The Centre has said that even though 103 of the 122 mobile telephone licencees failed to roll out services, it would be unwise to cancel the agreements, according to news reports.
It said that the demand for cancellation of all allocations in 2008 at 2001 prices and their fresh auction could jeopardise foreign direct investments already made in the sector and suggested that levying penalty on them was the right course of action.
In an affidavit before the Supreme Court, the Department of Telecommunications (DoT) said that the demand notices levying liquidated damages for failure to comply with the roll out obligation have also been issued up to February 9, 2011, in respect of 103 licences out of the 122 issued in 2008.
The petitioners, including the Centre for Public Interest Litigation (CPIL) and Janata Party president Dr Subramanian Swamy had said the licencees were obliged to start mobile telephone services within a year of allocation of spectrum and cover 90 per cent of the area in a metro and 10 per cent of a non-metro area. Both had sought cancellation of all licences and their fresh auction.
The DoT had added that the issues relating to investments made and foreign direct investment receipts to the country may have to be also taken into consideration. It also stated the response of the licencees to the cancellation-cum-penalty notices. The licencees said that if the licence is to be cancelled after it is acted upon, only on account of delayed roll out, the investment made in infrastructure etc would be rendered nugatory which may not be in public interest.
The DoT said that liquidated damages demand notices were issued after ascertaining the delay in meeting the roll out obligations and after considering the date of allocation of spectrum and the average delays by the Standing Advisory Committee on Frequency Allocations (SACFA).
A few of these licencees have approached the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) challenging the demand notices imposing liquidated damages and got interim orders. On January 10, 2011, when the Bench issued notices to DoT and 11 telecom firms, it had taken an adverse view of the breach of roll out obligations and said that if the services were not rolled out, it is a very serious matter.
The firms to which the Supreme Court issued notices were Dishnet Wireless, Etisalat, Vodafone Essar, Idea Cellular, S-Tel, Tata Teleservices Limited, Uninor, Loop Telecom , Videocon , Allianz Infra and Sistema Shyam Teleservices.
