The Telecom Regulatory Authority of India (TRAI) yesterday suggested to the government that the over the next few years the annual licence fee paid by DTH operators could be brought down to zero even as in near terms the fee should be charged at the rate of 3 percent of the adjusted gross revenue (AGR), subject to certain conditions.

“DTH licensee should pay an annual license fee equivalent to 3 percent of AGR. License fee for DTH licensees should be brought down to zero in next three years. DTH licensees should not be charged any license fee after the end of the financial year 2026-2027,” TRAI said in a slew of recommendations on ‘License Fee and Policy Matters of DTH Services’.

Giving some perspective to its recommendations, TRAI said DTH operations in India are governed by the policy guidelines for obtaining license for providing DTH broadcasting services in India. These guidelines prescribe a license fee (LF), which is a non-tax fee levied on a service provider against the privilege of being permitted to carry out a licensed activity.

As per the present provisions of the guidelines, the DTH operators are required to pay a LF, which is 8 percent of AGR on a quarterly basis to MIB, the regulator stressed.

The salient features of the recommendations, according to TRAI, are as follows:

# Gross Revenue (GR) shall comprise revenue accruing to the licenced entity by way of all operations/ activities and inclusive of all other revenue/income on account of interest, dividend, rent, profit on sale of fixed assets, miscellaneous income, etc. without any set-off for related items of expense.

# The recommendations also provided certain explanations vis-a-vis definitions of the applicable gross revenue (ApGR) for arriving at the revenue calculations for license fee, AGR, etc.

# TRAI has suggested MIB should revise the Form-D (the statement of revenue and licence fee for DTH licensees) and adopt the format of Form-D as prescribed in the recommendations. The process for the submission of Form-D should be made end-to-end online with the facility to upload all the related documents in digital mode via a single window system.

# MIB should develop a robust mechanism for deduction verification
process through a single window portal.

# The licensee should submit an initial bank guarantee from any scheduled bank to the MIB for an amount of Rs. 5 crore for the first two quarters.
Thereafter, the licensee should submit a bank guarantee (covering Financial and Performance Bank Guarantee) from any scheduled bank to the MIB for an amount equivalent to the initial bank guarantee (i.e., Rs. 5 crore) or 20 percent of the estimated sum payable, equivalent to license fee for two quarters and other dues not otherwise securitized, whichever is higher.

# Once the license fee becomes zero, the licensee should submit a BG (performance bank guarantee) for a fixed amount equivalent to the initial bank guarantee (i.e. Rs. 5 crore) from any scheduled bank to the MIB, which should be valid for a minimum of one year and renewed every year to ensure it remains valid for the entire currency of the license agreement.

# The Licensor should be at the liberty to encash the Bank Guarantee in full or part in the event of violation of any of the license conditions.

# These recommendations, including the definition of GR, ApGR, AGR and the percentage of AGR to calculate the license fee may be made applicable ‘prospectively’.

“In the highly competitive television distribution market, urgent measures are required for the DTH sector. The quick implementation of these recommendations will help the sector and enable all-round growth,” TRAI stressed in its recommendations.