TELECOM DISPUTES SETTLEMENT & APPELLATE TRIBUNAL

NEW DELHI 

 

                                                     DATED  11TH  MAY, 2009       

Petition No.209 of  2006

M/s Reliance Infocomm Limited                                                         …Petitioner 

      Versus 

Bharat Sanchar Nigam Limited                                                           …Respondent 

BEFORE: 

HON’BLE MR. JUSTICE ARUN KUMAR                       CHAIRPERSON

HON'BLE DR. J. S. SARMA                                                 MEMBER

HON'BLE MR. G.D. GAIHA                                                  MEMBER 

 

 For Petitioner

 :

  Mr. J.J. Bhatt, Senior Advocate with

Ms. Manali Singhal

Ms. Anjali Chandurkar

Ms.Santosh Sachin, Advocates

 

For Respondent

 :

                  Mr. Yoginder Handoo, Advocate  for

Mr. Maninder Singh, Sr.Advocate.

 

 

 

 

ORDER

Vide this Petition, the Petitioner – M/s Reliance Infocomm Ltd (RCom) – has challenged the Circulars dated 16.6.2006 and 24.7.2006 issued by the Respondent – Bharat Sanchar Nigam Limited (BSNL), revising the infrastructure sharing charges for Passive links of private telecom service providers, of which, the Petitioner is one, and also imposing certain conditions of choice of Active links.

2.         The case of the Petitioner is that it had entered into an interconnect Agreement with the Respondent on 25.1.2002 to facilitate telecommunication across the networks of both these service providers.  Interconnection between two service providers may be achieved either through Active links or Passive links.  The Petitioner stated that it had established Interconnection with the Respondent on several occasions on Passive links charges, for which the Respondent indicated, would be prescribed subsequently.  Since at a later stage, the Respondent determined arbitrary and exorbitant charges for such Passive Interconnection without mutual Agreement and also since the Respondent started compelling the Petitioner to shift from Passive Interconnection to Active links.  The Petitioner was a party in Petition no. 123 of 2005, separately filed before this Tribunal, by the Association of Unified Telecom Service Providers of India (AUSPI), of which the Petitioner is a member, against the Respondent.  This Tribunal had, in the Order dated 3.3.2006 in the said Petition, directed the Respondent to work out a realistic formula for charging the rentals for Passive links based on actual use of infrastructure.  The case of the Petitioner is that despite this Order, the Respondent issued an impugned Circular dated 16.6.2006 prescribing therein minimum infrastructure sharing charges @ 5 E1s.  The Petitioner’s case is that this minimum amount is without any basis and is arbitrary. 

 

3.         The case of the Petitioner is also that the Respondent is imposing the rental charges separately for each service, i.e. National Long Distance (NLD)/International Long Distance (ILD) and Unified Access Service License (UASL) separately for the same Interconnection link, which is contrary to the Interconnection Agreement. Besides, its contention is that the Respondent is also insisting on provision of Interconnection only through Active links. In this connection, it is stated that the Respondent issued a Circular dated 24.7.2006 directing the Petitioner to convert/migrate to Active links for the second type of service even where Passive links are established.       The Petitioner also sought a direction to the Respondent to allow all types of license serves on the same Points of Interconnection (POIs) and also direct not to insist on Active links. It also questioned the correctness of the charges for Active links being charged by the Respondent.

 

4.         Countering this Petition, the Respondent stated that the Order of the Tribunal dated 3.3.2006 in Petition no. 123 of 2005 was in the context of the compulsory provision of Active links to ensure safety and that necessary instructions were issued, by way of a Circular dated 27.3.2006 to all the Circles.   Its case is that the Petitioner had not raised any grievance or challenge against this Circular, which speaks of provision of Active links wherever the required space and infrastructure is available with BSNL.  The Respondent stated that since use of optic fibre for setting up of transmission links is most suitable and advantageous, the Petitioner had itself set up Active links with all other private operators.  The Respondent also pointed out that pursuant to the Order of this Tribunal dated 3.3.2006, it had re-worked a minimal and realistic formula for the rentals for Passive links.  Referring to the contention of the Petitioner that all services should be permitted on the same POIs, the Respondent stated that it was only relying on and following a Circular of the Department of Telecommunications (DoT) dated 27.9.2002.

 

5.         It is also stated that the order of this Tribunal dated 3.3.2006 had held that Passive links will continue only for existing POIs.  Referring to the contention of the Petitioner that it is a prerogative of the Interconnection seeker to chose the type of Interconnection, the Respondent stated that in the larger interest of the consumer, it should be the prerogative f the Interconnection provider to insist upon the latest technology in relation to the setting up of the Interconnection link.  The Respondent also stated that the Petitioner cannot now question the Active link charges which were fixed as far as back ad 19.2.2001. 

 

6.         The pleadings having been completed, we have heard the counsels for both the parties on 5.5.2009.  The issues for determination arising in this case are as follows:-

A.                 Whether the Circular dated 16.6.2006 issued by the Respondent fixing the charges for different links is appropriate?

B.                 Whether the Respondent is right in imposing Passive link charges for National Long Distance (NLD)/International Long Distance (ILD) and Unified Access Service License (UASL) ports separately?

C.           Whether the Circular dated 24.7.2006, issued by BSNL directing the Petitioner to convert/migrate to Active links for the second type of service even where Passive links are established, is appropriate?

D.           Whether the Active link charges fixed by BSNL are correct?

 

7.         On the first issue, the counsel for Petitioner pointed out that pursuant to the Order of this Tribunal in Petition no. 123 of 2005, the Respondent has revised the charges for Passive links to Rs. 3000 per E1 per annum.  However, at the same time, the Respondent is charging a minimum of 5 E1s and therefore a minimum of Rs. 15,000 p.a.  His case is that at most Points of Interconnection (POI), the number of E1s is far less than 5.  He drew our attention to the list of working as well as pending POIs to show that the number of E1s is less than 5 in most cases.  The counsel for Respondent argued that the list of working/pending POIs furnished by the Petitioner relates to remote areas and cannot be taken as representative of the majority of areas, where, according to him, the number of POIs is on average 8 E1s.  He, however, did not furnish any evidence to this effect.  We find that the list furnished by the Petitioner contains a large number of POIs at different places including important centres in different States.  In any case, the counsel for Respondent had not been able to indicate to us, despite our query, the rationale behind the stipulation of a minimum of 5 E1s.  At the same time, the counsel for Petitioner has also not been able to indicate why the figure of Rs. 3000 per E1 is arbitrary.  Admittedly, pursuant to this Tribunal’s Order of 3.3.2006, BSNL had carried out an exercise resulting in reduction of the charges per E1.  We therefore hold that while the rate of Rs. 3000 per Passive link without HSDL modem appears reasonable, the stipulation of a minimum of five E1s is without any basis.  We therefore direct that this minimum stipulation be removed and the Circular dated 16.6.2006 amended accordingly.

 

8.         The next issue for consideration is whether the Respondent is right in imposing Passive link charges for NLD/ILD and UASL ports separately.  The contention of the counsel for Petitioner is that a POI is meant for all services and the Petitioner cannot be charged separately for each service for the same POI.  His case is that this is actually contrary to the Order of the Department of Telecommunications dated 27.9.2002 and the Respondent’s own Circular of 4.12.2002.  The argument of the counsel for Respondent is that the Respondent is following the Orders of the DoT.  His further argument is that NLD/ILD and UASL are separate licenses and that since the Petitioner pays license fee separately for each of these services, it should also similarly pay separately for each of the services which are being carried through the POI. 

 

9.         We have perused the Order of the DoT dated 27.9.2002 which relates to sharing of Switch by an Access Provider with NLD/ILD licenses.  It states that the competent authority had permitted the licensees (who are International Long Distance, National Long Distance, Basic or Cellular Mobile Telephone Service Operators) to have only one Switch to perform the functions of ILD/NLD/Cellular/Basic Service Provider, provided if the switch is located at the same station and separate accounts of all the operations are maintained by duly apportioning the costs between the various services.   The Circular dated 4.12.2002 of BSNL refers to the sharing of BSNL infrastructure leased to private sector operators.  It states that “infrastructure leased/provided by BSNL to one legal entity for any service (licensed service) cannot be permitted to be shared by it with any other legal entity, as it amounts to re-selling and transfer of rights to a third party”.  It also states that the use of infrastructure by the same legal entity providing Interconnection links for its different licensed services, i.e., NLD, ILD, Basic and Cellular Mobile, will be permitted.  There will however be separate trunk groups for each type of service, as revenue sharing arrangements are different for each service.  Similarly, for the purpose of port charges and set up costs etc., POIs for each service shall be treated independently. 

 

10.       We have carefully considered the respective contentions of both the parties.  The Order dated 27.9.2002 speaks of permitting the operators to have a single Switch to perform the functions of ILD/NLD/Cellular/Basic Service Providers, even though the licenses for other services are different.  The Circular dated 4.12.2002 of the Respondent also permits the use of infrastructure by the same company providing Interconnection links for its different services.  To our specific query whether the charges levied by the Respondent are for ‘equipment’ or for ‘service’, the counsel for Petitioner, on specific advice of the Petitioner’s technical representative who was present in the Tribunal, stated that the charges are for ‘equipment’.  This being admittedly the case, it does not appear to us rational for the Respondent to levy the POI charges separately for different services on the ground of parity with the licenses.  Firstly, the licenses are statutory in nature and are given by the Government.  Insofar as the interconnect Agreement is concerned, it is a commercial Agreement between equal two parties   The existing Interconnection Agreement between these two parties does not make any reference to the charges being levied separately for each service for the same POI.  There is also no subsequent agreement between the two parties that it will be so.  This being the case, we hold that the Respondent is not right in charging separately for each service for the same POI.  We direct that only a single charge be levied for each E1/POI.  It shall have no relevance to the service – whether Wireline or Wireless or whether it is local or NLD or ILD or Unified Access Service. 

 

11.       The next issue for consideration is whether the Circular dated 24.7.2006 issued by BSNL directing the Petitioner to convert/migrate to Active links for the second type of service even where Passive links are established, is appropriate.  The counsel for Petitioner drew our attention to the Circular dated 24.7.2006 wherein it is stated that “if demand of connection is for second type/another service for POI connectivity, it may be treated as new / fresh case and connectivity through Active link is to be given priority”.  He argued that there is no difference between Active and Passive links insofar as quality of service is concerned.  It depends entirely on the infrastructure available with the Interconnection provider.  His case is that the choice of Active or Passive link should be with the Interconnection seeker and should not be imposed upon it by the Interconnection provider.  The counsel for Respondent pointed out that Passive links are provided only when the infrastructure is not available with the Interconnection provider.  As long as the Respondent has the necessary infrastructure, it should be utilised by the Interconnection seeker.  The counsel pointed out that the Interconnection of the Petitioner with other private sector telecom operators is in the form of Active links and questioned us to why the Petitioner is insisting on Passive links only insofar as the Respondent is concerned.  To this, counsel for Petitioner immediately responded pointing out that unlike the private sector service providers who charge the same amount for Active or Passive links, BSNL has differential charges.  Therefore, he pointed out, it makes commercial sense for the Interconnection seeker to establish its own infrastructure outside the BSNL’s premises and have a Passive link.  The counsel for Respondent pointed out that the rental charges for infrastructure include building space, electricity charges, tower sharing charges and charges for duct sharing.  His case is that the charges for Active links cannot be the same as for Passive links where only transmission cable is brought to the exchange premises.  The counsel for Petitioner pointed out that the building space charges as well as infrastructure service charges are being levied by the Respondent on the basis of classification of cities followed by Government of India for the purpose of House Rent Allowance and stated that this is irrational. 

 

12.       We have carefully considered the contentions of both the counsels.  As per BSNL’s own Circular dated 30.5.2006, which forms part of the record, the definition of Active and Passive links are as follows:-

 

Active Links:    These are the links of Licensed Telecom Service Providers for which transmission equipment of service provider is installed in BSNL’s exchange premises and their network is connected through it.

 

Passive Links:   These are the links of Licensed Telecom Service Providers for which their transmission equipment is installed close to BSNL exchange premises and only transmission cable (with/without modem) is brought in the BSNL’s telephone exchange premises.

 

13.       It is admitted by both the parties that there is no difference in the quality of service whether the link is Active or Passive.  It therefore does not appear to us rational for the Respondent to insist that the links should be Active.  Just because the Respondent has additional infrastructure in certain places does not necessarily mean that it can impose its own choice of Active link and also levy the charges unilaterally.  It is open to the Interconnection provider, in this case the Respondent to indicate the charges of its choice for Active or Passive links.  To this extent, it is the prerogative of the Respondent.  But it is equally the prerogative of the Interconnection seeker, in this case the Petitioner, to make a choice of the kind of link it would like to have.  After all, even in the case of Passive link, the Interconnection seeker will have to locate a premises to set up its equipment.  As long as it is making a commercial choice, there is no scope legally for the Interconnection provider to insist that the Interconnection seeker use its premises at the provider’s rates.  This virtually amounts to coercion which is not permitted.  In the telecom sector, Interconnection is essential and it cannot be held ransom to bad commercial practices.  We therefore hold that it is open to the Petitioner, and for that matter, every Interconnection seeker to make a choice of Active and Passive link and it shall be incumbent upon the Respondent, and therefore the Interconnection provider, to provide the link accordingly. 

 

14.       Insofar as the fourth issue is concerned, i.e., whether the Active link charges fixed by BSNL are correct, the counsel for Respondent pointed out that these charges have been in vogue for a long time including before the Petition no. 123 of 2005 was filed.  He also pointed out that the Petitioner’s prayer in the said Petition did not cover Active links.  This contention of the counsel for Respondent was fairly conceded by the counsel for Petitioner.  As such it is no longer necessary to go into this aspect.

 

15.       In conclusion, we hold that while the rate of Rs. 3000 per E1 of Passive link without HSDL modem appears reasonable, the stipulation of a minimum of 5 E1s is without any basis.  We therefore direct that this minimum stipulation be removed and the Circular dated 16.6.2006 amended accordingly.  We also hold that the Respondent is not right in charging separately for each service for the same POI.  We direct that only a single charge be levied for each E1/POI.  It shall have no relevance to the service – whether Wireline or Wireless or whether it is local or NLD or ILD or service under UASL.  In addition, we hold that it is open to the Petitioner, and for that matter, every Interconnection seeker to make a choice of Active or Passive link and it shall be incumbent upon the Respondent, and also every Interconnection provider, to provide the link accordingly.

 

16.       The Petition is disposed of accordingly.  No costs.

 

……………..J

   (Arun Kumar)

Chairperson  
 

.........................

(J.S. Sarma)

Member  

 

 

 ........................

(G.D. Gaiha)

Member