TELECOM
DISPUTES SETTLEMENT & APPELLATE TRIBUNAL
DATED 20th JANUARY, 2010
PETITION NO. 77 OF 2009
Internet Service Providers
Association of
Vs.
Union of
BEFORE :
HON’BLE MR.
JUSTICE S.B. SINHA, CHAIRPERSON
HON’BLE MR.
G.D. GAIHA, MEMBER
For Petitioner : Ms.
Meenakshi Arora, Advocate
Mr. Rahul
Narayan Advocate
For Respondent : Mr.
Sachin Dutta, Advocate with
Ms.
Poorva Nanawati, Advocate
JUDGMENT
S.B.
Sinha
1.
The
petitioner is an association of the Internet Service Providers who have been
granted licenses under Indian Telegraph Act, 1885 for providing data services to
their respective customers. The ISP
license holders are required to transmit data in the broadband 2.5 to 2.69
GHz. For some reason or the other, to
which we may refer to a little later, they were asked to surrender the said
bandwidth and shift to another.
2.
Indisputedly
the Government of India has taken a decision to auction the available
spectrum. Interalia, on the premise that
the guidelines issued by the respondent on 1.8.2008 as amended on 11.9.2008,
for the said purpose were issued ignoring the recommendations made by the
Telecom Regulatory Authority of India (TRAI) as contained in the ‘Recommendations
on Spectrum Related Issues’ dated 13th May, 2005, 27.09.2006 & 10.05.2007,
this petition has been filed interalia for the following reliefs :-
(i)
Set
aside the Guidelines issued by the respondent dated 1.08.2008 as amended on
11.09.2008;
(ii)
Pass
an order directing the respondent to reformulate guidelines relating allocation
of spectrum keeping in mind the Broadband Policy 2004, the recommendations of
TRAI, as well as representations of all stakeholders including the petitioner
to ensure equitable distribution of spectrum in accordance with the principles
of a level playing field and national priorities.
(iii)
Pass
an order directing the respondent to cancel the allotment of spectrum to
MTNL/BSNL under the Guidelines.
(iv)
Pass
such other or further orders as this Hon’ble Tribunal may deem fit and proper
in the facts and circumstances of the case.
3.
Relying,
on or on the basis of the recommendations dated 13.05.2005, 27.09.2006 and
10.05.2007, the petitioner contends :
(i)
In
issuing the impugned guidelines the recommendations of the TRAI have not been
taken into consideration and the impugned
guidelines puts the UASL Licensees to unfair advantage over the ISP license
holders despite huge difference in the bargaining power and economic strength
between them and thereby treating unequals as equal and depriving them of a
level playing field.
(ii)
The
number of areas sought to be auctioned having been limited by the respondent only
to four blocks, out of which one has been dedicated to MTNL, a situation has
been created by reason whereof the capability of the holders of ISP licenses
has been squeezed to the minimum.
(iii)
Although
in terms of the guidelines of 2007 some reservations have been made for
allotment of the spectrum to the data service providers; by reason of the amendment
carried out thereto being dated 11.9.2008 the same has been removed, as a
result whereof the members of the petitioner association would not have any
opportunity to participate in the auction.
(iv)
The
bandwidth which was reserved for data services having been made open also to
voice and other UASL license holders, the capability of the members of the
petitioner association to take part in the auction has drastically been reduced.
4.
Ms.
Meenakshi Arora, the learned counsel for the petitioner would take us through
the recommendations of the TRAI and also the Broadband Policy of 2004 in great
details; to contend:
(i)
the
holders of license having been operating
mostly for catering to the needs of semi-urban and rural people and their
investment being limited, the impugned guidelines must be held wholly arbitrary
and, thus, violative of Article 14 of the Constitution of India.
(ii)
The
respondent having failed to provide adequate protection to the small time
operators like ISP holders, the impugned policy decision cannot be sustained.
(iii)
The Broadband Policy of 2004 having
recognised that there was a demand of broadband, pursuant whereto and in
furtherance whereof TRAI having made recommendations to treat data service
providers differently from other service providers who have a deep pocket, a
situation should not have been created as a result whereof the marginalised
service providers would have no other option but to go out of their businesses.
(iv)
The
recommendations of TRAI having recognised the necessity to provide for a niche
market for the ISP license holders by providing them a large number of similar
bands, the action taken by the respondent in putting the spectrum on auction ignoring
the same, in terms of the impugned
guidelines, cannot be sustained, particularly
in view of the fact that by reason thereof the level playing field in the
matter of investment, pricing, re-farming of spectrum, quantum of license fee
and the economic and other capabilities of the petitioner have been
compromised.
5.
Mr.
Sachin Dutta, the learned counsel appearing on behalf of the respondent, on the
other hand, would contend :-
(i)
Auction
now being proposed to be held in respect of 4 blocks only namely, 2 blocks in
2.3 to 2.4 GHz band and 2.5 to 2.69 GHz band respectively, the respondent
cannot be held to have acted arbitrarily or without jurisdiction in issuing the
guidelines.
(ii)
The
bandwidth of 2.5 to 2.69 GHz having limited availability being only confined to
only viz 40 MHzs, the auction is proposed to held only to that extent, as the
rest of the same is being used by Department of Space and as and when the same
is vacated, more spectrum would be available for auction.
(iii)
TRAI
recommendations for allotment of spectrum to the ISP license holder is being
confined to 3.4 to 3.6 GHz band, which
is not the subject matter of auction, the petitioner cannot be said to have made
out any case for grant of any relief.
6.
The
basic fact of the matter is not in dispute.
The Broadband Policy was introduced by the Government of India in the
year 2004, the preamble whereof reads as under :-
“Recognising the potential of ubiquitous Broadband service
in growth of GDP and enhancement in quality of life through societal
applications including tele-education, tele-medicine, e-governance,
entertainment as well as employment generation by way of high speed access to
information and web-based communication, Government have finalised a policy to
accelerate the growth of Broadband services.
Demand for Broadband is primarily conditioned and driven
by Internet and PC penetration. It is
recognised that the current level of internet and broadband access in the
country is low as compared to many Asian countries Penetration of Broadband,
Internet and Personal Computer (PC) in the country was 0.02%, 0.4% and 0.8% respectively
at the end of December, 2003. Currently,
high speed internet access is available at various speeds from 64 kilobits per
second (kbps) onwards and presently an always-on high speed internet access at
128 kbps is considered as ‘Broadband’.
There are no uniform standards for Broadband connectivity and various
countries follow various standards.
Government envision an accelerated growth in Internet
penetration and PC as the success of Broadband would largely be dependent on
their spread. It has been decided that
following shall be the framework of the policy.”
7.
Clause
4.0 dealing with “Other Issues” acknowledges that cost of bandwidth constitutes
a major cost component for broadband services which would be on priority and
would be addressed by Government and TRAI.
8.
Clauses
4.3 and 4.4 dealing with role of other agencies and fiscal issues read as under
:
“4.3
Role of other Agencies
PCs, content and applications are important constituents
for overall growth of internet and Broadband services. Broadband services will accelerate
decentralised governance at Panchayat level.
The role of other facilitators such as electricity
authorities, Department of ITs of various State Governments, Departments of
Local Self Governments, Panchayats, Department of Health and Family Welfare,
Department of Education is very important to carry the advantage of Broadband
services to the users particularly in rural areas.”
“4.4 Fiscal Issues
The Department of Telecommunications assigns a very high
priority to indigenous manufacture of Broadband related equipments. It shall endeavour to work closely with the
concerned Ministries and Manufacturers Associations so that the equipments are
available at an affordable price. The
department is conscious of the fact that Broadband services can reach the urban
and rural consumers only if services are offered at affordable and easy
terms. Department of Telecommunications
will work out a package in consultation with Ministry of Finance and related
Departments as well as concerned service providers to achieve this.”
9.
TRAI
after holding an open house consultation process made recommendations in
respect of spectrum policy on various issues including spectrum pricing,
spectrum allocation and re-farming, spectrum trading, M&A and surrender
etc. It has interalia, made
recommendations with regard to key objectives having in mind level playing
field amongst the service providers using various technologies in connection
with allocation and pricing of spectrum as also ensuring availability of spectrum
wherefor it thought of providing a more competitive tariff.
10.
Chapter
5 of the said recommendations provides for Spectrum charging and allocation for
other terrestrial wireless links. Clause
5.1 thereof reads as under :-
“5.1 Internet
and Broadband access have been widely recognized as catalysts for economic and
social development of a country.
Significant initiatives have been taken both by the Authority and the
Government to pursue initiatives that will boost the growth of the relevant
industries in this regard. Further to
those initiatives, spectrum policy also needs to be formulated with the growth
of future technologies, wireless data services and promotion of competition
kept in mind. Just as in telephony,
wireless broadband access can lead the way to allow
11.
It
also laid down the policy for other terrestrial wireless link with a view to
achieve the goal referred to therein to support the quick and cost effective
spread of internet and broadband, both for commercial and residential users.
12.
It
made a distinctive approach with regard to ISP licenses. Clause 5.6.6 of the
said recommendation reads as under:-
“Likewise, while today only UASL operators have the
facility of acquiring spectrum on a circle-wise or geography-wise basis, other
licensees who want to provide services under the ambit of their licenses should
also be extended such facility. It may
be possible to tackle this last issue independent of the other larger issues of
emerging technologies and management techniques mentioned above.”
13.
The
Authority made similar recommendations in terms
of its report submitted on 27.09.2006 wherein the principles specified
in Clause 1.12 were followed as regards the broader resources, Clause (viii)
whereof reads as under :
“Keeping a level
playing field: No conditions should
exist which favour one group of stakeholder more than another, with the only
exception being the public interest – if there is a choice to be made between
maintaining a level playing field and maximizing the public interest, the
public interest should prevail.”
14.
In
clause 4.13 the Authority made recommendations on spectrum allocation in 800
MHz band with which we are not concerned.
15.
Chapter-5
deals with Spectrum for BWA technologies.
Clause 5.1 reads as follows :-
“Broadband Wireless Access (BWA) technologies enable
high-speed data communication over wireless links. It offers significant advantages over wireline
broadband systems based on cable network or DSL, having better coverage, speedy
deployment, high scalability, lower maintenance and upgrade costs, and phased
investment to match the market growth.”
16.
Spectrum
requirements for BWA considered in Clause 5.17 which reads as under:
“In order to ensure that sufficient spectrum is available
for BWA systems, the Authority recommends that at least 200 MHz of spectrum
should be made available for BWA to accommodate growth requirement until 2007,
and 300 MHz of spectrum should be earmarked by 2010.”
17.
While
considering the matter relating to allotment of spectrum in 3.4 – 3.6 GHz it
was observed that by the most recommended for broadband wireless deployments
was the said band. We may notice that
paragraph 5.49, 5.50 and 5.53 of the said recommendations deal with policy for
other terrestrial wireless links.
18.
The
Authority furthermore recommended that one block of spectrum should be
allocated to categories A, B, C, of ISP licensees in cities or SSAs with
population of less than one million.
On the question of setting the reserve
price, it was of the opinion that the effective spectrum acquisition fee for
Metros should be Rs. 10 crore, in addition to a performance bank guarantee of
Rs. 5 crore that may be released upon successful completion of the roll out
obligations.
19.
Having
noticed the broad recommendations of TRAI, we may now consider the guidelines issued
by the respondent as amended on 11.09.2008, the relevant clause being Clause
3.1 reads as under:-
“(a)
Spectrum shall be auctioned in the 2.5 GHz and 2.3 GHz bands. Each successful bidder can get 20 MHz either
in 2.5 or 2.3 GHz bands (TDD mode) in a telecom service area. The number of blocks shall be two in 2.5 GHz
band and two in 2.3 GHz band.
Spectrum
in 700 MHz and 3.3-3.6 GHz bands shall be auctioned as and when it becomes
available.
(b)
The
reserve price for 20 MHz (TDD) shall be as under:
|
Circle |
Reserve Price (in Rs. crores) for 20 MHz |
|
Metro & Category ‘A’ |
80 |
|
Category ‘B’ |
40 |
|
Category ‘C’ |
15 |
(c)
The
earnest money (in the form of a Bank Guarantee from a Schedule Bank) shall be
25% of the reserve price.”
20.
Admittedly
TRAI had made recommendations of allocating certain spectrum to the data
service operators only in the broadband width of 3.4 -3.6 GHz.
21.
The
petitioner, however, in paragraphs 11 and 15 of the rejoinder raises a
contention that the said bandwidth is most unsuitable for use in providing data
services. The Central Government is
required to take a policy decision in the matter of auction of the spectrum
having regards to its huge demand vis-à-vis scarcity in the matter of
availability thereof. It is yet to take
into consideration the recommendations of TRAI in respect of the auction of
spectrum in respect of 3.4 – 3.6 GHz. We
may, however, notice that admittedly the petitioners for one reason or the
other had not asked to shift from the broadband 2.5- 2.69 GHz way back in 2004.
It is, therefore, not a case where
recommendations of TRAI have totally been ignored. Stage for consideration of the said
recommendation is yet to reach.
Recommendations of TRAI were to be
taken into consideration by the respondent wherever required.
The petitioner’s counsel says that irrespective
of the recommendations of TRAI, their contention should have been taken into
consideration even in respect of a bandwidth which was not the subject matter
of such recommendations. We do not agree.
22.
Ms.
Arora would contend that it is incorrect to say that all ISP operators were
offered the said bandwidth. The learned
counsel has drawn our attention to the following statements made in the
rejoinder of the petitioner, which read as under :
“(c) ISPs are not in a position to utilize other
frequencies such as 3.3-3.4 GHz, 2.7-2.9 GHz, 5.7 etc. which according to the
Respondent are available for their use.
The
2.5-2.69 GHz frequency band is the most suitable for last mile services of
ISPs. Firstly, since its designation by
the ITU for data services, all the equipment needed by ISPs is based on the
utilization of 2.5-2.69 GHz frequency.
Manufacturers of equipment for other frequencies are few and the costs
are much higher so as to render it economically unviable for most ISPs to use
them. Secondly, using these frequencies
would entail considerable infrastructural costs as towers etc. would need to be
erected on virtually every building in order to give a good connection to
customers. Thirdly, ISPs had earlier
been allotted this frequency and had begun steps to utilize them when the
respondent took back the said frequencies from them. Several ISPs had applied for necessary
licenses to utilize the said frequency but the respondent had failed to grant
the same despite having even accepted the fees for them. It has recently been announced that one of
the four bands in this frequency has already been allotted to MTNL/BSNL. In these circumstances when Spectrum has been
taken from one license and given to other forcing all other licenses to bid for
only 3 bands is both arbitrary and unfair.”
Such a contention in our opinion should
have been raised before TRAI when consultation process was going on. In this petition TRAI is not a party. Even otherwise it being a recommending body,
its recommendations may not be subject matter of a challenge before a court of
law. We may furthermore notice that in
terms of the proviso appended to Section 11 of the TRAI Act, the recommendation
of TRAI is not binding on the Central Government. We must, however, observe that the
recommendation of TRAI should be given due weight, although the respondent may
not ultimately agree therewith.
23.
As
would appear from the discussions made hereinafter it is not at all necessary
for us to enter into such a disputed question of fact. Even the said contention, we may notice had
not been made in the original petition.
It was furthermore contended that the
ITU only in 2006 designated the said band for data services and only in the
years 2007 and 2008 some of the ISP license holders obtained the same. It, however, is not in dispute that most of
the ISP operators due to lack of infrastructural facilities including those for
procurement of equipment etc. had not been using the originally allotted
bandwidth as a result whereof they had been asked to surrender the same.
24.
The
decision of the Central Government in that behalf was acted upon. The members of the Petitioner Association accepted
the said recommendations without any demur whatsoever. We are, therefore, of the opinion that it is
too late in the day to turn round and question the validity thereof in a
collateral proceeding. A party aggrieved
by such a decision should have approached this Tribunal when it was
necessary. The holders of the ISP
license had shifted to another bandwidth.
They, therefore, in our considered view, cannot be permitted to question
the correctness of the said decision in this proceeding indirectly when they
cannot do so directly.
25.
We
are, therefore, required to proceed on the basis that internet service
providers having been assigned spectrum for their ISP connection in their
frequency band 3.4 -3.6 GHz, 2.7 -2.9 GHz, 5.7 and 10.5 to 10.650 GHz, now have
no locus standi to question the present auction policy of the
Central Government which is only being confined to 4 blocks in the bands as noticed
hereinabove in this proceeding.
26.
It
is stated that some more frequency bands i.e. 5150-5250 have also been exempted
from licensing requirements for indoor purposes. The guidelines for allotment of auction of
spectrum for BWA are now open to all. In
the event the petitioner finds it difficult and/or faces some hardship in
competing with other competitors for the present, they can certainly take part
as and when the broadband reserved for them are put to auction. Even otherwise, some hardship alone on the
part of the members of the petitioner association may not by itself be a ground
for interfering with a policy decision.
27.
We
also intend to place on record the stand of the Central Government in this
behalf, which are as under:
(i)
DOT
in its guidelines has made eligible UASL, CMSPs and ISP’s for participating in
the auction of BWA spectrum.
(ii)
Only
40 MHz is presently available for BWA in the frequency band 2.5 – 2.69 GHz as
Department of Space is using this band for mobile satellite service as well as
broadcasting satellite service. With the
available technology, successful bidders can provide data as well as voice
services through BWA network.
(iii)
As
per the guidelines, the reserve price of the BWA spectrum has been kept lower
than the 3G reserve price, based on the recommendations of TRAI. Lower reserve price of BWA will help
penetration in rural part of the country.
28.
So
far as the price factor contained in the recommendations of TRAI is concerned,
we are of the opinion that with the demand of spectrum going up and in view of
scarcity thereof price of the spectrum is bound to go up.
Even TRAI in its recommendation has
given priority to public interest.
29.
Although
public interest is said to be an unruly horse, there cannot be any doubt or
dispute that the decision of the Central Government in a situation of this
nature should be considered to have been taken in public interest; at least at
this stage. (See (2008) 13 SCC 30 (Para 123) Entertainment Network (
It is true that as to whether a
decision had been taken in public interest or not ultimately would fall for
consideration before a competent court of law, but it is not suggested by the
petitioner that the decision taken by the Central Government does not subserve the
public interest.
Nothing has been shown to us that the date
service licenses granted to the members of the petitioner association, contain any
specific mandate to provide broadband service through BWA only, nor is their
any provision to earmark any frequency spectrum band for the said purpose.
It may be true that use of any other
medium viz. optical fibre, Cable TV Network, Copper cable may prove to be
costly but the ISP licensees had accepted the said option with their eyes wide
open.
It is possible that the policy decision
to hold auction in respect of the bands in question has been taken because of meagre
availability of the spectrum, i.e. to the extent of 40 MHz for the present, keeping
in view the expected easy availability of equipment internationally designed to
work in these bands.
30.
Although
a policy decision adopted by the Central Government may not be beyond the pale
of judicial review but it is also trite that ordinarily an economic policy should
not be interfered with. (See Guruvayoor Devaswom Managing Committee and Another
Vs. C.K. Rajan and others (2003) 7 SCC 546 at 570 (e-f); and BALCO Employees’
31.
In
this case, as noticed hereinbefore, the Central Government has not refused to
consider the recommendations made by TRAI.
No occasion had arisen to do so. Furthermore, no court of law/Tribunal can
and/or should do anything which would infringe the march of technical
development. It is not disputed that
technology permits and facilitates provision of high speed data, voice, video
as well as many other services in that band.
32.
We
are further of the opinion, keeping in view the facts and circumstances of the
present case that it is not a fit case, where this Tribunal should interfere
with the guidelines issued by the Central Government at this stage and to put
on hold the proposed auction which would run counter to public interest.
33.
For
the foregoing reasons, there is no merit in the petition which is dismissed
accordingly. But in the facts and circumstances
of the case, there shall be no order as to costs.
……………,J
(S.B. Sinha)
Chairperson
………………
(G.D. Gaiha)
Member