DCC may take call on Rs 3,050-cr fine on Airtel, Voda-Idea after July 24

At the upcoming meeting of the Digital Communications Commission (DCC) slated to be held on July 24, the top agenda will be a discussion on whether it will agree with the recommendation of the Telecom Regulatory Authority of India (Trai) to impose over Rs 3,050 crore of penalty against Airtel and Vodafone-Idea for non-compliance of the terms and conditions of the telecom licence or find justification for reducing the quantum of fine that the telcos have to fork out.
 
Whatever the outcome, both sides — Reliance Jio, which is the aggrieved party, and the two (earlier they were three before Idea and Vodafone merged) telcos — are planning to take the matter to court if the decision goes against them.
 
The DCC’s deliberations on the issue has dragged on for three years, bringing out into the open the serious differences between Trai and the commission on the question of both the regulator’s jurisdiction as well as quantum of penalty given. Now, it has taken on a new twist with the Central Vigilance Commission (CVC) seeking an investigation on a complaint that certain officers in the telecom ministry were delaying the process of the imposition of the penalty allegedly in connivance with some telcos. Last week Minister for Communications Ravi Shankar Prasad told Parliament that DoT has examined the allegations and has alreadt submitted a report to the CVC.
 
In the last meeting of the DCC held on June 17, the consensus was to uphold Trai’s decision to impose the fine. However, some members said that given the financial health of
the telcos and the industry, the quantum of fine should be reduced. This led the commission to refer the issue of the amount of the fine back to Trai for a review.
 
The regulator responded on June 21, saying that there was no question of any change in the fine. It pointed out that DoT though its letter on April 5, 2017, had already requested the regulator to provide the basis on which the penalty was recommended and Trai had responded by its letter on May 24 of the same year that it had given a detailed response on this when it had reiterated its earlier recommendations of a fine of Rs 50 crore per circle. Says a senior official involved in the discussions, “The quantum of penalty is determined in law by the severity of the violation, not the financial health of the offender. If that happens, every income tax payer or corporate will take the same stance.”
 
The saga of the penalty on telcos started in September 2016 when Jio, which had just started services, was facing increasing call failure rates on its network due to point of interconnect (POI) congestion with the incumbent operators. Trai shot off a show cause notice to the incumbent telcos, alleging deficiency in following quality of service norms. This was soon followed up by a direction to ensure compliance with the norms. When the situation did not improve, in October 2016, Trai slapped a fine against the three incumbent telcos — Airtel, Vodafone, and Idea — because they had denied interconnection to Reliance Jio, the new kid on the block, allegedly to stifle competition.
 
Jio said that it had requested the telcos through various letters for interconnection, but did not get it. The incumbent operators, on the other hand, pointed out through the Cellular Operators Association of India (COAI) that Jio had already started its commercial launch in the garb of beta testing, leading to huge voice and data traffic because of free usage. They argued that they were in no position, by way of network or financial resources, to terminate calls which were markedly asymmetric (most of Jio’s calls terminated in the incumbent networks and not vice versa), and neither were they obliged to entertain interconnect requests which were derived from abnormally induced traffic patterns (because Jio was offering free voice and data at the time).  According to sources involved in the discussions in DoT, many wondered if the regulator had the power on matters related to interconnection or even the power to impose fines at all. However, in response to Jio’s letter seeking augmentation of point of interconnect, DoT had stated clearly in September 2016 that under the Trai Act, matters related to interconnectivity between service providers was under the purview of Trai. Senior law officers of the government also opined that there was nothing illegal or wrong with the regulator’s recommendations.
 

In April 17, 2017, the DoT sent back the recommendations to Trai for reconsideration, which it could do under the law. The regulator not only stuck to its guns, but in its response, made it clear that under the licence conditions, the telcos were bound to maintain quality of service norms, failing which, it was a breach of the licence too. It added that non-compliance of licence conditions warranted revocation of licence, but to avoid consumer inconvenience, it was only recommending a fine.
 
Subsequently, DoT set up a committee of seven members to look into the Trai recommendations once again. After over a year of deliberations, the committee eventually gave its report in November 2018. The majority view was that the regulator had no jurisdiction when it came to imposing a penalty and that it lay with the Telecom Disputes Settlement and Appellate Tribunal (TDSAT). However, it left the final decision to the DCC.
 
Yet a Supreme court judgement in 2018 had clearly affirmed the position of Trai as a sectoral regulator. The ruling said that since Trai is constituted as an expert regulatory body which governs the telecom sector, disputes (such as whether Jio’s demand for PIOs was reasonable or not or whether there was any delay or denial in the provisioning of POIs) are to be decided by Trai in the first instance. It pointed out that the Trai Act and the Regulations framed thereunder have detailed provisions regarding the obligations of telcos to provide POIs. Even the consequences of breach of such obligations are mentioned.