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TDSAT clears 3G ICR road-block; quashes penalties on Bharti Airtel, Vodafone

Wednesday, 30 April 2014 - 10:15am IST | Place: Mumbai | Agency: DNA
COAI expects 3G subscriber growth to rise 20% monthly as a result

Providing troubled telcos - Bharti Airtel, Vodafone and Idea Cellular - relief after almost a year, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) cleared the 3G intra-circle roaming (ICR) agreements signed between the three companies, stating that the pacts didn't violate any license conditions.

In its ruling on Tuesday, TDSAT also quashed the cumulative penalty of Rs 1,200 crore imposed on the three operators by the telecom department (DoT).

Tuesday's verdict means that the three operators in question will be allowed to use each others' 3G spectrum in circles where they do not have 3G airwaves, allowing them to offer their subscribers seamless 3G access across India. The ruling comes at time when data growth has started to boom in the country.

However, the department of telecom (DoT) said it would evaluate TDSAT's verdict before taking a call on whether to approach the Supreme Court once again in this matter.

According to the 3G ICR agreements entered into by the three telcos, Airtel sought access to Vodafone's 3G network in four service areas- Maharashtra, Kolkata, Haryana and UP East.

Vodafone accessed six 3G circles of Airtel- Assam, Bihar, Karnataka, North East, Rajasthan and UP West, besides 7 circles of Idea Cellular- Andhra Pradesh, Himachal Pradesh, Jammu and Kashmir, Kerala, Madhya Pradesh, UP West and Punjab. Idea is yet to start 3G service in Punjab.

Idea Cellular, on its part, secured the right to provide 3G services using Vodafone's network in Delhi, Tamil Nadu, Chennai and Kolkata.

Commenting on the verdict, Rajan Matthews, director general, Cellular Operators Association of India (COAI) said, "While the DoT does have the option of approaching the Supreme Court to challenge this verdict, we don't see reason for such an appeal, as the government has itself lost considerable revenues on account of banning 3G ICR – which is part of the 8% license fee and 3% spectrum usage charge (SUC) that they receive from every operator."

Matthews continued, "On a conservative basis, the telecom industry with approximate revenues of Rs 1.8 lakh crore annually, has lost 1-2% - or over Rs 2,000 crore of this total as a result of the ban on 3G ICR. However, now that the ban has been lifted by TDSAT, 3G penetration which is already growing by 15-20% on quarter in data usage, is expected to see an additional 20% rise in 3G subscribers as well, on a monthly basis."

Airtel has about 11 million 3G subscribers, out of a total of 205 million subscribers, Vodafone has 4.2 million 3G subscribers (as of December 2013) out of a total of 164.34 million subscribers (as of February according to TRAI), and Idea has 10.2 million 3G subscribers out of its total subscriber base of 137.9 million.

On Monday, Reliance Communications entered into intra-cirle 3G ICR agreements with Aircel and Tata Teleservices to offer pan-India 3G services to Rcom customers, even beyond the nine circles where Rcom holds 3G spectrum. However, the company maintained that this agreement did not violate the ban on 3G ICR as imposed on Bharti, Vodafone and Idea, as RCom would not be adding additional 3G subscribers through this move.

However, if Tuesday's TDSAT verdict is approved by the DoT as well, all companies offering 3G services will be free to enter into 3G ICR pacts with each other.

In 2011, DoT issued notice to Airtel, Vodafone and Idea asking companies to stop 3G ICR and report compliance, but the order was challenged by telecom operators, who stated that the 3G NIA document clearly stated that 3G ICR was allowed.

Again, in July 2012, TDSAT gave split verdict where one of the bench member ruled in favour and other member ordered against it.

DoT again issued notice to telecom operators asking them to stop 3G ICR service along with penalty cumulatively amounting to about Rs 1,200 crore (Rs 350 crore on Bharti Airtel, Rs 550 crore on Vodafone and Rs 300 crore on Idea Cellular for providing the 3G facilities outside their licensed 3G telecom zones), which was quashed by the tribunal.

The three telcos in question then approached Delhi High Court which ruled in favour of DoT's decision to hold the 3G roaming pact of the telecom major as illegal.

Subsequently, the telcos then moved the Supreme Court against order of HC and sought that the case be transferred to TDSAT. The Apex court allowed telecom operators to move their case to TDSAT in September 2013.


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