TDSAT upholds DoT directive on licence fee by ISPs

In a setback to Internet Service Providers (ISPs) facilitating Net-based telephony, the TDSAT has rejected a petition challenging the government's direction to operators to pay 6 per cent of their adjusted gross revenue (AGR) as licence fee.

The Internet Service Providers Association of India (ISPAI), which challenged the DoT directive to pay 6 per cent AGR as licence fee from January 1, 2006, said the DoT had no jurisdiction to unilaterally amend the terms and condition of their licence agreements and hence the amendment was "ultra vires" (beyond the powers).

According to the ISPAI, such a review could only be done by regulator Trai.

However, TDSAT rejected the contention after noting there was a contractual obligation for such an increase in their licence condition if it was acceptable to both the parties.

"The petitioners have not shown anything which may suggest they objected to this condition. Therefore, the decision of the respondent to amend the term relating to licence fee cannot be challenged on this ground," said TDSAT Chairman Justice Arun Kumar.

TDSAT also rejected the ISPAI's contention that any amendment by the DoT in their licence was equivalent to a new licence and according to the TRAI Act, the regulator's recommendation was mandatory.

"The power to amend the relevant terms of licence is contained in the original licence and the respondent in exercise of that power amended the term relating to licence fee. This cannot be said to be a case of grant of a new licence. We find no merit in the arguments on behalf of the petitioners (ISPs) that the amendment of the term of license regarding license fee is illegal and is liable to be quashed," said the tribunal.