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Trai says cancel 69 telecom licenses, DoT agrees to only 8

NEW DELHI: The department of telecommunications (DoT) has decided to move for cancellation of only eight licences for failure of telecom operators to meet rollout obligations, against the Telecom Regulatory Authority of India’s (Trai’s) recommendation that 69 licences be cancelled. According to data available till August 28, 2011, only Aircel (two), Dishnet (three), Etisalat (two), and Sistema Shyam(one) were issued show-cause notices for cancellation of licences.Any licence termination can only occur after the conclusion of a long legal battle. Apart from this, since companies have got away with a large majority of their licences intact, the impact on their business is negligible. Consumers are also largely insulated from this move, as the violation signifies lack of network and therefore, subscribers. In any event, with number portability, the few subscribers, if any, can easily migrate to the 10-13 other operators in the same circle.

Documents with TOI reveal strong reluctance on DoT’s part to cancel more than these eight licenses, based on disagreement with the Trai on the very definition of rollout obligations. The telecom regulator had made statutory recommendations under Section 11 of the Trai Act and DoT has been grappling with the recommendations for over nine months.

If this confrontation between DoT and Trai continues, the holders of the remaining 61 licences are likely to get away by paying penalties as opposed to licence cancellation.

Rollout obligations are one of the key licence conditions in terms of public/consumer interest since it is an indication of how far and how soon an operator rolls out the network. The spread of network, in turn, increases competition – which places downward pressure on consumer tariffs.

After the CAG report on the 2G spectrum scam, dated November 16, 2010 was released, pointing to a Rs 1.76 lakh crore loss to the exchequer, a PIL was also filed in the Supreme Court. Simultaneously, on November 18, 2010, Trai wrote to the DoT recommending cancellation of 69 licences granted by ex-telecom minister A Raja on account of violation of rollout obligations.

Trai had determined that 38 of the 69 licences were straight cases for cancellation, while in the remaining 31, DoT should “seriously consider cancellation after legal examination in view of non-utilization of spectrum and resultant loss of revenue to the exchequer, in addition to the imposition of liquidated damages as per license conditions”.

Rollout obligations become even more important in the current context since the government had argued that it was giving away spectrum in 2008 at 2001 prices to 121 new unified access service licensees and 35 dual technology operators purely to serve consumer interest – the need to have a higher degree of competition in order to reduce tariffs further. Three years later, Trai found that at least 69 of these licensees had not even met their preliminary rollout obligations.

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