Govt wants re-look at DTH fee formula

In a move that will bring some respite to direct-to-home (DTH) broadcasters and marginally lower charges for users, the Ministry of Information and Broadcasting (I&B) has asked the Telecom Regulatory Authority of India (Trai) to take a second opinion on how to determine the DTH firms' annual revenue share that is charged as licence fee.

This indicates a possible shift from charging DTH operators 10 per cent of their gross earnings as licence fee to charging 6-8 per cent of their adjusted gross revenue (AGR), official sources say.

This implies a lower outgo for the companies as AGR excludes certain incomes. Gross revenue includes taxes, agency commission, billing rates inclusive of net discounts to advertisers and barter advertising contracts.

A senior executive of Tata Sky, the second largest DTH operator after Dish TV, said, "DTH companies are subjected to very high taxes in comparison with the cable industry. Any reduction in the licence fees will be welcomed but we are not in a position to immediately work out the benefit of any possible reduction in the near future."

Sources say the move is being initiated in line with the increase in the number of DTH operators from two (Dish TV and Tata Sky) to a possible six in the next 12 months.

This will also see a big jump in the DTH subscriber base from the current five million to over eight million. The new DTH players include Big TV (Reliance ADA Group), Bharti, Videocon and Sun Direct (Sun Network).

The DTH operators have been demanding a reduction in licence fees, excise and Customs duties, service tax and value-added tax. Trai, which is also the broadcast regulator, had earlier recommended that the licence fee be charged on the basis of AGR and not gross revenue.

For 2006-07, Dish TV and Tata Sky together paid the I&B ministry Rs 18.8 crore as licence fee on a gross revenue of Rs 188 crore. The gross revenue of DTH players for 2008-09 is expected to touch Rs 650 crore with the addition of at least three more new DTH operators.