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Hotels, pay channels lock horns over rates

June 21, 2008 02:09 IST

Hospitality majors, including Le Meridien and Pride Hotel, are opposing pay channels such as Star and Zee for raising rates for the second time in six months, pending an earlier court battle between the hotel trade body and private broadcasters.

The Federation of Hotels and Restaurants Association in India has been asking broadcasters and cable operators for the last five years to charge them the same rates as levied on residential TV consumers.

"The cable service being supplied by the broadcasters is same whether to a residential consumer or to a hotel or restaurant and hence, there cannot be a price difference. Whereas, the hotels and restaurants are being charged exorbitantly," said Dinesh Khanna, president, Hotels and Restaurants Association of Western India.

The cable operators on the other hand say, they charge the hotels only according to the occupancy rates which is high in many cases. They want the hotels to seek cable services from authorised dealers so that they can levy commercial rates too.

Private broadcasters such as Star raised rates as late as last month after an earlier revision in November 2007. The rates were revised after TV18 channel walked out of the Zee bouquet and joined Star. Similary Zee decided to charge more after it added new channels.

"Our contention is only that the hotels which seek cable services get it from an authorised operator. Most of them seek it from their local operators who are not authorised," says Ketan Kanakia, managing director of Novex Communication representing Sony, ESPN, STAR and UTV.

Five-star brands like the Taj Group of Hotels, ITC and the Oberoi Hotels have control rooms from where they have set up their own cable TV reception equipments and they obtain signals directly from the broadcasters. Other hotels seek cable service from local operators.

If an operator offers a rack rate of  Rs 1,500 for a bouquet of channels, the hotels are charged anywhere between Rs 750-1250 per month, per room. This means that a 100-room hotel will shell out anywhere between Rs 9 lakh to Rs 15 lakh per month for a subscription.

In 2003 the operators charged the hotels anywhere between Rs 650 to Rs 700 per month, per room for a rack rate of Rs 900. The pay channels officially introduced commercial tariff in 2003, which made the hotels shell out more for a subscription.

Till 2005, most hotels and restaurants were obtaining cable TV connection from the local TV cable operator for supply of TV channels, at prices determined between them.

However, in mid-2005, the broadcasters and their agents unilaterally decided to raise the tariff for their channels and started asking hotels and restaurants across the country to have agreements directly with the broadcasters by paying charges.

FHRAI requested the broadcasters to be reasonable in their demand and also requested them to allow the hotels and restaurants to receive the signals from the local cable operators who are providing the services, as it was beyond their means to install equipments and obtain the signals directly from the broadcasters.

The broadcasters and their agents refused FHRAI's request and the latter approached Telecom Disputes Settlement and Appellate Tribunal for resolving the dispute. TDSAT ruled that hotels and restaurants are not consumers.

Calling it unreasonable, FHRAI moved an appeal in the Supreme Court, which ruled in November 2006 that hotels and restaurants are indeed consumers. The Supreme Court therefore, directed TDSAT to dispose off the petition filed by FHRAI.

In November 2006, the Telecom Regulatory Authority of India (TRAI) for the first time issued a notification prescribing the tariff for domestic consumers. While doing so, TRAI excluded hotels with 50 rooms and above, hotels with three-star and above ranking and heritage hotels, and left them to negotiate the rates with broadcasters.

Aggrieved by the notification, FHRAI moved TDSAT challenging the discriminatory treatment. In the meanwhile, TDSAT ruled that no coercive actions be taken by the broadcasters against hotels.

FHRAI alleges that while the matter is sub-judice (next hearing is on July 14), the broadcasters and their agents are going against the court order and charging them exorbitant fee.

Kalpana Pathak in Mumbai
Source: