Reliance Jio, COAI Spar Over Voting Norms

Reliance Jio today accused COAI of serving "vested interests" of incumbent operators and demanded an overhaul of voting rules, prompting the operators' body to charge the Mukesh Ambani-led firm of being a "back door operator" that acquired licence through a front entity.

In a recent letter to COAI, Reliance Jio alleged that the association's voting rules were "skewed" in favour of dominant operators - Bharti Airtel, Vodafone and Idea - and gave them "the absolute control to influence any or all of the decisions of COAI" given that the trio enjoyed 68 percent of total votes.

Claiming that the COAI voting norms were in breach of Societies Registration Act and also the competition law, Jio demanded that a committee be appointed consisting of three retired judges of the Supreme Court to ensure all regulations fall in line with "fundamental democratic principles of reasonableness, fairness, accountability and transparency".

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Criticising the voting norms which are based on gross revenue of member companies, Jio said, "The IDOs (incumbent dominant operators) having a 60.84 percent market share based on revenues enjoy a dominant position in the market and command seven votes each, totaling to 21 votes. Apart from the IDOs, there are four more core members having a combined total of 10 votes shared amongst them. The IDOs command 68 per cent of the total votes."

Responding to the blistering attack, the COAI launched a point-by-point counter offensive where it said that Reliance Jio's move to label the established and well performing operators as Incumbent Dominant Operators or IDOs was "slanderous" and "mischievous".

"None of the half a dozen new operators who have entered in the last five years have ever accused the COAI or in fact labelled the leading operators as IDOs. Despite repeated and grave provocations from Reliance Jio, the COAI wishes to state that Reliance Jio which entered the sector as a Back Door Operator (BDO) was welcomed by the COAI as a full member," the cellular operators' body said in a statement.

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The COAI further said the "BDO, Reliance Jio was never an applicant for a UASL (Unified access service licence) or UL (Unified licence) but bought a BWA (broadband wireless access) through a front entity and then had it converted to a full blown UASL license despite strong objection from certain quarters including the CAG."

The cellular operators' association also further said that "despite all this skulduggery, the COAI welcomed Reliance Jio into the association and congratulated the new entrant on its launch".

The industry body emphasised that issues raised by Reliance Jio were private, internal matters of the association and will be dealt with internally among its members. "Jio is a member and this is a matter which can easily be discussed at the association. The conduct is not becoming of a member when appropriate forums are available within the association," it said.

Reliance Jio, in a letter to COAI claimed that the latter's rules were "overwhelmingly biased and lopsided" in favour of dominant operators and alleged that entire decision making power and authority rested only with the 'IDOs' while the other core members were reduced to a "nullity".

"The IDOs have put themselves in an unassailable position of influencing every decision at COAI only to serve their vested interest to the exclusion of other core members," Jio said.

The new entrant claimed that dominant operators have formed a cartel to "perpetrate their vested interests using COAI, a supposedly independent fair platform, helping them to abuse their dominance in the market".

"COAI Regulations are also in breach of the Societies Registration Act, 1860. In addition, COAI regulations are also in violation of the established legal principles laid down by the Supreme Court of India in relation to governance of similar societies," Jio said.

It further alleged that COAI is being flagrantly misused by the IDOs to freely indulge in cartelisation, abuse their dominant position, thwart competition and act against public interest.

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Lashing out at Jio's criticism that the association's norms were not based on 'One vote - One member' concept enshrined within the Societies Registration Act, the COAI pointed out that "proportional voting is an established pattern of democratic voting and all companies follow this principle, especially when shares are aggregated and voted by one or two majority stockholders".

The association said Jio was made aware of the rules when it had applied for COAI membership and the latter had agreed to abide by the same. "It is surprising that Reliance Jio now raises certain issues as something new. We can only believe these are now motivated by a desire to tarnish the reputation and credibility of COAI in the light of certain representations made by COAI to various government agencies," the industry body added.