenue from operations and activities, interest, dividends, rent, and other sources without offsetting related expenses.
- Adjusted Gross Revenue (AGR) Calculation: AGR is calculated by excluding GST paid to the Government from Applicable Gross Revenue (ApGR), with certain exclusions.
- Revised License Fee Structure: DTH Licensees should pay an annual license fee of 3 percent of AGR, with the goal of reducing it to zero by the end of the financial year 2026-2027.
- Bank Guarantee Framework: Licensees should submit Initial and Performance Bank Guarantees, with electronic Bank Guarantees encouraged for ease of doing business.
- Mechanism for Deduction Verification: A robust mechanism for deduction verification should be developed, and the submission of Form-D should be made end-to-end online.
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Implementation and Impact
The recommendations, which include definitions of GR, ApGR, AGR, and the License Fee calculation percentage, are expected to positively impact the DTH sector. They address the need for measures in a competitive television distribution market, fostering growth and efficiency.
