The Department of Telecommunications (DoT) on Tuesday allotted broadband wireless access (BWA) spectrum to US telecom giant Qualcomm Inc but with its validity reduced from 20 to 18.5 years. The DoT also made the roll-out obligation tougher by reducing it from five years to three and a half.
The move, top sources close to Qualcomm say, will be challenged by the company in the appellate tribunal, TDSAT. Qualcomm had won BWA spectrum in four circles (Delhi, Mumbai, Kerala and Haryana) for Rs 4,900 crore in 2010. It had challenged the government’s decision to delay the issuance of a licence as well as spectrum in the TDSAT.
The company received its licence in March this year, as the TDSAT directed the DoT to do so after Qualcomm forked out Rs 410-crore disputed dues its partners had to pay to the government. Qualcomm had roped in Tulip Telecom as well as GTL, which together hold 26 per cent stake in the BWA company.
R Chandrashekhar, secretary in the DoT, said, “We have sent a letter to the company for the issuance of spectrum. However, the validity of spectrum usage has been reduced by 18 months.”
When asked about the reason, Chandrashekhar said it was because of a delay on the company’s part.
“The rules were known to the company in advance. Earlier, they did not have FIPB clearance, then the application was not made in time,” he said.
|JUN 2010 Qualcomm emerges winner in four circles in BWA auction
|SEP 2011 DoT rejects Qualcomm’s application, saying only one ISP licence can be issued, not four and the company did not apply in the three-month window
|OCT 2011 Qualcomm moves TDSAT
|OCT 2011 DoT agrees to give one ISP licence on fulfilment of conditions
|FEB 2012 DoT accepts Qualcomm’s offer to pay dues of its Indian partner; TDSAT asks DoT to issue a licence within a week of payment of dues and grant spectrum
|MAR 2012 DoT issues licence to Qualcomm, company applies for BWA spectrum
|APR 2012 Qualcomm CEO Paul Jacobs meets Communications Minister Kapil Sibal
|MAY 2012 DoT issues letter for allotment of BWA spectrum to Qualcomm after reducing the spectrum validity
The DoT, in its letter to Qualcomm, said the right to use BWA spectrum would be up to November 7, 2030 from the effective date of the issuance of spectrum i.e. the date of the letter. “The licensee will ensure at least 50 per cent of rural areas are covered up to October 11, 2015. The commercial operation should not be commenced before the grant of operating licence,” it added. It said if the licensee did not achieve the roll-out obligations, the spectrum would be withdrawn.
When contacted, Qualcomm confirmed it had received the allocation letter. According to sources, the letter sent to the company does not give any reason for the reduction in validity.
The DoT move comes after Reliance Infotel, which has pan-India BWA spectrum, communicated to the government its licence validity should be extended to 22 years to make it co-terminus with that of Qualcomm and ensure a level playing field.
DoT sources say Reliance Infotel had pointed out that as BWA technology based on Long Term Evolution (LTE) was getting standardised and the process took time, it was unable to launch services.
DoT quickened the process for giving spectrum after Qualcomm Inc CEO Paul Jacobs met Communications Minister Kapil Sibal on April 13 and was assured the spectrum would be given within two weeks.
The company had also given a legal memo to Sibal, detailing the facts of its case. That is expected to be the basis of the company’s submission in the TDSAT against the riders now imposed.
Sources say the DoT order would make it difficult for the company to find a partner (it does not want to run the services itself) to operate the licences. The company would be willing to pay a lower price after the spectrum validity has been reduced.
The company, according to DoT sources, argued in the legal memo the rejection of its ISP (internet service provider) licence applications by the DoT was wrongful and on grounds extraneous to the notice inviting applications. Qualcomm said it did not cause any delay in the grant of an ISP licence or the allocation of BWA spectrum. To the contrary, it said it filed its applications for an ISP licence more than a month within the DoT’s deadline. Likewise, Qualcomm said it filed its applications for spectrum less than a week after receiving its ISP licence. Thus, it said there was no basis for the DoT to claim the company missed any filing deadline or caused any delay.
Similarly, it said the DoT did not inform the company that it should have filed one ISP application instead of four until it issued its letter rejecting the applications, over a year after they were filed. Meanwhile, during that one-year period it said it repeatedly requested the expedited issuance of a licence by the DoT and promptly responded to all queries with regard to the processing of its ISP applications, as late as June 27, 2011.
In its submission to Sibal, Qualcomm also argued the DoT had different rules for different operators. It said the DoT chose not to penalise another BWA company that won a bid for spectrum, though it received its ISP licence and spectrum a year after the auction results were announced.
It has argued the requirement to approach the FIPB (which did not apply to all licensees) and delays caused by it severely prejudiced the company’s position. According to the notice inviting applications, the allocation of spectrum is an automatic process after the ISP licence has been granted. The TDSAT judgment specifically provided that the company could not be penalised, said Qualcomm.
4G services will offer much faster data speed than 3G services. Other companies to have won BWA spectrum in the auction include Bharti Airtel, Reliance Industries (after acquiring Infotel Broadband) and Aircel. Only Reliance Industries has a pan-India licence to offer BWA services. Bharti launched 4G services in Kolkata and Bangalore recently.