Supreme Court squashes plea against Reliance Jio

In a major boost to the Mukesh Ambani-owned Reliance Jio Infocomm Ltd’s (RJIL) plans to commercially roll out the much-delayed 4G (fourth- generation) services, the Supreme Court (SC) on Friday squashed a plea challenging the allocation of 4G spectrum to it and left it to the government to take a decision on spectrum usage charge (SUC).

Ruling out that there were irregularities in spectrum allocation, the apex court also turned down a plea by the Centre for Public Interest Litigation (CPIL) for a CBI inquiry into the alleged Rs 40,000-crore scam.

The SC has accepted the Centre’s submission that the conditions in Reliance Jio licence allowed it to change its terms and, therefore, whenever it is felt necessary and expedient in public interest, the percentage of SUC can be hiked.

A bench headed by Chief Justice of India (CJI) T S Thakur, in its 55-page judgment, stated that the hike in charges for usage of airwaves was determined based on a Telecom Regulatory Authority of India (TRAI) recommendation in 2013 that it should be charged at an average rate instead of a slab rate.

The bench said that before taking a final decision, the Telecom Commission had obtained the Attorney General’s opinion who opined that the SUC charge be retained at 1% for Broadband Wireless Access (BWA) operators, based on which the final decision was taken.

On revenue segregation, the bench said it had received a report from a committee that was formed for it.
“The report is under consideration and a decision on the report is likely in two months. After considering the report of the committee on revenue segregation, appropriate action will be taken on whether to continue with separate revenue reporting or not or an increase in SUC is required for the proper conduct of telegraph as provided in the Licence Agreement,” stated the judgment.

The PIL against Reliance Jio was filed in 2014 by advocate Prashant Bhushan. It had sought the cancellation of government permission to Ambani-owned telecom firm for providing voice telephony on BWA spectrum. 

The PIL had quoted the Comptroller and Auditor General (CAG) report, which has described the licence acquisition as “rigged auction”. The government auditor has alleged in its report that Reliance Jio’s entry into voice telephony by paying a meagre fee of Rs1,658 crore had caused a loss of about Rs3,367 crore to the national exchequer.

In 2013, Reliance Jio had won a pan-India 4G licence and was also issued licence for providing voice calls on the 4G network. The Department of Telecom (DoT) has maintained government rules for 3G and BWA do not restrain winners from providing voice services on the network.

Meanwhile, industry observers welcomed the “clearing of the air” in the matter and hoped that Reliance Jio would now swiftly move ahead with its plans to roll out its 4G services across the country

“This was an issue that was hanging fire, which has finally been sorted out by the Supreme Court, and to that extent, it clears the air. While this is important, the real issue is about when Reliance Jio can actually start offering commercial services because that is the part which has been delayed for six years,” said Dr Mahesh Uppal, director of Com First (India) that advises major Indian telecom companies on policy and regulation.

He said that the delay in commercial launch was more to do with reasons relating to market for 4G services than to do with the court case.

A senior telecom executive, who did not want to be named, said all developments over the last 2-3 months have been very positive for Reliance Jio’s 4G rollout plans.

“Now, they are well placed as far as spectrum is concerned. We should expect full-blown commercial launch of their 4G services by the second half of this year. Overall, they are now becoming much better placed over the last two-three months’ developments,” he said.

G Krishna Kumar, a Bengaluru-based telecom executive, said; “The (SC) case getting dismissed would be good news for Reliance to go full speed for the launch. There is a lot of expectation from the people using Internet on mobile that, Reliance Jio could provide substantially lower (1/7th or 1/8th) tariff compared to the current data tariff that is charged by the telecom operators,” he said.