The Department of Telecommunications (DoT) has sought legal opinion from the Attorney General’s office on whether or not all the licences that have not been granted through the auction route need to be cancelled.
Till date the government has issued 277 licences to operators, either through the first-come-first-served route or a tendering process. The need for a clarification on the issue arose following a Supreme court judgment ordering the cancellation of 122 Unified Access Service Licences (UASL) granted in and after 2008 and saying that the government policy on granting licences on the first-come-first-served basis was not legal. The Court also directed the government to, instead, conduct auction of 2G spectrum.
A clarity on this issue is crucial as any adverse opinion would mean the cancellation of 51 more UASL licences that had been issued between 2004 and 2007, besides the 22 basic licences that had been given on the first-come-first-served basis in 2001.
That could have a major impact on some of the leading Indian telecom players like Aircel, Vodafone, Bharti Airtel, Tata Teleservices and Reliance Communications, among others.
From consumers’ point of view, it would mean the end of rock-bottom tariffs, as only 82 licencees (of the current 277) would be in operation across the country. In simple terms, it would mean that less than four operators would remain in each circle on an average, compared to an average of 12 at present.
In the present scenario, with the Supreme Court order asking eight operators to stop services within four months, only 155 licencees would remain in operation; that works out to an average of seven operators in a circle.
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Telcos like Vodafone have already questioned DoT’s first-come-first-served theory, arguing that they had got their licences on the “one-come-one-served” basis. A senior Vodafone executive said: “In 2004-07, we were given about eight UASL licences. However, we were the only ones who asked for it, there was no queue. It was fundamentally different from 2008.”
DoT has also sought advice on whether the government would have to pay back licence fees forked out by the 122 licencees, whose licences have been cancelled, and return the bank guarantees furnished by them.
A clarification on this issue is necessary as many of the new operators whose licences have been cancelled are preparing to go move the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), asking for financial compensation through a refund of licence fees with interest as well as compensation for rolling out services.
A top DoT official, confirming the development, said: “Yes, both these issues have been referred to the AG’s office as well as our own internal legal department. We will determine the future course of action only after getting their view.”
DoT has also asked for clarity on whether incumbent players need to be charged for start-up spectrum. Earlier, up to 4.4 Mhz spectrum came bundled with licences. With the Supreme Court saying that all spectrum should be auctioned, DoT needs clarity on whether they have to now pay a market-determined price for this spectrum.
It has also asked for clarification on the impact of the judgment on second-technology spectrum (which in all cases was GSM spectrum) given to dual-technology licencees (Reliance Communications and TTSL) and how that should be charged or dealt with.
Under the policy, CDMA players Reliance Communications and TTSL were also given 2G spectrum after paying Rs 1,651 crore for pan-Indian spectrum.
In addition to these, DoT has queried on the judgement’s impact on 3G spectrum holders, like S-tel and Idea Cellular, whose 2G licences have been cancelled in some circles.
The contentious question is whether or not they need to apply again for a UASL licence, without which they cannot hold 3G spectrum, according to the policy.
The government has also sought a clarification on whether or not it should continue to clear the launch of new services or allocation of number resources by the 122 cancelled licencees who have been given four months to close operations.