TRAI releases recommendations on “License Fee and Policy Matters of DTH Services”

August 22, 2023

The Telecom Regulatory Authority of India (TRAI) has released recommendations on “License Fee and Policy Matters of DTH Services.” These recommendations come in response to a request from the Ministry of Information and Broadcasting (MIB) for guidance on license fee and related policies. The amendments made by the Department of Telecommunications (DoT) to the Unified License Agreement served as the basis for this consultation.

The DTH operators pay a License Fee (LF), which is 8% of Adjusted Gross Revenue (AGR), on a quarterly basis. Additionally, operators are required to furnish a Bank Guarantee (BG) as security. TRAI’s recommendations propose changes to the definition of Gross Revenue (GR), Applicable Gross Revenue (ApGR), and Adjusted Gross Revenue (AGR). The recommendations also outline adjustments to the license fee calculation and the timeline for reducing the license fee to zero. These measures aim to promote growth and competitiveness in the DTH sector.

What prompted TRAI to issue recommendations on DTH license fees and policies?

TRAI’s recommendations were sought by the Ministry of Information and Broadcasting (MIB) under the TRAI Act, in response to amendments made by the Department of Telecommunications (DoT) to the Unified License Agreement. This prompted TRAI to address license fees and policy matters in the DTH sector.

How is Adjusted Gross Revenue (AGR) calculated for determining license fees in the DTH sector?

AGR is calculated by excluding certain items from the Applicable Gross Revenue (ApGR), which is the total GR of the licensee. These exclusions include revenue from specific activities, government reimbursements, and specific income types like dividend, interest, gains from foreign exchange, and more.

What changes are proposed in terms of License Fee (LF) and Bank Guarantee (BG) for DTH operators?

The recommendations suggest reducing LF to zero over three years, with no LF charged after the financial year 2026-2027. For BG, an initial amount of Rs. 5 crore is required for the first two quarters, followed by an equivalent amount or 20% of estimated dues as BG. Once LF is zero, a Performance Bank Guarantee is needed.

How does TRAI propose to simplify the submission process for license fee-related documents?

TRAI recommends an end-to-end online submission process using a single window system. DTH operators would upload documents digitally through this mechanism, streamlining the verification process.

What measures are suggested for maintaining compliance with license fee payments?

DTH Licensees are required to present their books of accounts and documents for reconciliation to verify revenue for LF calculations. The Licensor has the right to encash the Bank Guarantee for any license condition violations.

How might these recommendations impact the DTH sector and its growth?

These recommendations, if implemented swiftly, can promote growth and competitiveness in the DTH sector. The reduction of license fees and streamlining of processes could enable the sector to thrive in the competitive television distribution market.

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