Trai firm on its decision to cancel 74 licences

In a development that may put the Telecom Ministry in a dilemma, regulator Telecom Regulatory Authority of India (Trai) has stood by its decision to recommend cancellation of 74 licences due to missing roll-out obligations against 12 asserted by the DoT.

The Trai has also obtained legal opinion on this.

"The authority has obtained legal opinion from two eminent jurists (former judges of the Supreme Court) which support this view," Trai said in a communication to the Department of Telecom (DoT).

Trai's fresh communication comes in the wake of the DoT's letter to the regulator asking it to reconsider its earlier recommendation in which it had recommended cancellation of 74 licences issued since December 2006.

The DoT has scaled down the number to 12 from 74 suggested by Trai. In total, DoT has expressed that 15 licenses can be cancelled for missing roll-out obligations. These 15 licenses include 3 licenses which were not recommended by Trai.

"While agreeing with the DoT in respect of the 3 cases, in respect of the balance cases, the authority would like to leave it to the DoT to calculate the amount of liquidated damages to be imposed, after duly taking into account all the factors," Trai added.

The DoT is of the view that going by licence terms and conditions, the licencees are liable to pay liquidated damages if services are not rolled out within 52 weeks. As per the conditions, the operators have to cover 10% of the district head quarters within first year of allotment of spectrum.

And after expiry of another 52 weeks, after claiming liquidated damages, the licences can be cancelled in case the services are not rolled out as per licence conditions.

Trai said telecom operators whose licences should be cancelled never notified their tariffs, submitted their subscriber numbers and did not pay licence fee to the government till the time the recommendations were made.

"The authority recommends that four licenses given to Videocon in Assam, J&K, Kolkata and North East may be cancelled as per licence conditions besides imposition of liquidated damages," it said.

Trai in its recommendations last year had asked the DoT to cancel 43 telecom licenses outright as they were given spectrum but did not roll out network within 52-weeks.

Rest of 31 licences in the regulator's list showed technical roll-out of their network but the roll-out was either negligible or not proper.

Trai in November 2010 has recommended DoT for cancellation of several licences of Uninor, Etisalat, Videcon and Aircel and others in some telecom circles.