On August 21, 2023, the Telecom Regulatory Authority of India (TRAI) proposed to bring down the license fee payable by Direct-To-Home (DTH) operators to zero in the next 3 years.
In its recommendations on “License Fee and Policy Matters of DTH Services”, TRAI submitted that the amount of the annual license fee payable by DTH licensees should be equivalent to 3% of Adjusted Gross Revenue (AGR) and no such charge should be levied after the end of FY 2026-27.
Currently, the policy guidelines require DTH operators to pay license fees to the Ministry of Information and Broadcasting (MIB) on a quarterly basis, for providing DTH broadcasting services in India. Through an amendment in December 2020 and notification of operational DTH guidelines in September 2022, the annual license fee was reduced from 10% to 8% of the AGR.
Considering that no license fee was applicable to both regulated (such as Internet Protocol Service providers, etc.) and unregulated distribution operators including OTT platforms delivering the same broadcasting services, TRAI specified that all service providers should be accorded equal treatment to ensure a “level playing field”. This would improve ease of doing business, and lead to enhanced quality of service, technological innovation, etc.
Further, the Authority noted the decline in the number of subscribers of DTH services and that there are only four DTH operators in the country, one of which is undergoing insolvency proceedings. Referring to international best practices, TRAI highlighted the absence of license fee requirements for DTH services in the UK and the minimal license fee prescribed in the US based on the subscriber count.
With this, the Authority recommended that the annual license fee for the DTH sector should be reduced to 3% of AGR and then reduced to zero in the next 3 years. Once the license fee is brought down to zero, the licensee would be required to submit a performance bank guarantee which can be encashed if the license conditions are violated. The said bank guarantee should be valid for a minimum period of one year and be renewed every year for the entire license period.