The Department of Telecommunications (DoT) has asked the Telecom Regulatory Authority of India (TRAI) to reconsider the recommendations it gave in November 2010, pertaining to licence cancellations.
TRAI had suggested that the government cancel 69 licences of five operators, including joint ventures of Telenor, Emirates Telecommunications and Sistema JSFC, for failure to rollout services within a stipulated time frame.
DoT, in a detailed communication to TRAI, said the regulator must revisit its method of assessing network rollout, while adding that TRAI had not considered the delays in obtaining spectrum and clearances from the government, while ascertaining whether companies had rolled out services as stipulated in their contracts.
Prior to this, DoT had found that only 15 mobile permits could be considered for cancellation, as against 69 suggested by TRAI. It had arrived at this conclusion after studying the replies of 69 licencees, regarding the show-cause notices issued to them.
TRAI had said that 34 licences, two of Etisalat, 14 of Loop Telecom, 10 of Sistema Shyam TeleServices Limited (SSTL) and eight of Uninor, should be terminated as these companies had not launched services. The report also said 33 more mobile permits should be cancelled, as these companies, which include Etisalat in 13 circles, Loop Telecom in five regions, Datacom (now Videocon) in 10 circles, SSTL in one service area, and Aircel in four service areas, had built skeletal networks with a handful of customers to technically fulfill the rollout obligations.
Existing laws mandate mobile companies to provide commercial services in at least 10 per cent of the district headquarters by the end of the first year. DoT can impose a fine of Rs 0.5 million a week on mobile phone companies for every circle for the first13 weeks of service delay.
The penalty rises to Rs 1 million each for the next 13 weeks, and then to Rs 2 million for delays up to 26 weeks. If service rollout does not take place within 52 weeks of obtaining a licence, the company’s permit can be cancelled and the spectrum that comes bundled will be taken back.
The Comptroller and Auditor General of India (CAG) had criticised DoT for not recovering Rs 6.79 billion as penalty or liquidated damages from six new operators for missing network rollout deadlines.
DoT’s latest communication to TRAI also details the penalties imposed on all operators for delayed rollout of services. Prior to writing to TRAI, DoT had also obtained legal opinion, which concurred with its view on cancellation of mobile permits. Under current procedure, DoT cannot dismiss TRAI’s recommendations without first asking the regulator to reconsider.
