DCC okays ₹3,050 cr. penalty on Airtel, Vodafone Idea

Telcos did not provide points of interconnection to Jio

A rickshaw puller speaks on his mobile phone as he waits for customers in front of advertisement billboards belonging to telecom companies in Kolkata February 3, 2014. India is auctioning airwaves in both the 1800 megahertz and 900 megahertz bands, and Reliance Industries, a formidable rival to market leaders Bharti Airtel Ltd and Vodafone Group PLC, has unexpectedly opted to compete for both, sources have said. Spectrum in the 1800 Mhz range would enable Reliance to offer voice services and improved coverage for its 4G Internet service and bidding for the spectrum is expected to be relatively modest given that there is plenty of it and it is less efficient than the 900 Mhz bandwidth. Picture taken February 3, 2014. REUTERS/Rupak De Chowdhuri (INDIA - Tags: BUSINESS TELECOMS)

The Digital Communications Commission (DCC) on Wednesday approved the cumulative penalty of ₹3,050 crore that regulator TRAI had imposed on Bharti Airtel and Vodafone Idea for not providing points of interconnection to Reliance Jio when it entered the market.

Both Bharti Airtel and Vodafone Idea are likely to legally challenge the “arbitrary” decision.

The inter-Ministerial body had, at its meeting in June, approved the imposition of penalty recommended by Telecom Regulatory Authority of India (TRAI). It had, however, asked the sectoral regulator to review the levy given the financial stress in the sector. TRAI stuck to its earlier recommendations.

“The DCC has accepted TRAI’s recommendation on penalty on Airtel, Vodafone Idea. It will send the same recommendation to the competent authority [Department of Telecom] in government for their decision,” a senior government official said after the meeting.TRAI made its recommendations in October 2016, following a war of words between Reliance Jio, and Bharti Airtel and Vodafone, Idea Celluar. The regulator had stated that the act of the three operators was against public interest and in violation of their licence agreement, which warrants revocation of the licence.

However, it recommended a penalty, instead, to avoid consumer inconvenience. While the fine for Airtel and Vodafone amounted to ₹1,050 crore each, for Idea it was ₹950 crore. Since then, Vodafone and Idea have merged to form Vodafone Idea, the largest telecom carrier in India.

Stating that the company is “extremely disappointed” with the decision, an Airtel spokesperson said, “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.” An Airtel spokesperson said given the forced consolidation due to the financial stress in the sector, this decision will place further burden on the already stretched balance sheets of operators and will adversely impact the government’s vision of a digitally inclusive and empowered India.

The spokesperson said that the decision comes “despite the fact that the total number of POIs provided were more than sufficient for the projections provided on the number of customers. Further, the requested POIs were provided within the prescribed time limits and were more than the numbers requested for. 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.”

Vodafone Idea said in a statement, “This issue pertaining to points of interconnection has been examined by the DoT, various parliamentary and judicial authorities with no case for any default established. From media reports it appears that even the DoT committee examining the TRAI recommendations was not unanimous and in fact at least 4 committee members out of 7 had differing views on the subject. Further, the jurisdiction to decide any interconnection dispute between two service providers lies exclusively with TDSAT.”

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