The telecom sector is set to witness a fresh round of litigation between the operators and the department of telecommunications, thus upsetting the government’s intent of putting in place a second set of reforms aiming to put an end to legal battles.
The industry – operators like Bharti Airtel and Vodafone Idea – received a jolt when late evening on September 30, the DoT sent notices to them asking to pay a cumulative penalty of Rs 3,050 crore within three weeks. This penalty was recommended by the Telecom Regulatory Authority of India (Trai) way back in 2016, ratified by the Digital Communications Commission, the highest, inter-ministerial, policy making body in the DoT in July 2019, but held back by the telecom minister since then.
“The penalty was recommended by the Trai when the industry was fractious. Now, reviving it at a time when the industry unitedly urged the government for a financial package, has set the clock back. It is really surprising that on the one hand a revival package has been given by the government and on the other, old fractious levies are being pursued,” said an industry watcher.
Expressing its disappointment at the DoT’s move and moving the legal forum for redressal as its next step, a Bharti Airtel spokesperson said, “We are deeply disappointed with the arbitrary and unfair demand based on Trai recommendations of 2016 relating to provisions of point of interconnect to a new operator.
“These allegations were frivolous and motivated. Bharti Airtel takes pride in maintaining high standards of compliance and has always followed the law of the land. We will challenge the demand and pursue the legal options available to us”.
Cases relating to intra-circle roaming, one-time spectrum charges, etc between the operators and DoT are pending in various courts.
Industry executives and telecom sector analysts told FE that the timing for levying this penalty is not conducive as it burdens the operators at a time when the government has provided them financial relief by way of deferring their adjusted gross revenue and spectrum payment dues.
Since there’s a new chairman at Trai, some said that the DoT could have once again referred the matter to the regulator.
In the past, the DCC had tried its best to get the matter sorted by asking Trai to review the amount as the sector was under financial stress, but, unfortunately, the regulator stuck to its guns.
In fact, before the matter was sent to Trai for a review, a seven-member internal committee of DoT had rejected by 4:3 the regulator’s recommendation to levy the penalty and had left the final decision to the DCC.
To be sure, in 2019 the DCC could have ignored the Trai’s recommendation and gone ahead with either scrapping the penalty or lowering the amount. This is because the Trai does not have powers to levy fines. It had suo motu issued the recommendation to the DoT based on a complaint by Reliance Jio. As a licensor the power to levy fines and or cancel licences lie with the DCC which may seek recommendations from the Trai, but in this case it was not so.
In October 2016, Trai had recommended that a fine of Rs 50 crore be levied on Bharti Airtel and Vodafone each in 21 circles, while a similar amount be levied on Idea Cellular in 19 circles. Thus the penalty for Bharti and Vodafone was Rs 1,050 each, while for Idea it was Rs 950 crore. In August 2018, Vodafone and Idea merged and was christened Vodafone Idea.
The Trai had recommended fines after it had issued show-cause notices to the three operators towards end-September 2016 after finding high levels of congestion in their networks, leading to call failures made to and from the Jio network beyond the permissible limits.
The three incumbent companies in their defence had said that there is a 90-day period since the commercial launch of services by an operator for providing the demanded points of interconnect and they conformed to this deadline. They said it was unfair of Trai to monitor congestion levels on a daily basis and recommend a fine. Ideally, it should have measured congestion on a monthly basis, where the results would have been different.