Govt goes with TRAI on licence-cap issue

In what is considered as a significant victory for the telecom regulator TRAI over the Department of Telecom (DoT), communications minister A Raja has accepted TRAI’s stance that it (the regulator) cannot be forced to speed up its recommendations regarding capping the number of players that can offer telecom services in a circle.

In July 2009, DoT had asked TRAI to reconsider its earlier recommendations, where it had said that there should not be a cap on the number of telcos that are allowed to offer telecom services in a circle. The regulator had replied that it could not look at the issue in isolation while adding it would issue its recommendations by November-end.

The DoT then rejected TRAI’s argument and said that could not wait until November-end for Trai’s recommendations on capping the number of players in a circle. The DoT also added that as per TRAI Act, the regulator is required to respond within 60-days and must therefore submit its recommendations latest by September 5, 2009.

But, the regulator refused to budge and maintained that capping must be looked into along with other issues such as new methodologies for spectrum allocation and the pricing of this scarce resource while adding that that since these would require a lot of consultations, it (TRAI) would be able to give in its recommendation by November 30.

Mr Raja has now accepted TRAI’s stand implying that the regulator has time until November-end. The DoT had sought that Trai issues recommendations on capping by early September because, last month, the Delhi High Court, in a landmark judgment, had quashed communications ministry’s notification announcing September 25, 2007 as the cut-off date for granting telecom licences.

This had opened up the Pandora’s Box for the government as several of the 24 companies, which were denied licences on account of this cut-off date, plan to drag the communications ministry to court. These 24 companies, which filed about 343 applications, were denied licences on the basis of this cut-off date.

Several of these companies have alleged DoT changed the cut-off date to September 25, 2009, so that only a few select Indian companies, such as Swan, Unitech, Loop, Datacom and Shyam, get licences. So far, DoT has provided no explanation for changing the cut-off date.

While the DoT has now challenged the Delhi High Court order of quashing the dateline as the cut-off for applying for telecom licences, that came bundled with startup 2G spectrum, the communications ministry urgently needs favourable recommendations from the regulator to strengthen its case. This is also the primary reason for DoT’s move to emphasise to Trai that even as there were 343 pending applications for telecom licenses, there was already sufficient competition as there were already around 12-14 operators offering mobile services in every circle.