Mumbai: Broadcast tribunal TDSAT has ruled that licence fees for direct-to-home (DTH) services should be charged on the basis of adjusted gross revenue and not on gross revenue, similar to what is being followed in the telecom industry.

Passing an order in a case filed by TataSky, the tribunal directed that licence fee should be based on revenues arising out of licensed activities only, and not on the basis of entire revenue earned by DTH operators.

TataSky had challenged direction of the ministry of information and broadcasting to pay 10 per cent of its whole earning as license fee.

Striking down the directions issued by the ministry in July 2006 that asked TataSky to pay licence fee based on calculation of its entire revenue, the tribunal said that its order dated 7 July 2006 related to a similar case in the telecom industry should apply.

In that order, the telecom disputes settlement and appellate tribunal had defined adjusted gross revenue (AGR) and said that telcos would have to pay for only licensed activities.

The tribunal also held that money earned from sale of set-top-boxes, dish, installation, subscription and service revenue would be part of AGR.

"This is a direct income derived by the petitioner from licensed activities ... revenue earned from sales of set-top- boxes and accessories is to form a part of AGR besides the revenue earned under the head subscription, installation and service revenue," the tribunal said.

AGR means revenue on licence fee payable after excluding income from activities which do not form part of licensed activities.

Meanwhile, TDSAT also held that other incomes such as interest earned by investments and deposits made by DTH operators, royalty, commissions and enterprise resource would not be part of AGR.

"However, if the income is derived from deposits taken by the licencee while issuing connections to its customers, it will form part of the service and will have to be included in the gross revenue," the tribunal clarified.

TDSAT also observed that the sectoral regulator TRAI had on 1 October 2004 and 13 September 2006 recommended to the government to follow AGR model applicable in telecom in DTH.