Madras High Court asks Trai to revise tariff on Cable Landing Stations

The Madras High Court has ordered the Telecom Regulatory Authority of India (Trai) to re-do the charges it has fixed on the access facilitation and others, as its assessment of factors to arrive at these charges lack transparency. The telecom regulator has to arrive at new charges in six months, ensuring transparency.

The order was issued in appeals filed by Tata Communications and Bharti Airtel against a single judge order, which upheld the Trai’s decision on the tariff. The matter pertains to a complex technology and technical equipments by which various communication service providers in India are linked to the rest of the world by way of submarine fibre cables, which run beneath the sea. The dispute is on the Cable Landing Stations (CLS) regulations and the charges payable by the access seekers to owners of CLSs.

The appeal is against Trai, Bharat Sanchar Nigam, Association of Competitive Telecom Operators, Reliance Communications, in which Reliance Jio Info Comm is an intervenor in the appeals. Trai has issued three regulations, one in 2007 and two in the year 2012, to regulate and fix charges payable by the access seekers to the owners of the CLSs. 

In 2007, the Trai has brought in a regime of self regulation approving the rates that are to be charged by the CLS owners from the access seekers, but did not fix the rates. In 2012 the CLS Amendment Regulation authorised Trai to prescribe charges for CLSs. Trai came up with CLS co-location charges regulation, the charges fixed by Trai has brought down the rates that were approved in 2007 by as much as 79-97 per cent. This is the trigger for the entire litigation. The Single Judge upheld the Trai decision, against which Tata Communications and Bharti Airtel approached the division bench.

In an order issued today, the Division Bench dismissed the appeals partly, dismissing the challenge to the regulation of 2007 and the CLS Regulation and CLS Amendment Regulation, 2012. However, the Court quashed the Schedules I, II, and III of The International Telecommunication Cable Landing Stations Access Facilitation Charges and Co-location Charges Regulations, 2012. 

"TRAI shall redo and re-enact the aforesaid quashed schedules.... after strictly following the procedure for subordinate legislation making, particularly transparency and principles of natural justice which have also been built into Section 11(4) of TRAI Act within six months from the date of receipt of a copy of this order," said the order issued by the first bench of Chief Justice Indira Banerjee and Justice M Sunder. The regulation in 2007 and the other regulation in 2012, has been kept in abeyance for a period of six months from the date of receipt of a copy of this order or redoing/ re-enacting the schedules whichever is earlier. 

While the Court said that the CLS Regulations and the CLS Amendment Regulations are sustained, it observed that the utilisation factor being taken as 70 per cent and the conversion factor being fixed at 2.6 under these three schedules of the regulation, breach the requirement of transparency and natural justice principles which are non negotiable ingredients of subordinate legislation making. "This has a direct impact only on the access facilitation charges, annual operation and maintenance charges and co-location charges contained in Schedules I, II and III of the CLS Co-location Charges regulations. These three schedules deserve to be quashed," said Justice Sunder.