When push comes to shove: Telecom battles go to court

Past year saw firms resorting to legal challenge against each other and questioning Trai in new ways

The launch of Mukesh Ambani's Reliance Jio mobile services in September 2016 seems to have stirred the $30 billion (Rs 2 lakh crore) Indian telecom market in a number of ways.

The past year has in fact been witness to rivalry breaking new ground. Unlike the earlier days, when companies resorted to the courts only in extreme circumstances, telecom giants are now actively seeking out judicial and quasi-judicial fora, not only against rivals but also the Telecom Regulatory Authority of India (Trai).

This trend began soon after the regulator's October 16, 2016, penalty recommendation totalling Rs 3,050 crore on Vodafone, Airtel and Idea. This was for not providing sufficient points of interconnectivity, on a complaint made by Jio only days after the launch of its network. The recommendation was almost immediately challenged at the high court (HC) here, with Vodafone making strong accusations of bias against incumbent operators and disregard to the principles of natural justice. This has spurred a war of words between established operators and new entrants.

Airtel has also approached the Telecom Disputes Settlement and Appellate Tribunal against Trai for not acting against Jio for alleged violation of regulatory orders constraining operators from offering free voice calls and extending of promotional plans for over a period of 90 days. Airtel says Trai's alleged favouring of Jio is killing competition.

These legal challenges have brought Trai again under scrutiny, after having faced embarrassment at the Supreme Court striking down the regulator's penalties against call drops in May, terming this arbitrary.

There is also Jio's complaint to the Competition Commission of India, alleging cartelisation between Vodafone, Airtel and Idea, in conjunction with the Cellular Operators Association of India. In an unprecedented move within the sector, Jio has made a request for a formal enquiry against the incumbent operators, alleging abuse of dominant position through strategic denial of interconnectivity and rejection of requests for mobile number portability. The Competition Act says no company may abuse a position of strength by restricting technological development or denying market access in a manner that might negatively affect customers.

Jio and Tata Teleservices have also decided to intervene in a pending challenge by Airtel and Vodafone in the Delhi HC, against the modification by Trai in 2015 of interconnection usage charges (IUCs), These are payable by interconnection seekers to providers, for utilisation of the latter's services in completing of calls made on other networks. Trai in 2015 had amended the 2001 regulations fixing the rate of IUCs, from 20p a minute to 14p a minute for wireless to wireless calls and zero for all other calls.

According to Deepak Premnarayen, president, IMC Chamber of Commerce and Industry, early operators with large market capitalisation are sure to face the heat ,whereas newer companies stand to gain, since the move will allow them to lower rates and adapt faster.

Trai has said the charges were lowered to further the adoption of wired line networks and promote high-speed internet connectivity. However, large telecom operators fear significant loss in revenue, as most of these interconnection requests are seen as likely to terminate on their networks, requiring large infrastructural costs to be borne by these entities. And, these operators have gone on to challenge Trai's power to fix a nil IUC under the 2001 regulations, which say such revenue sharing must be cost-based, considering network expenses and volume of traffic between operators. The operators also say the move affects technological compatibility, effective interconnection and adversely impacts competition.

Large operators have also questioned the intentions of Jio and Tata, arguing these newer operators are willing to face small losses as long as the established players suffer a greater fall in revenues and this contravenes ethical business practice.

This year is sure to witness more of this adversarial trend in the country's rapidly evolving telecom sector.