Uninor, Videocon And Stel May Be Terminated Soon.....dot Preapring Show Cause Notice

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DoT collects Rs. 93 cr penalty from new operators: Sibal

6 Jan l The Economic Times l New Delhi

The government has collected Rs. 93 crore penalty from new telecom operators for missing the network roll-out deadline, even as some operators have approached the appellate tribunal TDSAT seeking a stay on it.

"We have received Rs. 93 crore from new operators. The total demand is Rs. 219 crore," Telecom Minister Kapil Sibal told reporters here.

Uninor, a joint venture between Unitech and Norway's Telenor , has paid the penalty but under protest and has approached TDSAT seeking stay on such drive by the Department of Telecom saying the delay was from the government side.

The TDSAT has reserved the order on Uninor's petition. On the issue of forming Joint Parliamentary Committee, as demanded by the Opposition, Sibal said "it (the demand for JPC) was absurd. The government has given several alternatives to the Opposition but they never moved even an inch."

He, however, exuded confidence that Budget would be presented by the Government without any hassle.

"We will bring out the truth before the people about the entire telecom issue since 2001," he said.

Earlier, Sibal had quantified revenue loss of Rs. 1.43 lakh crore to the exchequer in 2001 due to change in policy by the then NDA regime by switching over to revenue share regime from fixed licence fee scenario.

Asked which are the operators who have paid penalty, the Minister said Etisalat DB, Loop Telecom, Uninor, Sistema-Shyam and Aircel are among the service providers who have paid the liquidated damages (penalty).

Operators like Uninor and Videocon may get away with penalty for delay in rollout citing delay in clearances and spectrum allocation. Their major concern is cancellation of licences where they were not eligeble but were given licences in illegaly. Although, Etisalat is a defaulter on both the fronts.

[Honest 836]

TDSAT asks Videocon to pay 60% penalty; admits case against DoT

21 January l The Economic Times l New Delhi

Telecom tribunal TDSAT today asked another new operator Videocon Telecom to pay 60 per cent of Rs 12.45 crore penalty slapped on it by the Department of Telecom for missing roll-out obligations, while admitting its appeal against DoT.

The Telecom Disputes Settlement and Appellate Tribunal bench, headed by Justice S B Sinha , allowed Videocon's plea but directed it to pay around Rs 3 crore within two weeks. The company has already paid Rs 6.95 crore to DoT.

TDSAT's interim order follows Videocon plea, challenging the demand notice issued by DoT seeking Liquidated Damages (LD) for not rolling out its services within the stipulated period of one year.

On January 1, DoT had issued notice to Videocon demanding LD for four circles.

It has demanded Rs 6.95 crore for Kolkata circle, Rs 3.35 crore for West Bengal circle, Rs 1.95 crore for UP East circle and 0.25 crore for Haryana circle.

Earlier, in a similar case, TDSAT had directed Uninor to pay 60 per cent of its penalty amount demanded by the DoT for failing to roll-out services in 18 circles.

Directing DoT to file reply within two weeks, TDSAT has listed the matter on February 10, for next hearing.

Senior advocate Meet Malhotra , appearing for Videocon, said the delay was caused by government restrictions on import of telecom equipment on account of security, apart from delay in SACFA Clearance in granting spectrum or radio waves.

While the company is contesting the penalty charges imposed on it for four circles, it has already paid LD for the Kolkata circle under protest. The deadline for payment of damages for the remaining three circles, for which it has been served notices, was to expire today.

DoT had sent notices to several firms, which got new 2G licenses bundled with start up spectrum but have not started offering services in various circles.

As per the conditions of the Unified Access Service License (UASL), the telcos are required to roll-out their networks within one year from the date of allocation of spectrum.

According to the agreement, in case new licencees fail to roll-out services within the stipulated period, DoT shall be entitled to recover LD charges.

[Honest 836]

Pay 60% of the DOT penalty within 2 weeks: TDSAT to 4 telcos

The Economic Times l 28 January l New Delhi

Telcom regulator TDSAT today ordered Uninor, Videcon Teleservices, S Tel and Idea Cellular that secured 2G licences in 2008, to pay 60 percent of the penalty imposed by DOT for their failure to roll out services on time.

The four operators were given this direction in an interim order by Telecom Disputes Settlement and Appellate Tribunal, which asked them to deposit part of the penalty within two weeks.

Directing DoT to file its reply within two weeks, TDSAT has listed the matter for further hearing on February 10.

The TDSAT interim order came over a bunch of separate petitions filed by the four operators challenging DoT's demand notice seeking liquidated damages for not rolling out their services within the stipulated period of one year .

S Tel, which is jointly owned by C Sivasankaran and Bahrain Telecommunications, had approached TDSAT challenging the penalty imposed by DoT for its failure to timely roll out services in Orissa, Assam, North East, Bihar and, Jammu and Kashmir circles.

While it has paid penalty for Assam and Bihar under protest, it is yet to pay for the other three circles.

Videocon, which had approached the tribunal for the second time, challenged the penalty demand by DoT for its failure to meet the roll-out obligations in Andhra Pradesh, Madhya Pradesh and Karnataka circles.

Uninor and Idea Cellular had approached TDSAT for one circle each. Uninor had challenged penalty for Punjab while Idea Cellular had challenged it for West Bengal.

Earlier in a similar case, TDSAT had directed Uninor to pay 60 per cent of the penalty demanded by the DoT for failing to roll out its services in 18 circles.

DoT had sent notices to several firms that got new 2G licenses bundled with start-up spectrum in 2008, but have not started offering services in various circles.

As per the conditions of the Unified Access Service License (UASL), the telcos are required to roll out their networks within a year from the date of allocation of spectrum.

According to the agreement, in case new licencees fail to roll out services within the stipulated period, DoT shall be entitled to recover liquidation damages.

[Honest 836]

Regularisation of 2G licences of defaulters challenged in SC

The Economic Times l 30th January l New Delhi

The government's decision to regularise licences of the companies which failed to meet the deadline for the roll-out obligation of 2G spectrum, has been challenged in the Supreme Court by an NGO.

The application filed by the Centre for Public Interest Litigation along with other civil societies and individuals, has sought a direction to restrain the Ministry of Telecom from regularising 2G licenses of such companies by imposing penalty.

In their joint petition, the civil societies have alleged that these allocations, made by the Department of Telecom (DoT) during the tenure of former Telecom Minister A Raja, were marred by "multiple illegalities, corruption and favouritism" and the government is trying to protect them by charging a small penalty.

"It is amply clear that DoT is protecting the interest of the companies which have benefited and even those companies which violated the licence conditions. The stark case of Loop and Swan makes this clear," the petition which is listed for hearing on Tuesday, said.

"In the case of Loop, there was a detailed complaint as to how it was a front company for Essar and therefore was ineligible for the licence. In the case of Swan, a detailed complaint was made that it is a front company for Anil Dhirubhai Ambani Group ( ADAG )). In both the cases, clean chit was given to both these entities by the Ministry of Corporate Affairs," the petition said.

The other petitioners in this case are Telecom Watchdog, Common Cause, former Chief Election Commissioner J M Lyngdoh , T S Krishnamurthy and N Gopalaswami along with former Central Vigilance Commissioner P Shankar.

They further submitted that even the sectoral regulator has recommended for cancellation of 69 out of the 122 licences as the licencees have failed to roll out their services as stipulated by the condition on which they were given the licences.

"Restrain the Union of India from regularising any telecom license after charging some penalty or compounding any license violation," they pleaded alleging that in the present case, 122 telecom licences along with 2G spectrum were allocated in an arbitrary manner without any competitive process.

Referring to CAG report, the petitioners alleged that 85 licensees out of 122 issued to 13 companies have been found to the ineligible for grant of license and 2G spectrum and have acquired it through fraudulent means.

[Honest 836]

Three years on, new telcos fail to connect

The Economic Times l 31 Jan l New Delhi

Telecom regulator Trai has found that despite a three-year run in the telecom sector, new entrants have failed to make any competitive impact.

Trai’s data on market position at the end of November 2010 shows that the combined market share of six new entrants has barely crossed 5% after nearly three years of receiving their licences. On January 10, 2008, the DoT had issued 122 LoIs, mainly to non-telecom firms.

Companies that received maximum licences with bundled 4.4 MHz spectrum include Loop (22 circles), Sistema (22 circles), Uninor (22), Videocon (22), Etisalat — earlier Swan (15 circles, including Bihar and MP acquired from Allianze ) and S Tel (6).

According to Trai’s , at pan-India level , Uninor has only 2.2% share of mobile subscriber market, while Sistema has 1.1%, Videocon (0.9%), Loop (0.4%), S Tel (0.3%) and Etisalat (0.02%).

Mobile number portability (MNP) was seen as an opportunity for new entrants to attract high paying subscribers from existing operators, based on the promise of improved service, customer care and lower tariffs. However , early data belies this hope, as Videocon , Sistema and Loop have lost subscribers so far. Uninor is the only exception with mild gains.

With subscriber base and market share at such low levels, it is clear that India’s telecom market is likely to prove impregnable for new entrants. Even before these 122 LoIs were given, India had six to eight operators per circle—the highest level anywhere in the world. The evidence suggests that issuance of new licences has failed to impact the competitive landscape, improve quality of service or even lower tariffs. In fact, the most attractive per second pricing was launched by incumbent operators like MTNL , Tata and Reliance with others following suit.

The total telecom subscriber base at the end of November 2010 was 764 million, of which 95% or 729 million were mobile subscribers.

[kesav 127]

Can't cancel 2G licences over CAG report: SC

New Delhi: The Supreme Court on Tuesday said it cannot cancel the 2G liscences on the basis of CAG report.

The apex court adjourned the hearing on the matter till March 1 after giving the remark that any decision taken by the government on the issue will be subject to the outcome of the petitions pending before it.

The remark has been given by a Supreme Court bench, comprised of Justice GS Singhvi and Justice AK Ganguly, on the plea by an NGO - Centre for Public Interest Litigation (CPIL).

The NGO has sought a direction from the Supreme Court for restraining the Government from regularising the licences of the telecom companies which failed to meet the roll-out obligations.

Giving its remark on NGO counsel Prashant Bhushan's concern that the Government was regularising the licences of the companies by imposing penalties on the companies, the bench further said, "If the licences are going to be cancelled, it cannot be cancelled only on the basis of the CAG report".

source :: http://ibnlive.in.com/news/cant-cancel-2g-licences-over-cag-report-sc/142064-7.html

[kesav 127]

Govt asks DoT to consult Trai on new licences

The Ministry of Law has asked the Department of Telecommunications (DoT) to refer the recommendations of the Telecom Regulatory Authority of India (Trai) on cancellation of new licenses back to the regulator in case of any disagreement.

Last year, Trai had said the licences of the 62 telecom companies which had not met the rollout obligations should be cancelled and fined.

In a note, the law ministry said the first provision to Section 11(1) of the Trai Act, 1997 says that the regulator’s recommendations will not be binding upon the government, but the the last provision says if the government decides that the recommendations needs modification, it needs to refer back to Trai for reconsideration.

DoT had sought views on whether it was binding upon the government to refer back Trai’s recommendations if they did not agree with certain recommendations.

The department had also questioned the legality of Trai’s advise on cancellation of the new licenses.

In response, the law ministry said the DoT needs to examine every case separately. Before cancellation of licenses, DoT needs to examine whether the licensee failed to deliver services or has failed to meet the required coverage/network rollout obligations.

source :: http://www.business-standard.com/india/news/govt-asks-dot-to-consult-trainew-licences/424046/

This is exactly where DoT made plunder during the tenure of Raja.

Regarding most of the TRAI recommendations, DoT made changes without referring back to TRAI. In many cases DoT cherry picked recommendations without treating all recommendations in unison.

Due to this cherry picking by DoT, TRAI was not able to steer the industry in the direction it wanted to.

Ministry of Information & Broadcasting which also receives recommendations from TRAI was really proactive in referring back to TRAI even for a single change in word.

Let us hope and pray, at least during tenure of Sibal, DoT will focus on implementation and enforcement rather than spending time on policy matters which is purely in TRAI's domain.

The respect for Regulator will remain intact among stakeholders(service providers) only when govt departments respect the regulator.

Let us hope DoT had learnt certain lessons in this imbroglio and avoid doing other's work.

[Honest 836]

DoT seeks view on Trai's power to terminate licences

The Economic Times l 12 Feb l New Delhi

The telecom ministry is seeking legal opinion on whether the Telecom Regulatory Authority of India has power to recommend termination of mobile permits . The Trai had recommended cancellation of 62 licences of five telcos in November for their failure and delay in rolling out mobile services.

The ministry was, however, in favour of levying only a penalty. But wary of being embroiled in any controversy, the ministry thought it prudent to seek legal advice on the matter. ET reviewed internal DoT documents, where it had sought legal opinion on these issues. In its communication , the DoT also wants legal opinion on whether it should send back the proposal to Trai if it decided to modify or accept only a part of the regulator’s demands.

A telecom department official had earlier told ET that the communications ministry was against cancellation as new entrants had invested significant resources to rollout networks, while also adding that termination could send wrong signals to foreign investors in addition to embroiling the government is a long legal battle.

In November 2010, the Trai had asked the government to cancel 62 licences of five telecom operators, including joint ventures of international operators like Telenor , Emirates Telecommunications Corp and Sistema JSFC, along with domestic players such as Loop and Videocon for failing to meet rollout obligations. The ministry can override the regulator, but as per protocol , the department must first send the case back to the Trai.

In the instance of the regulator sticking with its stance, the DoT can reject the regulator’s views. In November, the government had issued showcause notices to these five companies. It is learnt that Uninor and Etisalat DB have already submitted their response, while others are likely to do so within the next couple of says.

[kesav 127]

DoT has started scrapping 2G licences??

he 2G spectrum investigation in India seems to be falling hard on few telcos as the Department of Telecommunications (DoT) has started the process of cancelling telecom licences.

The DoT is believed to have issued notices to Etisalat DB on the licence cancellation in Delhi and Mumbai circles. The telco has failed to roll out services in these circles.

Etisalat DB has confirmed the news. Etisalat DB was granted spectrum in 2008. This is the second show cause notice issued to the telco, following the March 7 notice. Highly placed DoT sources said that some other companies are also in line for losing the licence.

The grounds on which notices have been issued are little different from the 2G spectrum scam. Earlier, the notices were issued to telcos on failing to meet eligibility norms for getting a licence. In both occasions, 60 days notice period has been given.

It's likely the DoT is likely to issue similar notices to other companies on same grounds. The telecom regulator, TRAI had earlier recommended cancelling licences of Uninor in 8 circles, Loop Telecom in 14 circles and 4 circles of Aircel.

Among these telcos, Aircel has been in the business for five years in a few circles, Uninor entered in 2010 and Loop Telecom has rolled out its services in Mumbai last year.

Apart from Aircel, other telcos haven't managed to build a considerable subscriber base. Sources suggest that S-TeL and Videocon could also face the axe as they are believed to have not met eligibility norms.

TRAI had earlier recommended scrapping 69 telecom licenses across different circles on the grounds of failure to rollout services and ineligibility.

Back in November 2010, TechEye reported that the new Indian union telecom minister, Kapil Sibal had decided to crack down on 80 licences which were identified as ineligible to have won and about 38 companies were then allegedly falling under the category of not meeting roll-out obligations.

source :: http://www.techeye.net/mobile/india-has-started-scrapping-2g-licences

[faizca 5]

Indian Govt Issues Termination Notice To Sistema Shyam

The Indian government Tuesday issued a termination to Sistema Shyam Teleservices or SSTL to terminate licences for Kerala, West Bengal and Assam for the delay in network roll-out of services in these three circles, reports said, quoting a senior Department of Communications or DoT official.

The company launched its services in these states way back in 2009 and as of now, they have over one.

Confirming the receipt of termination notice, SSTL spokesperson said the company would be replying to the DoT on this matter soon.

SSTL offers CDMA voice and data services in 18 telecom service areas and have a total 10 million subscribers.

by RTT Staff Writer

http://www.rttnews.com/Content/IndianNews.aspx?Id=1592002&SM=1

[Karthik R 246]

Now the Department of Telecom (DoT) is likely to recommend cancellation of Idea Cellular's licence in Karnataka along with that of Spice in Andhra Pradesh. Idea Cellular is promoted by the Aditya Birla Group.

Idea Cellular had picked up 41.09 per cent stake in Spice in 2008 and the two had subsequently merged. This has led to a situation where the same company holds overlapping licenses in six circles. Idea maintains that it has not breached any condition of the license agreement.

The DoT is yet to approve the merger and is likely to issue a show cause notice to Idea and Spice for license cancellation in Karnataka and Andhra Pradesh respectively. The notice is also likely to say that Idea and Spice have not met their rollout obligations.

NDTV profit

[Karthik R 246]

Loop Telecom to get showcause notice for violating norms

The telecom department will issue showcause notice to mobile company Loop Telecom, asking why its licences in 21 regions across the country not be cancelled for violating rules that govern the communication sector.

An internal probe by the department has revealed that the Essar Group held more than the 10% permissible stake in Loop Telecom, one of the companies that bagged pan-India mobile permits in 2008 under controversial circumstances.

Indian laws prohibit a single group, which already has more than 10% stake in one mobile operator, from owning more than 10% in another. Essar is a 33% shareholder in Vodafone Essar.

The department, in its draft showcause notice reviewed by ET, said, "Essar Group under a corporate veil and its complex web of companies is indirectly holding substantial equity in Loop Telecom as well as the Vodafone Essar Group of companies which had mobile permits for the 21 circles for which Loop had applied and obtained licences in violation of the licence agreement". It also lists the different companies as well as the financial transactions between Essar Group and Loop Telecom to substantiate its findings.

A top telecoms department official confirmed that Loop Telecom would be issued a showcause notice, but said that the observations in the draft show cause may not necessarily reflect in the final one issued to the company. "We confirm that we are in compliance with UAS Licence norms," the Loop Telecom spokesperson said.

Last week, the Enforcement Directorate had charged Loop Mobile for FEMA violations of 431 crore and said the company had failed to report 'receipt of funds from abroad and issuing of shares to foreign investors within stipulated time frame'. Loop Telecom too was involved in similar violations resulting in contraventions of Rs. 184.28 crore, the agency had added.

The Essar Group said it was aware or received any such communication from the telecoms department and the company added that it was in compliance with UAS license norms. Its CEO Prashant Ruia had recently told ET that the Ruias were only a minority investor with a 1.5% stake in Loop Telecom and had no say in its running its businesses, nor had any intention of increasing their holding in the embattled mobile operator in the future.

He said, Loop was now 98.5% owned by the Dubai-based Khaitan group. Loop's main shareholders include Ruia's aunt Kiran Khaitan and her husband IP Khaitan. Kiran is sister of Essar group's founders Shashi and Ravi Ruia .

Investigating agencies have been specifically examining investments of 1,592 crore made by the Essar Group into Loop's controlling companies to find out whether this was used to bankroll its application for mobile permits in 2007.

The DoT in its draft showcause said the 1592-crore investment was outstanding as of May 19, 2009. "This means as of March 19 2009, Loop Telecom continues to be an Essar Group company and the directors on board of Loop Telecom represent the Essar Group," the draft notice said.

Its findings further add that two companies that held stake in Loop Telecom - Essar Teleholdings Ltd and Essar Investments Ltd - both belonged to the Essar Group and has been accepted as "associate companies". But during the earlier interaction with ET, Ruia said Essar and Khaitan group companies had a financial relationship that pre-dated Loop's application for permits.

He had said the Khaitan Group has invested around Rs 2,951 crore in Essar debt between October 2005 and July 2006, while Essar had invested Rs 1,592 crores in debt securities of Khaitan company Santa Trading between July 2005 and December 2006.

"Therefore, as of the date of the application (September 3, 2007), the net investment by the Khaitan Group in debt securities of the Essar Group was approximately Rs 1,358 crores. There was therefore no question of any net lending to Khaitan Group by Essar Group as has been alleged," Ruia had said. Loop came into being after Essar's 2005 acquisition of the erstwhile BPL Mobile, which saw three of the acquired firm's operations, merged with the then Hutchison Essar (now Vodafone Essar) and its Mumbai operations spun off into a separate company.

- Economic Times

[kesav 127]

DOT issues INR 1.5 bln penalty to old telecom firms

Indian telecommunication ministry has finalised a penalty demand of over INR 1.5 billion to old mobile operators for their failure to roll-out services on time, reports the PTI citing a senior Department of Telecommunication (DoT) official. Last year, DoT had issued 119 notices to telecommunication operators for slipping on network roll-out obligations and had levied penalties on them. It has collected over INR 3 billion from them in penalties. Earlier, the ministry had proposed penalty of INR 4.77 billion against old operators, including Bharti Airtel, Tata Teleservices, RCom, Aircel and others for missing roll-out obligations. However, after interest component, the total penalty comes to little over INR 1.5 billion from all the operators together, the sources said. No notice has been sent to any player in this regard. The penalty was lowered after several representations by the operators, who said that roll-out obligations should come into effect from the date of allotment of spectrum and not from the date of issuance of licences. The sources also claimed that statutory clearances came through late, leading to delays in the roll-out of services. As per the earlier calculations, Bharti Airtel had a penalty of INR 310 million, while Tata Telesevices (CDMA operations) was likely to be asked to pay over INR 400 million. DoT also issued notices for terminating telecommunication licences to telecommunication operators, asking them to reply within 60 days as to why their licences should not be cancelled.

source :: http://www.telecompaper.com/news/india-issues-inr-15-bln-penalty-to-old-telecom-firms

[kesav 127]

TRAI, DoT spar over cancellation of licences

The Telecom Regulatory Authority of India (TRAI) and the Department of Telecommunications (DoT) are at loggerheads over the cancellation of licences of new operators that failed to meet their rollout obligations. The TRAI has now written to the DoT seeking reasons for considering 15 cases for cancellation against 69 recommended by the telecom sector regulator.

“We have received the letter [from DoT], we have examined it and have written back to them to give us the case-wise details…we have requested them [DoT] to provide us their details of each licence, and also if the legal opinion [was taken], if any. We are awaiting the reply… As soon as we receive information, we will respond,” TRAI Chairman J.S. Sarma told journalists here.

The DoT and the TRAI are not agreeing on the cut-off date for the allocation of spectrum, as the former says a licence can be cancelled for not meeting the roll out obligations only after a lapse of 104 weeks from that date of allocation of spectrum and not the date of grant of licence. According to licence terms, an operator is required to cover 10 per cent of a circle covered in the first year.

So far, the DoT has sent 10 notices on account of delay in network rollout, while the remaining five are in the process, besides collecting over Rs.300 crore as liquidated damages from all the new operators. In its report last year, the TRAI had ordered cancellation of licences issued in 2007-08 by the former Telecom Minister, A. Raja, accused of selling licences and spectrum, and causing the exchequer huge losses.

source :: http://www.thehindu.com/news/national/article2048576.ece

[kesav 127]

Telecom Commission for change in methodology to calculate penalty

The Telecom Commision, the apex policy making wing of the Union communications ministry, has dismissed the recommendations of an inter-ministerial panel that was asked to determine the penalty for breach of licence conditions by mobile phone companies.

Instead, the TC wants the telecom department to frame a set of internal guidelines on determining the size of penalty on a case-to-case basis depending on the gravity of the violation.

It has also called for constitution of a smaller panel comprising members of the the department''s licencing, finance and wireless access wings to propose a suitable penalty for each individual licence condition breach, and place the same to the telecom secretary and communications minister for final approval.

The Telecom Commision believes the quantum of penalty should be determined only after factoring in the level of a licencee's culpability, the potential revenue loss to the government, the net wrongful gains made by the erring mobile phone company and the level of deterrence merited.

It also calls for stringent action against all telcos that compromise on the national security parameters in the licence agreement. "Security conditions cannot be compromised and any breach in this light should be dealt with strictly," says the internal TC communique.

source:: http://telecomtiger.com/PolicyNRegulation_fullstory.aspx?storyid=11359&section=S174

[Karthik R 246]

Trai says cancel 69 telecom licenses, DoT agrees to only 8

New Delhi: The department of telecommunications (DoT) has decided to move for cancellation of only eight licences for failure of telecom operators to meet rollout obligations, against the Telecom Regulatory Authority of India's (Trai's) recommendation that 69 licences be cancelled. According to data available till August 28, 2011, only Aircel (two), Dishnet (three), Etisalat (two), and Sistema Shyam (one) were issued show-cause notices for cancellation of licences.

Any licence termination can only occur after the conclusion of a long legal battle. Apart from this, since companies have got away with a large majority of their licences intact, the impact on their business is negligible. Consumers are also largely insulated from this move, as the violation signifies lack of network and therefore, subscribers. In any event, with number portability, the few subscribers, if any, can easily migrate to the 10-13 other operators in the same circle.

Documents with TOI reveal strong reluctance on DoT's part to cancel more than these eight licenses, based on disagreement with the

Trai on the very definition of rollout obligations. The telecom regulator had made statutory recommendations under Section 11 of the Trai Act and DoT has been grappling with the recommendations for over nine months.

If this confrontation between DoT and Trai continues, the holders of the remaining 61 licences are likely to get away by paying penalties as opposed to licence cancellation.

Rollout obligations are one of the key licence conditions in terms of public/consumer interest since it is an indication of how far and how soon an operator rolls out the network. The spread of network, in turn, increases competition - which places downward pressure on consumer tariffs.

After the CAG report on the 2G spectrum scam, dated November 16, 2010 was released, pointing to a Rs 1.76 lakh crore loss to the exchequer, a PIL was also filed in the Supreme Court. Simultaneously, on November 18, 2010, Trai wrote to the DoT recommending cancellation of 69 licences granted by ex-telecom minister A Raja on account of violation of rollout obligations.

Trai had determined that 38 of the 69 licences were straight cases for cancellation, while in the remaining 31, DoT should "seriously consider cancellation after legal examination in view of non-utilization of spectrum and resultant loss of revenue to the exchequer, in addition to the imposition of liquidated damages as per license conditions".

Rollout obligations become even more important in the current context since the government had argued that it was giving away spectrum in 2008 at 2001 prices to 121 new unified access service licensees and 35 dual technology operators purely to serve consumer interest - the need to have a higher degree of competition in order to reduce tariffs further. Three years later, Trai found that at least 69 of these licensees had not even met their preliminary rollout obligations.

Source :

Times Of India