Govt to fine erring telcos to prevent court battle

Baulking at the idea of fighting an indefinite court battlewith telecom companies after the cancellation of licences for failure to meetroll-out obligations-which would also mean putting the precious spectrum usageon hold till the verdict-the department of telecommunications (DoT) iscontemplating letting off some operators with a penalty.

A top government official said it could take a lenient viewon cancellations of licences. Those operators who have fulfilled the norms fornetwork rollouts may be given some consideration, which could mean they wouldbe monetarily penalised.

"But those operators who have not bothered to roll outnetworks yet and have been unable to meet the norms even now will still facecancellation of their licences. This is the thinking in the government," saidan official requesting anonymity.

There is also an opinion building up in the government thatit cannot afford to waste precious spectrum as operators who lose theirlicences will move court and the spectrum would be put on hold till the courtverdict is given, which could take years.

The DoT officials also admit that besides foul play by theoriginal allottees of telecom licences-which they sold off to others includingforeign players at much higher rates-there were many other factors responsiblefor delay in rollouts.

Operators have already told the government that the ban onChinese equipment was one of the main factors that delayed the rollout. Chinesetelecom equipment were far more costeffective compared to western telecomequipment.

The Telecom Regulatory Authority of India (Trai) had earlierrecommended cancellation of 74 licences given to telcos for missing out ontheir roll- out obligations but DoT scaled down the number to 12.

"The entire scam is the creation of local companies.International players like Norway'sTelenor, Russia'sSistema and others entered into the telecom business in India later.The government is taking a holistic approach as it is impacting foreigninvestment that is recovering now," said an industry official.

For the government, cancellations of telecom licences is amulti-pronged danger, including loss of revenue and employment - one telecomlicence generates around 800 to 1,000 jobs - and loss of confidence amongstpotential investors.

Sistema Shyam TeleServices Ltd (SSTL), which operates underthe brand name MTS, received a show-cause notice late last year for not havingrolled out its network in the Assamcircle.

But they met the rollout obligations by launching their operationsin February this year.

Therefore, SSTL stands to benefit if the government islenient.

However, Dishnet's three licences and Etisalat's two areunlikely to get any reprieve as they have not been able to meet the rolloutobligations.

According to the rollout conditions, operators have to cover10 per cent of the district headquarters within the first year of allotment ofspectrum. And after expiry of another 52 weeks, after claiming liquidateddamages, the licences can be cancelled in case the services are not rolled outas per licence conditions.

Trai, in its recommendations in November last year, hadasked DoT to cancel 43 telecom licences as the companies were given spectrumbut did not roll out the network within the stipulated 52-week period. Theremaining 31 licences in the regulator's list showed technical roll out oftheir network but the roll-out was either negligible or improper.

Courtesy: Mail Today