Will DoT risk litigation, CAG to meet telco demands?

It may not be possible for the telecom ministry to take up some of the major suggestions put forth by the telecom operators to get them out of the current financial crisis, as it may be seen as post spectrum-auction alternation of conditions and could invite litigations, or Comptroller Audit General's (CAG) probe.

A telecom industry insider, who spoke on condition of anonymity, said the recommendations of extension of moratorium in the payment schedule for spectrum and lowering of spectrum-usage charges (SUC) could be seen as post tender changes which can be questioned by telecom players, who did not bid aggressively, or abstained from the auction because of tough conditions.

He said the CAG could also investigate into it if they adversely impact the government exchequer.

"In the spectrum auction, there are two big aspects. One is what are spectrum payment terms and concessions, and the second is SUC. If conditions relating to them are changed post auction players can approach the court saying that they could have bid more aggressively if they had not been misled. This has happened before and the Telecom Regulatory Authority of India (Trai) has intervened and CAG had also looked into it. It will not be easy for the department of telecom (DoT) to do it," he said.

However, he also said there was a "complicated" way for the government to tweak these norms "lawfully" and "enforceable".

However, Rajan Mathew, director general, Cellular Operators Association of India (COAI), does not see any hurdle in the way of DoT in catering to the industry's demands of easing payment terms for spectrum by extending the moratorium from the current two years to five years and stretching payment duration from existing 10 years to the life of the airwave acquired in the auction and slashing SUC from 3% of adjusted gross revenue (AGR) to 1% of AGR.

"There is an omnibus clause in the contract/license condition which says DoT can change terms and conditions as it deems fit and such changes have happened (in the past)," he said.

Citing cases, he said the telecom companies (telcos) have been asked to do reverification of customers that have increased costs. "Changes have been made all the time. Over the years, DoT has changed conditions in the license which are detrimental to the operators. So, I don't think that would stand in the way of the government. (Former Prime Minister) Mr (Atal Bihari) Vajpayee did the same thing in 2001 when he changed the whole terms of license condition from upfront payment to revenue share".

Mahesh Uppal, director of telecom consultancy firm Com First (India), also did not see government confronting any legal, or regulatory wall in altering SUC.

"One, because SUC is a very peripheral issue in the larger issue of the spectrum auction. It (auction) was about the pricing of the spectrum. Now, you probably factor in usage charges. But to argue that changing them would substantively affect the bidding in the auction, would be overstating the importance of SUC. Second, in any case, almost all auction documentation – eg. the memorandum of information – that is usually issued before auction talks of tariffs being the domain of the Trai. All said and done, SUC is also mentioned as part of the spectrum auction issue," he said.

According to Uppal, the risk was not litigation by the other players but the fact that it could actually hurt government revenue.

"Bureaucrats would not want to take any action that would impact the government exchequer. It would be a political decision more than anything else," he said.

DISTRESSED CALL

• Extension of moratorium in the payment schedule for spectrum could be seen as post-tender change
   
• This can be questioned by telcos who kept away from the auction because of tough conditions
   
• The CAG could also investigate into it if they adversely impact the government exchequer