Digital Commission Accepts TRAI's Quantum of Penalty on Telcos

The all-important inter-ministerial Digital Communications Commission (DCC) of the Department of Telecom (DoT) on Wednesday decided to accept the recommendation of the Telecom Regulatory Authority of India (TRAI) on imposing a penalty of Rs. 3,050 crores imposed on three telecom majors, an official said on Wednesday following a DCC meeting here.

Although TRAI's recommendation on imposing penalty on the three telcom majors - Airtel, Vodafone, and Idea - has been accepted by the DoT panel, there is, however, still no finality on the issue as the DCC's rulings are not binding.

"Today (Wednesday) it was decided that the DCC would accept the recommendations of the TRAI as it is and then give its views to the government", Telecom Secretary Aruna Sundararajan said at a press briefing.

"The DCC has gone with the earlier TRAI decision on the penalty. But the government has all the powers to take any decision. DoT is the final decision making authority. The DCC in this case is only a recommending body", she said in response to queries on whether the government can circumvent the DCC's recommendations.

The penalty on Airtel, Vodafone and Idea has been imposed for failing to provide adequate interconnection three years ago to new entrant Reliance Jio during its network trial stage causing call drops and poor quality of service for customers.

Airtel and Vodafone were fined Rs. 1,050 crores each while Idea was given a Rs. 950 crores penalty. Idea and Vodafone had not merged at that time.

Reacting to the DCC decision, the concerned telcos said that the committee did not consider the facts before reaching its verdict and hinted at mounting a legal challenge.

Airtel said it is disappointed with the decision of the DCC.

"We are extremely disappointed with the decision to impose penalty on the telecom operators on the matter pertaining to providing the Point of Interconnect (POI). This is despite the fact that the total number of POIs provided were more than sufficient for the projections provided on the number of customers," an Airtel spokesperson said.

"All these facts were presented to the authorities. It is, therefore, disheartening that those facts have not been considered while taking this arbitrary decision of imposing the penalty.

"Upon receipt of the formal communication intimating the levy of penalty, we will approach the appropriate forum. We have complete faith in the judicial process and the law of the land," he added.

Given the current the financial stress in the sector, this decision will put additional burden on the already stretched balance sheets of the telecom operators and will adversely impact the government's vision of a digitally inclusive and empowered India.

Vodafone Idea in a statement said it would explore all options, including legal ones, to protect the company's interests.

"As India's leading telecom service provider, we abide by stringent norms of governance and compliance with all applicable laws and regulations while conducting our business in an ethical and conscientious manner. We will explore all options, including seeking legal recourse to protect our interests," the statement said.

On June 17, the DCC, while approving the TRAI proposal for imposing penalty on Bharti Airtel, Vodafone and Idea, had asked the regulator to consider revising the quantum as the sector is financially stressed.

Officials say a fine of Rs. 3,050 crores at this stage would be an additional burden on the telecom industry. In a situation of the DCC accepting TRAI's recommendation, the companies could appeal in the courts, adding the cost of prolonged litigation to telecom sector's burdens.

Vodafone Idea and Bharti Airtel have been posting losses at their India businesses due to the lower pricing pressure triggered by the entry of Jio in September 2016.

In February, a seven-member internal committee of the DoT had rejected TRAI's recommendation to levy the penalty and left the final decision to the DCC.

TRAI had recommended that a fine of Rs. 50 crore be levied on Bharti Airtel and Vodafone each in 21 circles, while a similar amount be levied on Idea Cellular in 19 circles.