Slowdown forces ArcelorMittal to write down European biz value by $4.3 bn
Plane deregistration: German bank sues DGCA, Kingfisher

Corporate Dec 21, 2012

Voda, Idea, Tata and Aircel get notices for 3G roaming

By Sindhu Bhattacharya

New Delhi: The Department of Telecom (DoT) sent out show cause notices to four telcos late this evening, asking them why penalties should not be imposed on them for providing 3G intra-circle roaming in those circles where they did not possess 3G spectrum licences. DoT has sought a reply to the notice by 18 February.

Industry sources told Firstpost that notices were sent out to Tata Teleservices, Vodafone, Idea Cellular and Aircel. A Vodafone spokesperson said no notice had come so far, while spokespersons of other telcos did not respond to queries on this matter.

Spectrum tales. Reuters

Earlier, DoT had warned telcos against continuing 3G intra-circle roaming since this could increase the amount of penalty such companies would have to pay eventually. Last month, DoT had issued a similar show-cause notice to Bharti Airtel, asking it to explain why action should not be taken for offering 3G services in those circles where it did not bag 3G spectrum.

Through such notices, DoT is seeking immediate suspension of 3G service but has provided each telco a 60-day window to explain why penalties should not be imposed.

If telcos are ultimately found guilty, not only will they have to shell out the mandatory Rs 50 crore per circle penalty, they will also have to surrender revenue earned by offering 3G roaming in this 60-day period as "undue enrichment" has already been identified as a sum which will accrue to the government.

"If they continue offering 3G roaming despite the show cause notice, they are doing so at their own risk," a top DoT official said earlier.

These sources had said earlier that the Delhi High Court, which stayed the order banning 3G roaming pacts last month, only prevents DoT from taking any coercive measures against Bharti.

According to documents reviewed by Firstpost earlier, DoT had sought legal opinion on 'unjust enrichment'. Put simply, this means that apart from charging for licence violation, DoT also wants to recover the revenues that telcos have gained by offering intra-circle roaming on 3G services. So, not one but two show cause notices may be on their way.

Bharti, Vodafone, Idea and Aircel had won 3G airwaves in 13, 9, 11 and 13 circles, respectively and their roaming pacts ensured that customers could access high-speed data services on a pan-India basis.

Bharti is a 'taker' of 3G spectrum, or uses high-end frequencies of other operators, in seven regions where it does not have 3G spectrum bandwidth. The show cause notice sent by DoT seeks to levy total damages of Rs 350 crore (Rs 50 crore per circle) on Bharti. The circles where it has been asked to stop 3G services are Maharashtra, Madhya Pradesh, Kolkata, Uttar Pradesh East, Gujarat, Kerala and Haryana.

The DoT sources quoted earlier said notices are being issued to only the 'takers' as of now.

Similarly, Vodafone, Idea, Tata Tele and Aircel use each other's networks in circles where they themselves are not present to offer 3G services. Earlier this year, the Telecom Dispute Settlement Appellate Tribunal (TDSAT) gave a split verdict on a petition filed by telcos, challenging an order by DoT to stop such roaming pacts.

The government had raised over $12 billion from 3G auctions in 2010.

But no company managed to win airwaves in all of the country's 22 service zones as the bid prices were much higher than expected - this is what led to intra-circle roaming pacts.

by Sindhu Bhattacharya

Related Stories.