Cancel licences of erring firms: Trai

Targets telcos on roll-out and service grounds.

The Telecom Regulatory Authority of India (Trai) has recommended the cancellation of 69 of the 127 unified access service (UAS) licences issued by the government since 2006 for the failure by operators to meet their roll-out obligations or providing very poor coverage. Trai has made its recommendations to the department of telecommunications (DoT), which will take a final call.

Thirty-eight licences have been recommended for cancellation because operators failed to comply with the DoT stipulation of starting services in 10 per cent of the district headquarters and towns in a circle within one year of receiving spectrum. These include those belonging to new players Loop Telecom (14 circles), Sistema (10), Uninor (8) and Etisalat DB (2). The only older player on the list is Aircel (4).

Trai has also pulled up 31 other licensees for poor coverage and inadequate cell towers, saying their licences should also be cancelled after taking legal opinion. Companies that fall in this category include Etisalat DB (13), Videocon (10), Loop Telecom (6), Aircel (1) and Sistema (1).

The telecom regulator’s suggestions come close on the heels of a comptroller & auditor general (CAG) report that states the government could have earned Rs 679 crore in damages from six new operators for inordinate delays in their roll-out obligation until December 31, 2009.

The report also put most of these operators in the dock, saying DoT should not have issued them licences for violating various preconditions and misrepresenting facts.

Trai’s recommendations, analysts say, would bring pressure to bear on DoT to take action against the erring operators. A top DoT official said: “We will soon examine the issue of whether roll-out obligations have been met and take action, if required. Similarly, we are also looking at CAG’s recommendations and will see if action is necessary.” In both cases, DoT has the power to cancel the licences.

Trai officials say most of these licences and bundled spectrum were issued from January 2008 and April 2008 onwards, respectively, and the year-one roll-out period ended last year. However, under the rules, operators can continue to run services without meeting their year-one roll-out obligations for another year, provided they pay damages.

“Even that deadline ended in September and they have still not met their obligations under the licences,” said a Trai official. Officials also added that many operators were not using the scarce spectrum and had started services with just a few dozen towers and intra-circle agreements with other players just to show they had met roll-out obligations.

Responding to the regulator’s recommendations, some companies denied they had failed to meet their roll-out obligations. “We were the first company to launch services. The company has complied with all its roll-out obligations in all the 22 telecom circles and already secured over 7 million voice subscribers and over 300,000 data customers,” said a spokesperson for Sistema Shyam Teleservices.

A spokesperson for Delhi-based Uninor said: “We have not received any information from Trai regarding our licence in India. Therefore, we can't comment on this matter. However, Uninor has launched its services across India. We have 13.7 million customers.”

Points out a Loop Telecom spokesperson: "We have not received any communication from Trai or DoT, therefore cannot comment on specifics. Loop Telecom is in compliance with the roll-out obligations as per the UAS licence."
 

RECOMMENDED CANCELLATIONS
FAILURE TO MEET ROLL-OUT
Loop Telecom	14
Sistema-Shyam	10
Uninor	8
Aircel	4
DB-Etisalat	2
POOR SERVICE
DB-Etisalat	13
Videocon	10
Loop Telecom	6
Aircel	1
Sistema-Shyam	1