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DoT set to back TRAI's Rs 3,050 crore penalty on Airtel, Vodafone Idea over Reliance Jio's complaint

BusinessToday.In     June 17, 2019

The Digital Communications Commission (DCC), the highest decision-making body of the Department of Telecommunications (DoT), is reportedly ready to back the telecom regulator's stand on allegations of cartelisation made by Reliance Jio Infocomm against leading private sector incumbents three years back. The issue dates back to October 2016, when the Telecom Regulatory Authority of India (TRAI) recommended imposing total penalty of Rs 3,050 crore on Bharti Airtel, Vodafone and Idea Cellular for allegedly denying inter-connectivity to newcomer Jio.

TRAI's opinion is set to be taken up by the DCC at a meeting this week after three of the senior-most DoT officials endorsed it, The Economic Times reported. The DCC, previously called the Telecom Commission, is an inter-ministerial body headed by the telecom secretary Aruna Sundararajan and its members include secretaries from various ministries, including IT, finance and the department of industry. "Member, technology, [Shiwa Shankar Singh] has said that in the current case, owing to noncompliance of licence provisions and quality of service (QoS) norms, the telecom regulator's recommendation of levying penalty is valid and may be accepted by the telecom department," a senior official told the daily.

Singh's opinion on which agency was responsible for maintaining service quality in the sector was sought by the DCC after a seven-member committee set up by the DoT had earlier this year ruled 4-3 against the penalty recommendation. While four of the members felt that the jurisdiction lay with the Telecom Disputes Settlement Appellate and Tribunal (TDSAT), not TRAI, while the remaining three members of the committee had favoured the penalty. Sundararajan and the member, finance, are believed to have signed off on Singh's views.

TRAI's recommendation followed the Jio's complaint in 2016 that over 75 per cent of calls on its network were failing as its incumbent rivals were not releasing sufficient number of points of interconnection (PoIs). Back in August 2016, Mukesh Ambani's telco had submitted to the watchdog that it would need 12,727 PoIs for mobile services and 3,068 PoIs for STD call facility ahead of its commercial launch in the following month. PoIs allow calls to be transferred from one network to another.

The regulator's penalty on Airtel and Vodafone worked out to about Rs 1,050 crore each, and about Rs 950 crore in the case of Idea Cellular for violating rules on service quality. Vodafone India and Idea Cellular, which merged last year to give India's telecom sector a new top cat after around 15 years, had separately moved the Delhi High Court soon after TRAI's decision.

If the penalty is accepted this week, the curtains will finally come down on one of the most heated disputes in the telecom sector's recent history. This issue had divided the industry with the older telcos on one side and Jio and TRAI on the other. In fact, last February, the Cellular Operators Association of India (COAI) - which represents all of India's major operators - had even levelled allegations of bias against TRAI and had called on the government to urgently intervene in the matter. In a statement, COAI had claimed that the regulator's tariff related policies appeared "to be strengthening the ambitions of one particular operator with deep pockets and monopolistic designs at the expense of other operators". TRAI and Jio had both denied all allegations.

Jio, having unleashed an unprecedented price war upon its entry, is moving full steam towards emerging a market leader. In just three years, its subscriber base reached 306.7 million (as of March) and it has garnered revenue market share (RMS) of 31.7 per cent, which is close to Vodafone Idea's 32.2 per cent share and ahead of Airtel's 27.3 per cent. Speculation is rife that Jio is chasing an RMS of 50 per cent, and it's not going to stop offering the world's cheapest tariffs until it reaches that target.

According to a June report by brokerage Motilal Oswal Securities, Jio is now a leader in 16 out of 22 telecom circles and Vodafone Idea Ltd may find it difficult to retain its top position "over the next quarter or two".

With PTI inputs

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