TRAI insists on cancellation of several Loop, MTS & Uninor licenses as DoT demurs

Disagreements have cropped up between the Department of Telecom and the Telecom Regulatory Authority of India (TRAI) over the cancellation of 31 licenses belonging to Loop Telecom, Sistema Shyam (MTS) and Uninor (Unitech-Telenor) See chart of the licenses

While the regulator wants these licenses to be cancelled for failing to launch services within two years of getting spectrum, the Department of Telecom (DoT) has written back to TRAI saying it may not be justified to do so.

The TRAI had, in November and December, written to the DoT to cancel 43 licenses, out of which only 12 have been taken up for cancellation by the DoT. Under the terms of India’s telecom license, companies have to launch their service within two years of getting the spectrum and clearances.

However, according to the department, it would be wrong to say that these operators did not launch their services as they did put up some towers — even if they did not launch services in the commercial sense of the term.

Whether or not they launched actual plans and services is immaterial as they had put up some cell-phone towers and created the radio network, DoT said in a letter to TRAI.

Indeed, nearly all the new operators had installed at least one or more towers in the district headquarters. Since a single tower can cover an area up to several kilometers, they could claim that they had indeed covered the minimum area that they were required to within two years according to their license.

It is another matter that many of these did not actually start commercial operations in the usual sense of the term — setting up distribution, promotion, tariff schemes etc.

Indeed, if they had started selling SIM cards to subscribers, it is doubtful if their basic networks would have stood the load.

However, DoT told TRAI that, in its opinion, even people who have created such a skeletal infrastructure — but had not launched any commercial plans or schemes — should be considered as having started their operations in these circles.

“It is the case of the DoT that there is no specific provision for minimum number of BTSs (towers) and subscribers in the network for the assessment of roll-out obligations,” it said, sending TRAI recommendation for action against these 31 licensees back to the regulator.

It further pointed out that these operators had notified the DoT that they have completed roll-out and such a notice “is treated as fulfillment of the roll out obligation” as long as subsequent checks found that the network was indeed present in that area, as claimed in the notice.

TRAI, however, opposed this view. It pointed out that a mobile operator that does not have any subscribers or plans or outlets or dealers or advertisements cannot be considered an operational mobile operator.

It pointed out that the telecom license specifically requires the operator to “bring its services into commission” within the stipulated time of two years.

It argued that “commissioning of service” is further explained in the license in the following way: “commissioning of service means complete installation of all necessary equipment and offer of service to the subscribers so as to meet the stipulated performance roll out obligations.”

In other words, TRAI says “offer of service to customers” is as integral a part of commissioning of service as installation of equipment. As long as the operator is not offering its services to the subscribers on a commercial scale, it cannot be considered to have commissioned its service, it noted.

“Further, the licensee should also make the system operational in terms of offer of its services to the subscribers which include provision of service, treatment of subscriber complaints, issue of bills to its subscribers..,” it added.

It further revealed that 29 out of the 31 licensees in question have neither filed any tariff plan or reported their total revenue to it during the two years — as is required under the telecom laws of the country for all operational service providers; proving that they were not operational.

TRAI also got two retired Supreme Court judges to support its stance in separate legal opinion on the matter, which was also attached to its reply to the DoT.

On a separate matter of another 31 telecom operators who have met the roll-out criteria, including offering their service to customers, but have failed to garner enough subscribers, TRAI suggested that they too should be considered as possible candidates for license cancellation.

Since the TRAI has now re-recommended the license cancellation of these 31 operators (see chart), the Government can now take a final call on the issue.