Telecom companies like Bharti Airtel, Vodafone and Idea Cellular have received a breather, with the Delhi High Court announcing a stay on the Department of Telecommunications? (DoT) order asking mobile operators to stop offering 3G services through roaming agreements outside their licensed circles.
Late September 2012, DoT had issued show-cause notices and advisories to various operators, asking them to stop offering 3G services immediately in areas where they did not have licences. It also asked them to submit a compliance report within three days. Moreover, the companies were given 60 days to respond to why their licences should not be cancelled or a penalty not be imposed on them.
Bharti Airtel challenged DoT?s order in the high court, stating that compliance with the order would adversely affect the interests of customers who were benefitting from the 3G arrangements. According to Bharti?s counsel, DoT?s decision ?violated Article 14 (equality before law); besides, the order was arbitrary, with no rational basis and was contrary to the contract between the parties?.
While the high court?s stay order has earned operators some respite, industry experts believe it is temporary. DoT is unlikely to put a lid on the issue so easily. It is reportedly planning to cite licence violation for imposing a maximum fine of Rs 500 million per circle on each operator. Apart from that, DoT is looking at options for recovering the revenues that telecom companies have gained by offering inter-circle roaming on 3G services.
DoT has all along maintained that it is illegal to offer 3G data services beyond a company?s licensed circle. By the same extension, 3G roaming pacts between operators are illegal. While mobile licences allow operators to enter into roaming agreements to cater to subscribers who travel from one circle to another, in the case of 3G, operators have gone a step ahead and offered connections even in areas where they do not have 3G spectrum. This, according to DoT, is a breach of licence norms. In Madhya Pradesh, for example, DoT points out, both Bharti Airtel and Vodafone do not have 3G spectrum but they have 36,490 and 1,558 subscribers respectively. This is possible only because of the 3G roaming pacts the two operators have with Idea Cellular.
The Telecom Regulatory Authority of India (TRAI) made another point. It noted that if DoT were to permit such an arrangement for 3G services, then 2G players too would want to get into similar deals given that there are a number of operators that do not have 2G spectrum, in Delhi for instance, and are awaiting allocation. According to TRAI, this would upset the level playing field and result in a revenue loss to the government on account of spectrum charges.
Further, DoT is concerned whether such roaming arrangements are tantamount to spectrum sharing, which is not permitted under the licence conditions. The operators disagree. They argue that it would constitute spectrum sharing had they used their own equipment and network on someone else?s spectrum; however, the equipment and network belong to the operator that owns the spectrum. Also, they point out that DoT had clarified before the auctions that roaming agreements would be allowed for 3G services.
In fact, in a letter to DoT early this year, Vodafone stated, ?Intercircle roaming was permitted by DoT through an amendment to the UAS licence and the Cellular Mobile Telephone Services licence on June 12, 2008. The amendment permits operators to enter into mutual commercial agreements with other service providers for inter-circle roaming facilities.?
The issue goes back to 2010, when hyper-competition and excessively high bidding for 3G spectrum prohibited any single operator from obtaining a pan-Indian 3G licence. To reduce costs and offer all-India 3G services, Vodafone India, Bharti Airtel, Idea Cellular, Aircel and others entered into intercircle roaming agreements.
In October 2011, TRAI wrote to R. Chandrashekhar, secretary, DoT, apprising him of the situation. In December 2011, DoT issued the show-cause notices and asked operators to stop providing 3G services outside their licensed circles. The latter challenged the order before the Telecom Disputes Settlement and Appellate Tribunal, which, in July 2012, gave a split verdict.
Now, while the high court has issued a stay order, the matter is far from laid to rest. In sum, despite several rounds of appeals, petitions and clarifications, the case still stands where it was a year ago.
