Royal Digital Cable And Communication Pvt. Ltd vs Star India Pvt. Ltd. & Ors

M A No. 395 of 2022 - This application has been preferred by the original respondent with following prayers.

"(a) Pass an Order allowing the Respondent No. 1 to disconnect the signals from the Petitioner’s network till the time the present petition is finally decided; and /or

(b) Pass an Order directing the Petitioner to deposit an amount of Rs. 3,88,70,177/- plus GST towards audit demand in terms of Audit Demand Letter dated 03.06.2021 and Disconnection notice dated 20.07.2021; and/or

(c) Pass such further order/orders as this Hon’ble Court may deem fit and proper under the facts and circumstances of the case."

Counsel appearing for the applicant (original respondent) has argued out the case at length and submitted that the audit carried out by the original petitioner under the regulation 15(1) Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) Regulations, 2017 (hereinafter referred to as Interconnection Regulation, 2017) was not upto the mark of satisfaction and hence this applicant (original respondent) had carried out the audit under Regulation 15(2) of the Regulations, 2017.

It has been contended by the counsel appearing the applicant (original respondent) that audit under the Regulation 15(1) was conducted for the month of February, 2019 to September, 2020 and the report was given in the month of October, 2020.

It is further submitted by counsel appearing for the applicant (original respondent) that upon receiving the aforesaid report under regulation 15(1) the broadcaster who is the applicant (original respondent) upon receiving the aforesaid report under Section 15(1) was of the opinion that the said report was not upto the mark of satisfaction and, therefore, as per the Interconnections Regulation 15(2) of the Regulations, 2017 further audit was conducted of SMS and CAS Digital Addressable System by an auditor who is empaneled by TRAI.

Counsel appearing for the applicant (original respondent) has taken this Court to the said report given by the auditor under Section 15(2) which is at Annexure - 20 to the memo of this broadcasting petition. The said report is dated 31.5.2021 for the period arising from August, 2019 to December, 2020. Counsel appearing for the applicant (original respondent) has taken this Tribunal to various annexures and has pointed out from the audit report given under Regulation 15(2) that there is a violation by the original petitioner of the provisions of Schedule III appended to Interconnection Regulation, 2017 and hence as per the 3rd Proviso to Regulation 15(2) this applicant (original respondent) - broadcaster can disconnect the supply of signals of the television channels of the original petitioner.

Earlier an order was passed by this Tribunal dated 11.3.2022 which was challenged before the Hon’ble Delhi High Court vide order dated 26.9.2022 in WPC No. 6681 of 2022 (Annexure – E) to the memo of the present M.A. has pointed out that the Tribunal may decide whether this applicant (original respondent) has a right to disconnect the supply of signals of their television channels to the petitioner.

Counsel appearing for the applicant (original respondent) has pointed out various deficiencies which have been pointed out by the auditor in his report under Regulation 15(2) and has submitted that the original petitioner has not complied with the requirements as enumerated in Scheduled III appended to the Regulations, 2017.

It is further submitted by the counsel appearing for the applicant that prima facie there is additional system available with the original petitioner which is not revealed to the broadcaster and there is a difference in the number of subscribers upon audit of digital addressable system of the original petitioner (CAS, SMS and STBs) and therefore, prima facie there is violation of Schedule III by the original petitioner and hence this applicant (original respondent) - broadcaster may be permitted to disconnect the supply of signals of the applicant’s channels.

Counsel appearing for the original petitioner submitted that there is no error in the audit report given under Regulation 15(1). It is submitted by the original petitioner that the report given by the auditor under Regulation 15(2) does not point out the number of subscribers that the original petitioner are more than what is revealed by the original respondent – broadcaster. It is also submitted by the original petitioner that the evidence upon which the auditor who has given a report under Regulation 15(2) has relied upon were never verified in presence of the original petitioner nor the same was supplied to the auditor who was carrying out audit under Regulation 15(1) and, therefore, let the evidence be taken in this matter and, therefore, a conclusion may be arrived at by this Tribunal about the right of the broadcaster to disconnect the supply of signals of their channels.

Having heard the counsels for both the sides and looking to the facts and circumstances of the case, it appears that audit was conducted under Regulation 15(1) of the Interconnection Regulation, 2017. This audit was conducted at the behest of the original petitioner.

Looking to the Regulation 15(2) the broadcaster has also a right to get the digital addressable systems be audited by the empaneled auditors. For the ready reference Regulation 15(2) reads as under: -

Clause 15 of the Interconnection Regulations, 2017:

"15. Audit.— (1) Every distributor of television channels shall, once in a calendar year, cause audit of its subscriber management system, conditional access system and other related systems by an auditor to verify that the monthly subscription reports made available by the distributor to the broadcasters are complete, true and correct, and issue an audit report to this effect to each broadcaster with whom it has entered into an interconnection agreement: Provided that the Authority may empanel auditors for the purpose of such audit and it shall be mandatory for every distributor of television channels to cause audit, under this sub-regulation, from anyone of such empanelled auditors: Provided further that any variation, due to audit, resulting in less than zero point five percent of the billed amount shall not require any revision of the invoices already issued and paid.

(2) In cases, where a broadcaster is not satisfied with the audit report received under sub-regulation (1) or, if in the opinion of a broadcaster the addressable system being used by the distributor does not meet requirements specified in the Schedule III, it shall be permissible to the broadcaster, after communicating the reasons in writing to the distributor, to audit the subscriber management system, conditional access system and other related systems of the distributor of television channels, not more than once in a calendar year:

Provided that the Authority may empanel auditors for the purpose of such audit and it shall be mandatory for every broadcaster to cause audit, under this sub-regulation, from anyone of such empanelled auditors:

Provided further that if such audit reveals that additional amount is payable to the broadcaster, the distributor shall pay such amount, along with the interest at the rate specified by the broadcaster in the interconnection agreement, within ten days and if such amount including interest due for any period exceed the amount reported by the distributor to be due for such period by two percent or more, the distributor shall bear the audit expenses, and take necessary actions to avoid occurrence of such errors in the future:

Provided also that it shall be permissible to the broadcaster to disconnect signals of television channels, after giving written notice of three weeks to the distributor, if such audit reveals that the addressable system being used by the distributor does not meet the requirements specified in the Schedule III."

Looking to the report under Regulation 15(2) which is dated 31.5.2021 for the period running from August, 2019 to December, 2020 (Annexure P-20 to the memo of this broadcasting petition), the relevant part of the said report reads as under: -

“AUDITOR’S OPINION & CONCLUSION

In view of the various observations made by us with respect to clause C-1, clause C-2, clause C-6, clause C-10, clause C-11, clause C-14, clause C-19, clause C-20, clause C-21, clause D-14, clause E-8, clause E-10 of Schedule III and the duplication of ECM PIDs, the Digital Addressable System (CAS, SMS and STB) available and installed at M/s Royal Digital Cable and Communication Pvt. Ltd., Burhanpur as on 25th March 2021, found to be not meeting the minimum requirements as specified by TRAI under DAS Schedule-III of Telecommunication (Broadcasting and Cable) Services Interconnection (Digital Addressable System) Regulations, No. 1 of 2017, dated March 3, 2017 issued by TRAI.”

Looking to the page no. 115 to 117 of the relevant part of the audit report C-1, C-2, C-6, C-10, C-1, C-11, C-12, C-16, C-19, C-20 and C-21 reads as under: -

"Sl. No.

Regulation Requirement

Compliance Status

The      distributor      of      television channels   shall   ensure    that    the current  version  of  the  CAS,  in  use, do not have any history of hacking.

(Ref. Schedule III-C 1)

Checked    and    found    to    be    partially compliant.

CAS PID (Hex number = Ox1fff. Decimal = 8191)     as     mentioned     in     the     CAS

certificate of Telecast CAS is found to be not  matching  with  the  actual  PID  (701) as      recorded      in      TS      during      the audit. Annexure-5.

Copy  of  the  certificate(s)  are  attached herewith           and           marked           as

Annexure-4.

The   SMS   shall   be   independently capable  of   generating,  recording, and    maintaining    logs,    for    the period    of    at   least    immediately preceding  two  consecutive  years, corresponding   to   each   command executed  in  the  SMS  including but not    limited    to    activation    and deactivation commands.

(Ref. Schedule III – C 2)

Checked    and    found    to    be    partially compliant.

The network ID  (1) as mentioned  in  the SMS certificate is found to be in variance with the network ID (43981) recorded in TS during the audit.

Copy  of  the  certificate(s)  are  attached herewith           and           marked           as Annexure-10.

Sl. No.

Regulation Requirement

Compliance Status

6.

The      distributor      of      television channels shall validate that the CAS has   the   capability   of   upgrading STBs over-the-air (OTA), so that the connected STBs can be upgraded.

(Ref. Schedule III – C6)

Checked   and   found   to   be   partially compliant as   though   the   CAS   vendor certificates  confirms  the  availability  of said  feature  however  the  DPO  is  using third  party  software  for  same.  Further, OTA  on  test  STBs  was  demonstrated  by DPO using pendrive on STB.

Screenshot  related  to  same  is  attached as Annexure-18.

10.

The    CAS    and    SMS    should    be capable  of  individually  addressing subscribers,   for   the   purpose   of generating  the  reports  on  channel by channel and STB by STB basis.

(Ref. Schedule III – C10)

Post    testing    of    STBs    in    terms    of activation, deactivation of customer and packages, the logs of SMS and CAS were extracted  for the audit dates and found the same to be matching.

However,  in  view  of  the  pay  channels found to be active in the ground samples but     deactive     in     SMS     transaction logs, continued  compliance  throughout

the audit period cannot be confirmed.

Sl. No.

Regulation Requirement

Compliance Status

11.

The  SMS  should  be  computerized and  capable  of  recording  the  vital information   and   data   concerning the subscribers such as:

(a)    Unique                 customer identification (ID)

(b)   Subscription           contract number

(c)    Name of the subscriber

(d)   Billing address

(e)   Installation address

(f)   Landline                telephone number

(g)    Mobile phone number

(h)    E-mail address

(i)      Channels,   bouquets   and service subscribed

(j)     Unique STB number

(k)    Unique VC number

(Ref. Schedule III – C11)

As  per  the  Audit  procedure  defined  in audit      manual      for      checking      the compliance of clause C-11, we requested DPO to provide 5 samples CAF however DPO  failed  to  provide  same  during  the audit       hence continued       compliance cannot be confirmed.

12.

The SMS should be capable of:

(a)    Viewing   and   printing   of historical  data  in  terms  of the    activations    and    the deactivations of STBs.

(b)   Locating   each   and   every STB and VC installed.

(c)    Generating  historical  data of       changes       in       the subscriptions      for      each subscriber         and         the corresponding    source    of requests     made     by    the subscriber.

(Ref. Schedule III – C12)

Checked   and   found   to   be   compliant based on the certificate provided by SMS vendors.

Annexure-19

Annexure-20

Annexure-21

However,  the  SMS  transaction  logs  are found  to  be not  reliable  in  view  of  the pay  channels  found  to  be  active  in  the ground      samples      but      having      no

corresponding transaction logs.

14.

The   CAS   shall   be   independently capable  of   generating,  recording, and    maintaining    logs,    for    the period    of    at   least    immediately preceding  two  consecutive  years, corresponding   to   each   command executed  in  the  CAS  including  but not    limited    to    activation    and deactivation  commands  issued  by the SMS:

(Ref. Schedule III – C14)

Checked and found to be non-compliant as the      CAS      transaction      logs      are unreliable  in  view  of  the  pay  channels found to be active in the ground samples but having no corresponding transaction logs.

Sl. No.

Regulation Requirement

Compliance Status

16.

It shall be possible to generate the following  reports  from  the  logs  of the CAS:

(a)    STB-VC Pairing/De-Pairing

(b)   STB Activation / De-activation

(c)    Channels Assignment to STB

(d)   Report   of   the   activations   or the deactivations of a particular channel   for   a   given   period. (Schedule III – C 16)

Checked    and    found    to    be    partially compliant.

(e)   All STBs are Cardless.

(f)     Annexure-32

(g)    No   separate   report   is   generated from system.

(h)   No   separate   report   is   generated from system.

19.

The      distributor      of      television channels  shall  declare  the  details of  the  CAS  and  the  SMS  deployed for distribution of channels. In case of   deployment   of   any   additional CAS/SMS,    the    same   should    be notified to the broadcasters by the distributor.

(Schedule III – C 19)

The   DPO   declared   to   have   deployed three CAS and one SMS however during the audit, we found an additional server which  was  not  declared  by  DPO  in  any documents.

Further,  during  the  audit,  we  observed that    the    IP    address    for     LE    CAS (10.15.17.1)   as   reflected   in   SMS   was neither declared nor was traceable in IP scanning  performed  by  us.  Also,  this  IP address  was  not  matching  with  the  IP address  (172.168.10.215)  mentioned  in the    LE    CAS    vendor    certificate    and provided to access the LE CAS during the audit (Annexure-16).

DPO Declaration is attached and marked as Annexure-7.

20.

Upon       deactivation       of       any subscriber    from    the    SMS,    all program / services shall be denied to that subscriber.

(Schedule III – C 20)

Checked     and     found     to     be     non- compliant as    though    the    stimulation tests  performed  by  us  on  test  STBs  the said   feature   was   working   however   in view  of  the  pay  channels  found  to  be active    in    the ground    samples    but deactive     in     SMS     transaction     logs, continued   compliance   throughout   the audit period cannot be confirmed.

21.

The      distributor      of      television channels   shall   preserve   unedited data of the CAS and the SMS for at Least two years.

(Schedule III – C 21)

Checked     and     found     to     be     non- compliant as  the  SMS  and  CAS  data  is not  reliable  in  view of the  pay channels found to be active in the ground samples but having no corresponding transaction logs."

Thus, prima facie it appears that original petitioner has not complied with requirements of schedule – III appended with the Interconnection Regulations, 2017 and looking to the audit report prima facie, there is an additional system available with the original petitioner which is not revealed to the broadcaster who is the applicant of this M.A. and respondent in the main broadcasting petition. The quantum of the discrepancy which is to be converted into the amount to be deposited by the original petitioner to the original respondent shall be decided at the time of final hearing. But prima facie it appears that there is non-compliance of requirements of Schedule III of the Interconnection Regulations, 2017 by the original petitioner.

Much has been argued out by the counsel appearing for the original petitioner that audit report under Regulation 15(1) is also reliable audit report and evidence upon which the auditor while carrying out audit under Regulation 15(2) has relied upon were, in fact, not collected and verified in presence of the original petitioner. There is no need to consult first the petitioner and thereafter to collect the evidence by the broadcaster. Evidence of the broadcaster can be collected by the broadcaster on its own. The evaluation of this evidence depends upon the auditor’s report. It ought to be kept in mind that the audit has been chosen from the empaneled auditors. This empanelment was done by TRAI and, therefore, prima facie we have no reason to arrive at any other conclusion than what is mentioned hereinabove in the audit report which is Annexure – 20 of the memo of the petition as prima facie made out that the petitioner has violated the requirements of schedule – III appended with the Interconnection Regulations, 2017.

We, therefore, permit this applicant (original respondent – broadcaster) looking to the 3rd Proviso of Regulation 15(2) of the Regulations, 2017 to disconnect the supply of signals of the channels of this applicant to the original petitioner. The breach or breaches of the petitioner as pointed out by the auditor are now required to be quantified in terms of money at the time of final hearing of the broadcasting petition.

Counsel appearing for the original petitioner submitted that evidences which were collected by the broadcaster, and were verified by the auditor while conducting the audit under Regulation 15(2), the original petitioner was not allowed to be present.

With these observations this M.A. is allowed and disposed of.

This Broadcasting Petition will be further heard on 14.3.2023.