Tribunal quashes ban on 3G roaming pacts

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Govt fears cartelisation, may move top court

Tribunal quashes ban on 3G roaming pacts
They are celebrating together. Top telecom companies like Bharti Airtel led by Sunil Bharti Mittal, Vodafone of the UK and Idea Cellular led by Kumarmangalam Birla were on a high after the telecom disputes settlement and appellate tribunal (TDSAT) allowed them to provide 3G services beyond their licence areas, riding piggyback on each other’s networks.

In effect, the tribunal has set aside a nodal telecom department order asking these companies to scrap the inter-circle roaming agreements that were concluded to leverage the existing infrastructure, provide high-speed data and voice services beyond their zones. The tribunal also squashed Rs 1,200 crore penalties levied on the telecom operators.

This will also mean that Bharti Airtel, Vodafone and Idea Cellular will be able to spread out or save on capital investments as well as avoid duplication.

The only apprehension within government officials was that in case the troika went ahead with 3G roaming pacts beyond their assigned circles, it could eventually lead to formation of cartels.

Since the three account for the largest chunk of 900-million customer market in India, they may collude to dictate tariffs, tariff revision periodically and also ‘fix’ spectrum prices in future auctions.

Having lost out in the TDSAT, the government is weighing its options on appealing further before a larger bench of the Supreme Court.

In fact, it was the apex court that referred the dispute to TDSAT for an early ruling based on a representation made by the industry. Hitherto, in June 2012, the TDSAT had given a split verdict on the issue.

On Tuesday, the industry was euphoric following the tribunal ruling given that major players are expected to benefit in a big way in the short term and set a precedent for future.

So, Bharti Airtel can access Vodafone’s 3G network in four service areas like Maharashtra, Kolkata, Haryana and Uttar Pradesh East to provide 3G roaming services even though it does not have any presence in these circles.

Similarly, Vodafone can access Airtel’s 3G circles in Assam, Bihar, Karnataka, North East, Rajasthan and Uttar Pradesh West besides seven circles of Idea Cellular in Andhra Pradesh, Himachal Pradesh, Jammu and Kashmir, Kerala, Madhya Pradesh, Uttar Pradesh West and Punjab. Idea Cellular is yet to rollout 3G services in Punjab.

Under the agreement, Idea Cellular has the right to provide 3G services using Vodafone’s network in Delhi, Tamil Nadu, Chennai and Kolkata.

High cost of purchasing 3G spectrum in 2010 seems to have driven the three companies to sign the roaming pact across circles because none of them have a pan-India permit.

Telecom department had banned the arrangement with the argument that Bharti Airtel-Vodafone-Idea Cellular axis would allow companies to offer 3G services without licences and undue advantage vis-à-vis other players.

Citing the TDSAT ruling, cellular operators association of India (COAI) director general Rajan S Mathews said 3G inter-circle roaming rights were the ‘right’ enjoyed by winners in the 2010 spectrum auction as per investors’ agreements and licences.

Mathews told Financial Chronicle that the telecom department cancellation of these roaming agreements was in violation of assurances given during investors’ conference during spectrum bidding period.

Universal access services licence policy was subject to the legal decision of courts on inter-circle roaming.

On possible cartelisation, COAI cited the competition commission ruling saying, “There was none”. Cellular operators claimed that the TDSAT ruling was a ‘win-win’ for all the stakeholders.

While customers can get pan-India coverage and data offerings, the industry would quickly rollout the 3G services across zones. For the government, it means more revenue as the spectrum was put to use more efficiently, Rajan S Mathews said.

Telecom operators began launching 3G in 2011 and the premium services currently account for about 4 per cent of their revenue. But 3G revenue is growing more than 70 per cent annually and much beyond the voice services, analysts say.

The telecom department had slapped penalties of Rs 350 crore on Bharti Airtel, Rs 550 crore on Vodafone and Rs 300 crore on Idea Cellular for providing 3G services beyond their licensed telecom zones through the ICR agreements.

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