TELECOM DISPUTES SETTLEMENT & APPELLATE TRIBUNAL
NEW DELHI
DATED 31st MARCH 2009
Petition No.286 of 2007
1.
Cellular
Operators Association of India
2.
Bharti Airtel Limited
3.
Idea Cellular Limited …
Petitioners
4.
Spice
Communications Limited
5.
Vodafone
Essar Limited
Vs.
1.
Union
of India
2.
Telecom
Regulatory Authority of India
3.
Reliance Communications Limited
4.
HFCL
Infotel Limited ...
Respondents
5.
Tata
Teleservices Limited,
6.
Bharat
Sanchar Nigam Limited,
7.
Mahanagar
Telephone Nigam Limited
8.
Shyam
Telelink Limited
BEFORE:
HON’BLE MR. JUSTICE ARUN
KUMAR CHAIRPERSON
HON’BLE DR. J. S. SARMA
MEMBER
HON’BLE
MR. G. D. GAIHA
MEMBER
For
Petitioners
Dr.
A.M. Singhvi, Senior Advocate,
Mr. C.S. Vaidyanathan, Senior
Advocate,
Mr. N.K. Kaul, Senior Advocate,
Mr. S. Ganesh, Senior Advocate, with
Mr. Manjul Bajpai,
Mr. Navin Chawla,
Mr. Gopal Jain,
Ms. Inklee Roy Barooah,
Ms. Shilpi Mehta,
Mr.
Kaushik Mishra,
Mr.
Amit Bhandari,
Mr.
Manoj B George, Advocates
For
Respondent No. 1 (Union of India) Mr.
Vikas Singh, Senior Advocate, with
Mr.
Sanjay R Hegde,
Mr.
A. Rohen Singh, Advocates.
For Respondent no. 2 (TRAI)
Mr. Saket
Singh, Advocate.
For
Respondent No.3 Mr. Mukul Rohtagi, Senior Advocate, with
(Reliance
Communications Ltd.)
Ms. Manali Singhal,
Mr.
Mahesh Agarwal,
Mr. Rishi Agrawala,
Mr.
Santosh Sachin, Advocates.
For
Respondent No.4
(HFCL) Mr. Biswajeet Bhattacharya,
Senior Advocate,
Mr.
Ajay Singh,
Mr.
Debashis Mukherjee, Advocates.
For
Respondent No.5
Mr. Ramji Srinivasan, Senior Advocate,
with
(Tata
Teleservices Ltd.)
Ms.
Vartika Sahay, Advocate.
For
Respondent No. 6 (BSNL)
Mr.
Maninder Singh,
Mr.
Yoginder Handoo,
Mr.
Kunal Sood, Advocates
For
Respondent No.7 (MTNL)
Mr. Arun
Kathpalia,
Mr. Samir
Sagar Vasisht,
Mr.
Virender Singh Thakur, Advocates
For
Respondent No. 8
Ms. Vartika Sahay, Advocate.
(Shyam Telelink Ltd.)
ORDER
In
this Petition, the Petitioners are challenging the decision dated 19.10.2007 of
the Department of Telecommunications, Government of India (hereinafter referred
to as DOT) on the ground that it is
illegal, arbitrary, and violative of principles of natural justice as well as
violative of the mutually agreed contract between the Petitioners and the
Government.
2. The decision of the DOT was
communicated vide a Press Release dated 19.10.2007 and the major decisions
were, inter alia, as follows:
·
That the Recommendations
of Telecom Regulatory Authority of India (TRAI) that there should be no cap on
the number of access providers in any service area were accepted;
·
That Government have
accepted TRAI’s recommendation of enhanced subscriber linked criteria for
frequency allocation;
·
That it has been decided
that the existing private UAS licensees may be permitted to expand their
existing networks by using alternate wireless technology i.e. a UAS licensee
who is presently using GSM technology for wireless access may be permitted to
use CDMA technology and vice-versa;
·
That the spectrum for
the alternate technology, CDMA or GSM (as the case may be) shall be allocated
in the applicable frequency band subject to availability after payment of
prescribed fee;
·
That BSNL and MTNL being
incumbent operators shall be permitted usage of alternative technology and
allocated spectrum for the alternate technology without paying the prescribed
fee;
·
That for the purpose of
payment of licence fee and spectrum charges, the stream wise revenue of
different technologies shall be considered; and
·
That the Access Services
providers shall endeavour to use more efficient methods and optimum
technologies for spectrum utilisation.
3. In their Petition filed on 23.10.2007,
the Petitioners assailed the above decisions on the ground that the Unified
Access Service Licence (hereinafter referred to as UAS Licence or UASL)
requires every licence holder to apply for and obtain a specific authorisation
and licence, called the WPC licence from the Wireless Planning and Coordination
(WPC) wing of the DOT and that while the UAS licence itself is technology
neutral, it was incumbent on every licensee to choose, at the outset, either
GSM or CDMA platform to offer its mobile services and that thereafter, it
should operate within its designated band, and therefore within the chosen
technology. Their contention is that the decision of the DOT, pursuant to the
Recommendations of the Telecom Regulatory Authority of India (hereinafter
referred to as TRAI or the Authority), was contrary to the provisions
of the UAS licence. The Petitioners have also contended that while making its
Recommendations, although the Authority held that the choice of GSM or CDMA,
once exercised, becomes the basis for offering telecom services, it had,
without any cogent reasons, recommended that dual technology (crossover
technology) / allocation of dual spectrum may be permitted through an amendment
of the UAS licence. They allege that based thereon, the DOT took a decision on
or prior to 18.10.2007 to permit allotment of both GSM and CDMA spectrum under
the same licence and vide its letter, dated the same day, addressed to
some CDMA operators issued an
in-principle approval to use GSM technology in addition to CDMA technology
under the same licence. The contention of the Petitioners is that this was done
in a completely non-transparent manner and without informing anyone and that
the in-principle approval was issued to the CDMA operators even before the
licences were amended in order to make the decision a fait accompli. Their plea
is that the action of the DOT is a complete by pass of all due process and is,
in fact, the equivalent of grant of a brand-new licence, which is otherwise not
permitted as per the licence conditions.
4. Another contention raised by the
Petitioners is that although the Authority had recommended that the spectrum
usage charges should be applied on total spectrum held by the operator, the DOT
decided that the spectrum charges would be charged for the two technology
streams—GSM and CDMA-- separately.
5. The Petitioners have further contended
that TRAI had also gone beyond its terms of reference and made some very
arbitrary and ad hoc Recommendations raising the subscriber linked spectrum
allotment criteria by as much as 700%. After some deliberation, the DOT had
prescribed the criteria suggested by TRAI and in the process have deprived the
Petitioners of additional spectrum to which they had a vested right and for
which they had applied much earlier. Their contention is that this was
deliberately done in order to make spectrum available to the CDMA operators who
were given crossover technology and consequently the GSM spectrum.
6. The Petitioners further allege that
contrary to the principle of a level playing field, BSNL and MTNL was given an
allocation of spectrum of 10 MHz and 12.5 MHz respectively in excess of their
eligibility under the subscriber linked criteria and that this tantamounts to
discrimination by the DOT against the private GSM operators.
7. The Reply of Union of India, the 1st
Respondent, was filed on 7.1.2008. The contention of this Respondent is that
the Petitioners are indulging in unnecessary litigation. According to it, the
issue of technology neutrality or crossover technology and therefore also the
question of dual spectrum, was already decided. Alleging that the Petitioners have taken
benefits of additional spectrum beyond the stipulated quantity in their
respective licence agreements, the Respondent contends that they cannot
question a valid policy decision taken by the Government of India and
particularly a decision taken, in larger public interest, on the basis of
Recommendations of expert bodies. The Respondent denies that the Petitioners
have a vested right to receive spectrum and states that there was never an
agreement whereby the Petitioners can claim additional spectrum beyond 6.2 MHz.
It is also contended that the Petitioners are using outdated equipment, thereby
leading to sub optimal utilisation of spectrum that was allocated to them. The
argument is that there is a distinct scope for improving spectral efficiency
and the subscriber base but that the Petitioners are not implementing these
measures. It is also contended that the allocation of spectrum of 10 MHz to
BSNL and 12.5 MHz to MTNL was made on a trial basis.
8. The contention of TRAI, the second
Respondent, is that the Recommendations made by them are in pursuance of a
request from the DOT seeking Recommendations on various issues and also in terms
of the functions specified under the TRAI Act. It is stated that the
Recommendations were made after due consultation process. While the DOT had not
asked for any specific recommendation on the issue of spectrum allocation or
pricing, TRAI was of the opinion that there was need for a predictable and
transparent roadmap in the process of spectrum management including spectrum
allocation principles, its pricing and means to promote its efficient
utilisation. It is also contended that notwithstanding the Recommendations, the
Central Government, as the licensor, had the power to either accept or reject
the Recommendations of TRAI. It is also contended that no relief has been
sought by the Petitioners against TRAI.
9. M/s Reliance Communications Ltd, the 3rd
Respondent, in its counter affidavit alleged that the Petition has been filed
with mala fide intentions of
perpetuating the Petitioners’ monopoly, preventing competition and is unfairly
questioning the policy decision of the Government which has been arrived at
through a multi-level decision-making process. According to the Respondent, the
UAS licence agreements do not put any embargo on the use of any technology on
which the licensee can operate its services and therefore the concept of dual
technology is not prohibited and that the decision of the DOT does not infringe
on any of the legal rights of the Petitioners. Besides, it is stated that the
Petitioners having earlier welcomed the entry of the Respondent into GSM
technology, are now estopped from raising objections. The Respondent contests
the contention of the Petitioners that they have a vested right for spectrum.
10. The 4th Respondent, HFCL,
underlined the role of TRAI in framing of policies by the Central Government
and stated that it is in furtherance of the dual technology policy that HFCL
Infotel Ltd had paid the requisite entry fee. It charged that the petitioners
are interested only in retaining their monopoly and hence this Petition.
According to the Respondent, which particular technology can and ought to be
used by a service provider is in the realm of policy; and judicial review in
the thicket of policy matters is not maintainable. Denying that there is any
contract between the Petitioners and the DOT for spectrum up to 15 MHz, it was
pointed out that the decision to implement dual technology was fair. The discrimination
in favour of public sector operators was also contested.
11. In its counter affidavit, Tata
Teleservices Ltd, the 5th Respondent herein, contends that the
licence provisions clearly demonstrate the permissibility of dual technology
within the same licence. Accusing the Petitioners of being interested only in
hoarding vast amounts of spectrum, the Respondent denies that the Petitioners
are entitled to additional spectrum as a matter of right.
12. The case of BSNL, the 6th
Respondent, is that whenever BSNL desires to augment its infrastructure, it
runs into unwarranted obstacles and that this petition is one such. It contends
that while originally it was sanctioned 6.2 MHz of GSM Spectrum for all
Circles, further spectrum allocation is varied in different Circles, the total
spectrum available to it ranging from 6.2 MHz to 10 MHz, according to its
needs. Its case is that the spectrum allocation made to BSNL, on trial basis,
is valid and that no preferential treatment was shown to BSNL. A more or less
similar case is made out by MTNL, the 7th Respondent. Its case is
that all along, its allocation of spectrum was less than its entitlement and it
is only now that the Government has allocated an additional 4.4 MHz, on trial
basis. Both BSNL and MTNL contended that as Public Sector enterprises, they
have social obligations and also certain constraints and that this puts them on
a special footing.
13. In its Reply, M/s Shyam Telelink Ltd.,
the 8th Respondent, who is the licence holder in Rajasthan Telecom
Circle, contends that as per the New Telecom Policy 1999 (hereinafter referred
to as NTP-99), the UAS licence
permitted it to deploy any technology without any restriction. Refuting the
allegations made by the Petitioners, it avers that the action of DOT is in
accordance with the stated policy. Alleging that the contention regarding level
playing field is but an attempt to maintain the Petitioner’s monopoly, the
Respondent submits that the Recommendations made by TRAI were after due
deliberation and that the Government in DOT is empowered to take such policy
decision. It is contended that there is no contract between the Cellular
Operators and the Government and that, in fact, the Petitioners have been
receiving spectrum in excess of their contractual entitlement.
14. In the light of the contentions of
different parties, the following issues arise for determination in this case:
I.
Issue of vested right -
whether the Cellular Operators have a legal and vested right for
optimum/adequate spectrum?
II.
Issues involving dual
technology -- whether use of dual technology and allocation of dual spectrum
are permitted? Whether the decision on dual technology/dual spectrum was taken
properly?
III.
Issues of subscriber
linked criteria -- whether the Subscriber-linked criteria were properly
recommended and adopted?
IV.
Whether discrimination
was shown in favour of BSNL and MTNL in allocation of additional spectrum,
violating the principle of level playing field?
V.
What relief, if any, are
the Petitioners entitled to?
Each
of these issues raises, in its turn, several questions. Before we proceed to
analyse the issues however, it would be useful to refer briefly to the
background of the case as well as to trace the developments during the course
of hearing of this Petition.
15. The evolution of modern telephone
services in India started with the inception of the National Telecom policy in
the year 1994 with certain specific objectives. Two developments --
privatisation of the Telecom services and introduction of Cellular Mobile services
-- have led the way for the rapid growth of telecommunications. Till 1994,
telephone services were a monopoly of either DOT or Mahanagar Telephone Nigam
Limited (hereinafter referred to as MTNL)
which is a Public Sector Undertaking. To begin with, two private service
providers each in Delhi, Mumbai, Kolkata and Chennai were awarded the Cellular
Mobile services in November 1994. This was followed by award of two licences in
each of the 18 Telecom circles, based on a competitive bidding process. The licences
given to the private operators were on the basis of a fixed licence fee regime,
the amount being determined on the basis of an auction. Originally only the GSM technology (Global Speciale Mobile)
was preferred and the frequency provided was in the 900 MHz band i.e. 890-915
MHz paired with 935-960 MHz. Subsequently, in order to enable fixed service
providers (basic service operators) to provide fixed wireless service, another
technology known as Code Division Multiple Access (CDMA) was introduced in the year 1997, with the frequency
allocation being in the 800 MHz band i.e. 824-844 MHz paired with 869-889 MHz.
16. In April 1999, the National Telecom
policy, 1999 (NTP-99) was introduced with the objective of transforming, in a
time bound manner the telecommunication sector in India. Far-reaching changes
were brought about in this policy, which allowed the operators to migrate from
fixed licence fee regime to revenue sharing regime for the payment of licence
fee and spectrum charges. The policy of duopoly (only two operators in a
service area) was changed to multipoly (multiple players). DOT/MTNL were
brought in as third operators in each circle. The concept of level playing
field was recognised and even DOT was to pay the licence fee. The policy envisaged
achieving specific targets in a time bound manner. NTP-99 envisaged that
spectrum should be utilised efficiently, economically, rationally and
optimally. In September 1999, the concept of technology neutrality was
introduced and the terms and conditions of licences were to be applicable to
all licensees equally.
17. In January 2000, the TRAI Act was
amended, specifying the powers and functions of TRAI. TDSAT also came into
being pursuant to this amendment.
18. In January 2001, Guidelines were issued for
the Fourth Cellular Operator and multi-stage bidding was followed for the
fourth license. In November 2003, NTP-99 was amended, introducing two new
categories of licence -- Unified Licence and Unified Access Services Licence.
Both the licences were specifically declared to be technology neutral.
Simultaneously, guidelines were also issued for Unified Access Services Licence
(UASL). The UAS License conditions provided that allocation of spectrum would
be subject to eligibility, justification and shall be considered a case-by-case
basis. From time to time, the criteria for allocation of both initial as well
as additional spectrum were notified, the last order being on 29.3.2006.
19. On 6.2.2006, Reliance Communications Ltd
applied to the Department of Telecommunications seeking allocation of GSM
spectrum. HFCL and Shyam Telelink also applied similarly a few months later.
20. On 13.4.2007, the DOT addressed a letter
to TRAI seeking its Recommendations on various issues. For the purpose of
convenience, this letter containing the Terms of Reference, is reproduced
below.
No.
16-3/2004-BS-II
Government
of India
Ministry of
Communications
Department
of Telecommunications
Sanchar
Bhawan, 20, Ashoka Road, New Delhi – 110 001
Dated: 13th
April 2007
To
The Secretary,
TRAI,
MTNL Exchange Building,
Jawaharlal Nehru Marg, Minto Road,
New Delhi.
Sir,
The policy on Unified Access Service Licensing was finalized in November
2003 based on the Recommendations of TRAI. As on date, 159 licences have been
issued for providing Access Services (CMTS/UASL/Basic) in the country.
Generally, there are 5-8 Access Service Providers in each service area. The
Access Service Providers are mostly providing services using the wireless
technology (CDMA/GSM). As per the present policy, any Indian company fulfilling
the eligibility criteria can apply for UAS licence. These are increasing the
demand on spectrum in a substantial manner. The Government is contemplating to
review its policy. A suggested option can be to put a limit on the number of
Access Service Providers in each service area, in view of the fact that
spectrum is a scarce resource and to ensure that the adequate quantity of
spectrum is available to the licenses to enable them to
expand their services and maintain the Quality of Service.
2. Fast changes are
happening in the Telecommunication sector. In order to ensure that the policies
keep pace with the changes/developments in the Telecommunication sector, the
Government is contemplating to review the following terms and conditions in the
Access Provider (CMTS/UAS/Basic) licence.
i)
Substantial equity holding by a company/legal person
in more than one license company in the same service area (clause 1.4 of UASL
agreement).
ii)
Transfer of licences (clause 6 of the UASL)
iii)
Guidelines dated 21.02.2004 on Mergers and
Acquisitions. TRAI in its Recommendations dated 30.01.2004 had opined that the
guidelines may be reviewed after one year.
iv)
Permit service providers to offer access services
using combination of technologies (CDMA, GSM and / or any other) under the same
licence.
v)
Roll-out obligations (Clause 34 of UASL).
vi)
Requirement to publish printed telephone directory.
Certain issues are
applicable to other licences (NLD/ILD etc.) also.
3. TRAI is requested to furnish their recommendations
in terms of clause 11 (1) (a) of TRAI Act 1997 as amended by TRAI Amendment Act
2000, on the issue of limiting the
number of Access providers in each service area and review of the terms and
conditions in the Access provider licence mentioned in para 2 above.
-Sd-
(N. Parameswaran)
DDG (Access
Services)
Tel:23716874
Fax:
23372201
21. In order to deal with the above issues, the
Telecom Regulatory Authority of India issued a Consultation Paper on 12.6.2007
setting out various issues for consultation and seeking the views of various
stakeholders thereon. After receiving comments and holding open house
discussions, the Authority gave its Recommendations on 28.8.2007. Briefly
stated, the Authority recommended that there should be no cap on the number of
service providers in each service area. The Authority also recommended
permitting the concept of dual technology and allocation of dual spectrum i.e. GSM
spectrum to CDMA operators and vice versa. Simultaneously, TRAI recommended, suo motu, subscriber linked criteria for
allocation of GSM spectrum, which criteria were significantly higher than those
prescribed in the order of DOT dated 29.3.2006.
22. On 18.10.2007, DOT addressed a letter to
Reliance Communications Ltd, giving an in-principle approval for use of GSM
technology under the existing UAS licence in different Circles. It also stated
that the date of receipt of payment of prescribed entry fee shall determine the
date of priority for allocation of spectrum. It was also indicated the separate
revenue streams shall be maintained for different technologies -- GSM and CDMA
-- for calculation of licence fee and spectrum charges. Similar letters were
also given to HFCL and Shyam.
23. On 19.10.2007, the Department of
Telecommunications issued a Press Release setting out various decisions. This
is the decision of the DOT that is impugned. For this reason, we feel it
appropriate to set out this Press Release in full.
Department of Telecommunications
PRESS RELEASE
"Given the central aim of NTP 99 to ensure rapid
expansion of tele-density" and the objective "to transform in a time
bound manner, the telecommunications sector to a greater competitive
environment in both urban and rural areas providing equal opportunities and
level playing field for all players", the recommendations of TRAI that
there should be no cap on the number of access providers in any service area
has been considered by the Government and has been accepted.
The Unified (Telecom) Access Services (UAS) licences are
technology neutral and the licensees are required to provide access services
and meet the stipulated roll-out obligations using wireline and/or wireless
technologies by utilising network equipment that meets the prescribed
standards. The allocation of radio-spectrum and grant of wireless licence shall
be subject to availability. In case UAS Licensee is not allocated spectrum due
to non-availability, the Licensee shall endeavour to roll out services using
wireline technologies. It has also been decided that the roll-out for wireless
services shall be reckoned from the date of spectrum allocation. This will also
apply to those licensees who are awaiting initial spectrum allotment.
TRAI had recommended to enhance the subscriber link
criterion for allocation of frequency spectrum to UAS/CMTS licensees and to set
up a Committee to study further allocation of spectrum. Government has accepted
the TRAI’s recommendation of enhanced subscriber linked criterion for frequency
allocation and has set up a Committee in Telecom Engineering Centre (TEC) to
further study and give a report to the Government.
In order to further enhance the penetration of access
services for rapid expansion of tele-density, it has also been decided that the
existing private UAS licensees may be permitted to expand their existing
networks by using alternate wireless technology i.e. the present UAS licensee
who is using GSM technology for wireless access may be permitted to use CDMA
technology and vice-versa. The spectrum for the alternate technology, CDMA or GSM
(as the case may be) shall be allocated in the applicable frequency band
subject to availability after payment of prescribed fee. Allocation of spectrum
for the alternate technology may be done to private UAS Licensees on payment of
prescribed fee, which will be an amount equal to the amount prescribed as entry
fee for getting a new UAS licence in the same service area. The existing UAS
licensees, who have already applied for allocation of spectrum for the
alternate technology shall also be considered for allocation of spectrum in
alternate technology from the date of payment of prescribed fee. BSNL and MTNL
being incumbent operators shall be permitted usage of alternative technology
and allocated spectrum for the alternate technology without paying the prescribed
fee. For the purpose of payment of licence fee and spectrum charges, the stream
wise revenue of different technologies shall be considered.
At the time of further allotment of spectrum in any
technology, allotment will be subject to the condition that in case the
eligibility of the licensee for allocated spectrum in other technology falls
below the criterion set for spectrum allotment in the specified technology for
the last consecutive six months then corresponding chunk of spectrum in the technology
will be surrendered by the licensee before any further allotment of spectrum is
considered.
The Access Services providers shall endeavour to use more
efficient methods and optimum technologies for spectrum utilisation. In order
to encourage Licensees to use all available methods for efficient spectrum
utilisation, the "Spectrum Enhancement Charge", in addition to annual
spectrum charges based on revenue share, may be levied at the time of
additional spectrum allotment to licences beyond 10 MHz for GSM and 5 MHz for
CDMA. For each additional 1 MHz or part thereof "Spectrum Enhancement
Charge"@Rs. 16 crore, 8 crore, 3 crore for Metro/category ‘A’, category
‘B’, category ‘C’ service areas respectively may be charged.
SACFA clearance should be given in a stipulated time frame
of 60 days unless there are circumstances to the contrary.
For the substantial equity holding in the UAS/CMTS Licensee
Company, there is no change in the existing criterion.
For failure to meet roll out obligation within prescribed
time schedule, the existing stipulation of termination of licence under clause
35.2 of UAS licence agreement shall continue. In addition, Performance Bank
Guarantee (PBG) may also be forfeited and the service provider may be asked to
resubmit PBG of the same amount. No additional spectrum may be allocated to
licensees without fulfilling the roll-out obligations. In case of spectrum
auction, a Licensee, who has not met roll-out obligation against an existing
licence, should not be eligible to participate in any spectrum auction till the
roll out obligation is met. Any proposal for permission for merger shall not be
entertained till the roll out obligation is met; however, request for
permission for acquisition may be entertained. Roll out for each licensed service
area is to be dealt separately. In case of violation of roll-out conditions,
Government may consider termination of licence in certain cases.
Self certification scheme for completion of roll-out
obligation is already in place and shall continue. The authorised testing party
of the Licensor shall issue the required test certificate of compliance within
120 days from the date of submission of self certificate which is correct and
complete in all respects.
Merger & Acquisition guidelines will be issued separately.
24. Even before TRAI submitted its
recommendations, the DOT, on 6.8.2007 desired the Telecom Engineering Centre (TEC),
a technical unit of the DOT, to study matters relating to spectrum utilisation
by operators and spectral efficiency. The TEC gave its report on 26.10.2007 in
which it recommended the subscriber base criteria for allocation of GSM
spectrum, the level of which was much higher than those recommended by TRAI.
Following receipt of representations from the Industry, a Spectrum Review Committee
was constituted in the DOT under the chairmanship of the Additional Secretary
on 7.11.2007. This committee, which studied various issues and also the
recommendations of TRAI and TEC, gave a fractured report on 18.12.2007, leaving
the matter of subscriber linked criteria to be decided by the Government.
Thereafter, the DOT, on 17.1.2008, took a decision to apply, as an interim
measure, the subscriber linked criteria recommended by TRAI.
25. Insofar as the present Petition no. 286
of 2007 is concerned, the COAI filed this Petition on 23.10.2007. Initially,
the Petition was filed only with Union of India and Telecom Regulatory
Authority of India as Respondents. When the matter first came up for hearing on
24.10.2007 before this Tribunal, it was adjourned to 12.11.2007 on which date,
and on the request of the counsel for Petitioners, the following parties were
impleaded as Respondents -- Reliance Communications Ltd (hereinafter referred
to as RCom); HFCL Infotel Ltd (hereinafter
referred to as HFCL); Tata Teleservices Ltd (hereinafter referred
to as TATAs); Bharat Sanchar Nigam
Ltd (hereinafter referred to as BSNL);
Mahanagar Telephone Nigam Ltd (hereinafter referred to as MTNL); and Shyam Telelink Ltd (hereinafter referred to as Shyam). On the same date, the learned
Solicitor General brought to the notice of this Tribunal that on 7.11.2007, the
competent authority in the Government had constituted a Committee to recommend
revised subscriber base linked criteria for allocation of spectrum and that the
Committee was required to submit its report within three weeks. It was also
assured by the learned Solicitor General that till the criteria for allocation
of spectrum is finally determined, the question of allocation of spectrum will
not be taken up. On 12.12.2007, the learned Solicitor General informed this
Tribunal that the COAI had formally dissociated itself from this Committee and
that Government will not be bound by the statement made by him before this
Tribunal on 12.11.2007. Accordingly, he was relieved of the earlier commitment
made by him on behalf of the Government. The Prayer for stay made by the
Petitioners was rejected at that stage. On 20.12.2007, COAI filed a Writ
Petition no. 9654 of 2007 in the Delhi High Court. As the matter was seized of
by the Delhi High Court, which was hearing the case on a day-to-day basis, the
matter was not taken up for hearing in this Tribunal. Having heard the matter,
the Delhi High Court reserved its orders once 28.2.2008 and delivered its
judgement on 22.8.2008. In its judgement, which is a fairly lengthy one, the
Delhi High Court dealt with various issues and dismissed the writ petition,
also imposing costs on the six writ petitioners. It also stated that since the
jurisdiction of the Delhi High Court related only to consideration of only a
prayer for interim relief denied at that stage by the tribunal, the matter
would need to be disposed of by the TDSAT.
26. In the meanwhile, the Petitioners filed
certain additional affidavits. Pleadings having been completed by all parties
concerned, the matter was taken up for hearing and was heard at length.
27. Before we proceed to examine the issues
identified by us in para 14 above, we need to deal with a threshold challenge
posed by the learned counsel for Union of India, Mr. Vikas Singh, who argued
(a) that this Tribunal is bound by the judgement/observations of the Delhi High
Court in writ petition no. 9654 of 2007 and (b) that while this Tribunal can go
into questions of fact as well as questions of law, in so far as examination of
issues of fact is concerned, it is bound by the principles of judicial review.
This was duly countered by the learned counsel for petitioners. We would like
to briefly deal with both these issues.
28. Insofar as the first issue is concerned,
Mr. Vikas Singh pointed out that in its
judgement dated 22.8.2008, the Delhi High Court had passed adverse comments on
the Petitioners in several paragraphs, particularly on their not wanting to
invest in new technology and equipment, hoard spectrum etc. He stated that
these observations of the Delhi High Court are binding on this Tribunal. The
learned counsel for Petitioners, Mr. Vaidyanathan, countered this and cited the
judgement of the Supreme Court in the case of NITCO Tiles Ltd v. Gujarat Ceramic Floor Tiles Manufacturing
Association and Others [(2005) 12 SCC 454] . We have considered the matter.
Firstly, the TRAI Act fully empowers this Tribunal to settle any dispute
between the licensor and licensee. There is no limitation in this regard.
Section 15 of the TRAI Act bars the jurisdiction of civil courts. The writ
petition no. 9654 of 2007 was filed in the Delhi High Court under writ
jurisdiction, against an interim order of this Tribunal refusing to grant stay,
at that stage. In its judgement dated 22.8.2008, the Delhi High Court
had itself stated that “the challenge in the
writ petition before this court is limited to the refusal of the TDSAT to grant
an interim relief.” It also stated that "the TDSAT is admittedly seized of
and is competent to examine the entire matter relating to the decision to
permit crossover of the technology." It was also mentioned by the Delhi
High Court in its judgement that "this application is wholly beyond the
scope of the proceedings before this court." In Para 268 of its judgement,
the Delhi High Court observed as follows: "in the instant case, there is
no application seeking relief on the basis of the subsequent facts and no prayer
to this effect has been made in the proceedings before the TDSAT. The
jurisdiction of this court in the present proceedings relates to consideration
of only a prayer for interim relief denied at that stage by the Tribunal."
29. In the NITCO tiles case, cited supra, the Supreme Court had observed that
"it is well established that orders passed on interlocutory proceedings do
not conclude the merits of the matter." In the light of this, as well as
the observations of the Delhi High Court, we do not think it is necessary for
any party to entertain any doubts regarding the authority of this Tribunal to
determine independently on its own the various issues arising in this matter
for which it alone is competent. If we
refer, during the course of our judgement to any of the observations of the
Delhi High Court, it is only to draw attention to the convergence of judgement
on the issues involved.
30. As regards the scope of this Tribunal's
authority to review the decisions of the Government, we have carefully gone
through the judgements cited by the learned counsel for Union of India. He has
sought to take the support of the decisions of the Supreme Court in Union of India and Others v. K.G. Soni
[(2006) 6 SCC 794]; Directorate of Film Festivals and Others v. Gaurav Ashwin
Jain and Others [(2007) 4 SCC 737]; Dhampur Sugar (Kashipur) Ltd v. State of
Uttaranchal and Others [(2007) 8 SCC 418] and BALCO Employees’ Union (Regd) v.
Union of India and Others [(2002) 2 SCC 333]. We have carefully gone
through all these cases. They relate to the scope of judicial review by courts.
The position of this Tribunal is different. Insofar as this Tribunal is
concerned, the Hon’ble Supreme Court has, in the case of Cellular Operators Association of India and Others v. Union of India
[(2003) 3 SCC 186], explained the position in unambiguous terms and pointed out that the
TRAI Act gives wide jurisdiction to this Tribunal. In this case, the Apex Court
held that "having regard to the very purpose and object for which the
Appellate Tribunal was constituted and having examined the different provisions
contained in Chapter IV, more particularly, the provision dealing with ousting
the jurisdiction of the civil court in relation to any matter in which the
Appellate Tribunal is empowered by or under the Act, as contained in Section
15, we have no hesitation in coming to the conclusion that the power of the
Appellate Tribunal is quite wide, as has been indicated in the statute itself
and the decisions of this Court dealing with the power of a court, exercising
appellate power or original power, will have no application for limiting the jurisdiction
of the Appellate Tribunal under the Act. Since the Tribunal is the original
authority to adjudicate any dispute between a licensor and a licensee or
between two or more service providers or between a service provider and a group
of consumers and since the Tribunal has to hear and dispose of appeals against
the directions, decisions or order of TRAI, it is difficult for us to import
the self-contained restrictions and limitations of the court under the
judge-made law to which reference has already been made and reliance was placed
by the learned Attorney-General." The Apex Court went on to observe that
"the jurisdiction of the Tribunal under Section 14 cannot be held to be a
supervisory jurisdiction, in view of the language of the statute as well as the
fact that it is the only forum for redressing the grievance of an aggrieved
party inasmuch as the appellate jurisdiction to this Court is only on a
substantial question of law and the jurisdiction of a civil court for filing a
suit is also ousted. It has already been held by us that the Tribunal has the
power to adjudicate any dispute ...." In the light of the above judgement,
there need be no doubt whatsoever regarding the extent of this Tribunal’s
jurisdiction and the wide sweep it enjoys.
31. We now proceed to examine the various
issues for determination.
32. In respect of the first issue,
i.e. whether the petitioners have a vested right to be allocated spectrum, the
learned counsel for Petitioners, Dr. Singhvi argued that the Petitioners have a
vested right to receive 15 MHz of GSM spectrum which, according to him, is a
right established through NTP-99, contractual settlement, as well as the
various letters/orders of DOT. Dr. Singhvi pointed out that the need for
adequate spectrum is recognised in the NTP-99 which states as follows:
"Availability of adequate frequency spectrum is
essential not only for providing optimal bandwidth to every operator but also
for entry of additional operators. Based on the immediately available frequency
spectrum band, apart from the two private operators already licensed, DOT/MTNL
would be licensed to be the third operator in the service area in case they
want to enter, in a time bound manner. In order to ensure a level playing field
between different service providers in similar situations, licence fee would be
payable by DOT also. However, as DOT is the national service provider having
immense rural and social obligations, the Government will reimburse full
licence fee to the DOT. "
33. According to him, when the then existing
operators migrated to NTP-99 regime, all provisions of NTP-99 were applicable
to them including the right to optimal spectrum. Certain issues which were not
resolved under the migration package were resolved through various letters of
the DOT. In this connection, he referred to the letters written by DOT on
22.9.2001, 1.2.2002 and 18.4.2002. The counsel contends that all these letters
put together constituted an ‘offer’ made by the DOT to the GSM operators and
this included, inter alia, the promise of 10 MHz of GSM spectrum. The GSM operators
‘accepted’ this offer through their letter dated 23.8.2002 and accordingly a
concluded ‘contract’ came into being on the basis of which the GSM operators
withdrew their Petitions before the TDSAT on 19.9.2002. It is in accordance
with this contract that the DOT allocated spectrum up to 10 MHz to the private
GSM operators.
34. The learned counsel pointed out that
while in our country, the allocation of spectrum is made in meagre quantities,
the average spectrum allocated in other countries is 2*25.21 MHz per GSM
operator. He pointed out that the average GSM frequency per operator is 52.60
MHz; 36.20 MHz in France; 26.60 MHz in UK; 22.50 MHz in China; 19 MHz in
Thailand and 18 MHz in Malaysia. He also stated that the quantum of spectrum
allocation impinges directly on not only the capital cost but also the
operating costs for the service provider.
35. According to the learned counsel, clauses
23.5 and 43.5 of the UAS licence clearly confirm that the allocation of
spectrum will be as per guidelines issued by the Government from time to time.
In this context, the counsel also referred to a letter dated 12.4.2007 and
stated that even as late as April 2007 Government had agreed to their
commitment to provide spectrum. The learned counsel also stated that a
high-level spectrum Committee set up by the DOT had, in a report dated
29.7.2003 extended the roadmap of allocation of GSM spectrum up to 15 MHz and
that this was confirmed by DOT vide its letters dated 15.4.2004 indicating the
AGR for spectrum including beyond 12.5 MHz. Then on 29.3.2006, Government
revised the subscriber base criteria for allotment of GSM spectrum. He also
referred to a letter of the DOT dated 17.1.2008 which stated that 15 MHz was
the present upper limit for the GSM spectrum.
36. According to the learned counsel, a
contract need not necessarily be a written contract and that it can be oral or
even be implied and that no form is prescribed for a contract to come into
being. In this connection, he cited the judgement of the Hon’ble Supreme Court
in Vishnu Agencies Pvt Ltd v. CTO
[(1978) 1 SCC 520] wherein the Apex Court held that "offer and
acceptance need not always be in an elementary form, nor indeed does the Law of
Contract or of Sale of Goods require that consent to a contract must be
express. It is commonplace that ‘offer’ and ‘acceptance’ can be spelt out from
the conduct of the parties which covers not only their acts but omissions as
well. Indeed, on occasion, silence can be more eloquent than eloquence
itself." The learned counsel also cited
the case of National Fertilisers v.
Puran Chand Nangia [(2000) 8 SCC 343], wherein it was held by the Supreme
Court that "once the contract is entered into, any clause giving absolute
power to one party to override or modify the terms of the contract at his sweet
will or to cancel the contract -- even if the opposite party is not in breach,
will amount to interfering with the integrity of the contract."
37. Mr. Vaidyanathan, learned counsel for the
Petitioners also contended that the Petitioners have a vested right not only
because of the reasons adduced by Dr. Singhvi but also because the applications
of the Petitioners for allotment of additional spectrum were pending. These
applications were made in time and each application has been duly considered
and found eligible. In support of his
argument, the counsel cited the judgements of the Hon’ble Supreme Court in the case
of Union of India and Others v. Asian
Food Industries [(2006) 13 SCC 542].
38. Refuting the argument that the
Petitioners have a vested right, the learned counsel for the Union of India
stated that the Petitioners had always received more spectrum than they were
entitled to under the licence conditions and so the question of violation of
contract, even if it existed, did not arise. According to him, although the
licence of the Petitioners initially only provided up to 4.4 MHz, the
Petitioners were given upto 6.2 MHz without even the licence being amended.
According to the counsel, the licences which were amended in the year 2001
provided for grant of maximum of 6.2 MHz of spectrum to each of the licensees
which is the only contracted quantity. According to him, there is no other
contractual obligation. On 1.2.2002, the Government clearly mentioned that no
spectrum beyond 10 MHz would be allotted to any of the licensees, and that this
additional spectrum of 1.8 MHz, if so essential, could be considered only after
a suitable subscriber base, as may be prescribed, is reached. The learned
counsel also pointed out that one of the stipulations made in this circular
dated 1.2.2002 is that the additional spectrum beyond 6.2 MHz + 6.2 MHz would
be assigned in the 1800 MHz band. However, subsequently, two GSM operators were
allocated additional spectrum in the 900 MHz band. In July 2002, another 1.8
MHz of spectrum was given bringing the total allocation to 8 MHz. The counsel’s
contention is that spectrum allocation has always been made from time to time
taking into consideration the achievement of a prescribed subscriber base.
According to him, the letters that were cited by the counsel for Petitioners
did not in any way confer a right in favour of the Petitioners because these
letters were written in a different context and related to a different aspect
of the spectrum.
39. The counsels for other Respondents also
contested the issue of vested right. Mr. Mukul Rohtagi, learned counsel for 3rd
Respondent states that the COAI has no right under any law or contract which
entitles them to additional spectrum as a matter of right. The learned counsel
for the 5th Respondent, Mr. Ramji Srinivasan also argued that no
vested right can accrue on the basis of the three letters /orders of the DOT
dated 22.9.2001, 1.2.2002 and 18.4.2002.
40. We have carefully considered the entire
matter. The NTP-99 document, to which the counsel for Petitioners had referred,
states that "it is proposed to review the spectrum utilisation from time
to time keeping in view the emerging scenario of spectrum availability, optimal
use of spectrum, requirements of market, competition and other interest of
public." In section 5.0 relating to
Spectrum Management, the document states that there is need to have a
transparent process of allocation of frequency spectrum which is effective and
efficient. Clauses 23.1 and 43.5 of the UAS licence read as follows:
"23.5
..... Based on usage, justification and availability, spectrum may be
considered for the assignment, on case-by-case basis. The frequencies assigned
may not be contiguous and may not be same in all cases, while efforts would be
made to make available larger chunks to the extent feasible. The detailed
guidelines for allocation of frequency spectrum and charges thereof etc would
be separately issued from time to time." (Emphasis supplied)
"43.5
Subject to availability and as per guidelines issued from time to time, the
spectrum allocation and frequency bands will be as follows:
43.5 (i) For
wireless operations in SUBSCRIBER access network, the frequencies shall be
assigned by WPC wing of the Department of Telecom from the frequency bands
earmarked in the applicable National Frequency Allocation Plan and in
coordination with various users. Initially a cumulative maximum of of 24.4 MHz
+4.4 MHz shall be allocated in the case of TDMA-based systems@200 KHz per
carrier or 30 kHz per carrier on a maximum of 2.5 MHz +2.5 MHz shall be
allocated in the case of CDMA-based systems @1.25 MHz per carrier, on
case-by-case basis subject to availability. While efforts would be made to make
available larger chunks to the extent feasible, the frequencies assigned may
not be contiguous and may not be the same in all cases or within the whole
service area. For making available appropriate frequency spectrum for roll-out
of services under the licence, the types (s) of Systems to be deployed are to
be indicated.
43.5 (ii)
Additional spectrum beyond the above stipulation may also be considered for
allocation after ensuring optimal and efficient utilisation of the already
allocated spectrum taking into account all types of traffic and
guidelines/criteria prescribed from time to time. However, spectrum not more
than 5+5 MHz in respect of CDMA system or 6.2+6.2 MHz in respect of TDMA system
shall be allocated to any new Unified Access Services Licensee. The spectrum
shall be allocated in 824-844 MHz paired with 869-889 MHz, 890-915 MHz paired
with 935-960 MHz, 1710-1785 MHz paired with 1805-1880 MHz.
43.5 (iii) In
the event, a dedicated carrier for micro cellular architecture-based system is
assigned in 1880-1900 MHz band, the spectrum not more than 3.75 + 3.75 MHz in
respect of CDMA system or 4.4+4.4 MHz in respect of TDMA system shall be
assigned to any new Unified Access Services Licensee.
43.5 (iv) The
licensor has right to modify and/or amend the procedure of allocation of
spectrum including quantum of spectrum at any point of time without assigning
any reason."
41. A perusal of both the NTP document as
well as the licence conditions clearly indicates that there is no right
conferred upon the Petitioners by virtue of these documents. We have also
considered the various letters, cited by the learned counsel for Petitioners,
which have been issued by the DOT. It is neither feasible nor necessary to
reproduce these letters in extenso.
Suffice it to say, the letter dated 22.9.2001 of the WPC wing of the DOT
relates to royalty and licence fee charged towards WPC spectrum usage by
Cellular Mobile Telephone Service (CMTS) providers. It only states that any
additional bandwidth, if allotted subject to availability and justification,
shall attract additional royalty and licence fee as revenue share (typically 1%
additional revenue share if bandwidth allocated is up to 6.2 MHz + 6.2 MHz in
place of 4.4 MHz +4.4 MHz). The letter dated 1.2.2002 states that in order to
meet the requirements of growth of subscribers, it has been decided to assign
additional spectrum up to 1.8 MHz +1.8 MHz to the CMTS operators and requires
the operators to apply for allotment of additional spectrum after reaching a
customer base of 4 lakh or more in a service area. Stating that the actual
assignment will be made, subject to availability and coordination on case to
case basis, after a customer base of 5 lakh or more has been reached in the
service area, it states that the additional assignment will be beyond already
allocated spectrum of 6.2 MHz +6.2 MHz and that the additional spectrum of 1.8
MHz +1.8 MHz would be assigned in 1800 MHz band. It also states that additional
allocation be on 6.2 MHz + 6.2 MHz will carry a spectrum usage charge of 4% of
AGR and would cover allocation of further spectrum which may become possible to
allocate in future subject to availability, to add up to a total spectrum
allocation not exceeding 10 MHz +10 MHz per operator in a service area and that
such additional allocation could be considered only after a suitable subscriber
base, as may be prescribed, is reached. The Order dated 18.4.2002 of the WPC
wing of the DOT refers to the spectrum charges for microwave (MW) access and
backbone networks of cellular networks. It relates to the microwave access
spectrum in the frequency band of 10 GHz and beyond and as such has no
relationship to the GSM or CDMA spectrum. In Para 6 of this order, it only
states that in addition to the stipulations in the earlier paragraphs, the charges
for GSM spectrum (900/1800 MHz band) will continue to be levied in accordance
with the Government of India orders dated 22.9.2001 and 1.2.2002, which were
referred to above. Para 7 of this order states that the above package of
spectrum charging on percentage revenue share will be available to the
cellular operators on the premise that it is accepted in its entirety and
simultaneously all legal proceedings, with regard to spectrum charging,
shall be withdrawn. The acceptance by COAI vide the letter of 23.8.2002 also
states that the COAI "is taking necessary action at the earliest to
withdraw all legal proceedings, with regard to spectrum charging,
instituted by COAI and its members against the Government in courts and
TDSAT".
42. From the above, it is apparent that the
various letters/orders cited by the Petitioners essentially relate to spectrum
charging and where they refer to allocation of spectrum, it is made clear that
any allocation of spectrum would be subject to its availability and on
consideration on a case by case basis. Clause 43.5 of the UAS Licence
conditions stipulates that the maximum assured quantum of spectrum is 6.2 +6.2
MHz in case of GSM. We hold that there is thus nothing in either the NTP-99
document or the licence conditions or the correspondence/orders to support the
contention of the Petitioners that they have a vested right beyond 6.2 MHz. In
its judgement dated 22.8.2008, the Delhi High court has concluded that “there
is no element of fairness in the claimed vested right to allocation of
additional spectrum which is urged on behalf of the Petitioners”.
43. As mentioned in para 36 above, the
learned counsel for Petitioners, Dr. Singhvi, sought to take the support of the
judgement of the Apex Court in the Vishnu
agencies case cited supra, on the premise that the order dated 18.4.2002 of
the DOT was an ‘offer’ and the reply dated 23.8.2002 of COAI an ‘acceptance’ of
the same. But a close reading of these documents shows that they relate to
spectrum charging and so has no relation to allocation of spectrum. We
therefore hold that the instant case is not one of a contract and by virtue of
this, do not regard the Vishnu agencies
case as relevant to this case. For this very reason, we also do not hold
that the observations of the Supreme Court in the National Fertilisers case are relevant to this case. The other
learned counsel for petitioners, Mr. Vaidyanathan, sought to draw strength from
the judgement of the Apex Court in the Asian
Food Industries case (para 37 above),
in which the Supreme Court held that "by reason of a policy, a
vested or accrued right cannot be taken away. Such a right, therefore, cannot a fortiori be taken away by an amendment
thereof". The facts of that case do not have a bearing on the facts in
this case. Besides, as was brought out above, there is no vested right in
favour of the Petitioners. The issue is whether the Petitioners have a vested
right to receive GSM spectrum up to 15 MHz. And, for reasons indicated, we hold
that they do not have any such vested right.
44. We now turn to the two critical aspects
of this Petition. These are whether dual technology is permitted under the same
licence and whether the subscriber linked criteria laid down by DOT are not
arbitrarily fixed and arbitrarily high, rendering the Petitioners ineligible
for receipt of additional spectrum to which they were entitled as per the
previous criteria. The grievance of the Petitioners is that on the one hand the
DOT, on the Recommendations of TRAI, permitted dual technology and thereby
entry of CDMA operators in the GSM fold, and secondly they, again on the
Recommendations of TRAI, revised the subscriber linked criteria for allotment
of GSM spectrum to an unrealistic level. Their contention is that this ‘double
whammy’ was deliberately dealt out so as to benefit the CDMA operators. They
contend that allocation of GSM spectrum to the CDMA operators disturbs the
level playing field and is violative of Articles 14, 19 and 21 of the
Constitution.
45. We will first take up the issues relating to dual technology and
allocation of dual spectrum. The arguments
on behalf of the Petitioners were led by Dr. Singhvi and Mr. Vaidyanathan, both
of whom argued at length. For purpose of convenience, and since several of
their arguments overlapped, we shall list out the contentions of both the
learned counsels, which are as follows:
1.
CDMA operators wanting
to offer GSM services could have offered the same in their allocated/contracted
800 MHz spectrum.
2.
Technology neutrality
enables the licensee to choose any technology -- either GSM or CDMA on the
basis of which the allocation of appropriate spectrum is made. But, once the
band is so allocated, the operator has to operate/provide service in its
allocated band, whether it later chooses to use GSM technology or CDMA
technology or both.
3.
Government’s own
understanding and actions evidence that dual spectrum was never permitted under
NTP-99. In April 2001, when GSM operators applied for CDMA spectrum in 800 MHz
band, their request was rejected by DOT on 9.4.2001. A request of BPL Mobile
for CDMA spectrum in 1999 was rejected on the ground that the same was
earmarked for fixed services. In the case of Bharti Airtel, DOT required the Company
to surrender its CDMA spectrum in Madhya Pradesh and did not allow it to retain
the CDMA spectrum under its UAS (GSM) licence. Thus, its request for dual
spectrum was rejected.
4.
Technology neutrality
was understood by all in the field to mean only one system, to be chosen by the
operator. The change of policy substantially impacts the existing operators. It
is contended that rule of law involves legal certainty as decided in the case
of Reliance
energy Ltd and Another v. Maharashtra State Road Development Corporation and
Others [(2007) 8 SCC 1].
5.
The licence conditions
clearly stipulate that the service providers will continue to provide services
in the already allocated/contracted spectrum. A Licence is a specific
permission to do something and so unless it is specifically provided, an
activity cannot be taken up. Specific provision to take up an activity and not
lack of prohibition is what matters.
6.
The Press Release of
19.10.2007 is a new decision resulting in an amendment of the licence
condition. If dual spectrum was already allowed under the licence, there was no
need for DOT to refer the matter to TRAI on 13.4.2007, and for the impugned
Press Release of 19.10.2007 to state that it has been decided to ‘permit’ use
of alternate technology and also for DOT to subsequently amend the licence of
Reliance by replacing the word ‘or’ with ‘and’.
7.
The decision
communicated through DOT’s Press Release of 19.10.2007 is a new policy decision
effectively amending NTP-99 and was taken without the approval of the Cabinet
which had earlier approved the NTP-99.
8.
The impugned decision is
violative of clause 1.3.1 read with clause 1.4 (ii) of the UAS licence
agreement which prohibits a promoter from having a stake of more than 10% in
another licensee company in a circle. Also, clause 1.4 of the UAS licence
states that Basic and Cellular licensees existing as on 11.11.2003 shall not be
eligible for a new UASL in the same service area. The impugned decision
effectively means that a second and new GSM licence has been given to the CDMA
operators, which is not permissible.
9.
The application of RCom
of 6.2.2006 is void ab initio and non est
since there was no dual spectrum policy till 19.10.2007
10. The implementation of the policy decision was in a
non-transparent manner. There was also undue haste in the manner in which the
decision was implemented. While the impugned policy decision was released to
the world on 19.10.2007, the ‘in-principle’ approval was granted to RCom on
18.10.2007 itself and payment also accepted on the morning of 19.10.2007. Any
Government order takes effect from the date it is published and not from the
date it is made in the file.
11. In giving GSM spectrum to CDMA operators, injury has been
caused to the existing GSM operators who are being denied additional spectrum
for which they were entitled under the then existing criteria.
12. DOT was wrong in selectively implementing the
Recommendations of TRAI and changing certain Recommendations. TRAI recommended
levy of spectrum usage charges on combined spectrum (of both CDMA and GSM)
whereas DOT unilaterally changed it to permit levy of charges separately for
GSM and CDMA. This has resulted in the CDMA operators paying for spectrum
usage@2% of AGR instead of 4% of AGR, as recommended by TRAI. DOT also
disregarded TRAI’s Recommendations for imposing contingent roll-out
obligations, and also varied TRAI's Recommendations on one-time charges for
spectrum.
13. Effectively, the impugned decision is leading to a situation
where one operator holds 2 licences, 2 spectrums and runs 2 networks under the
same licence while others have to do with only one. Secondly, one operator pays
4% AGR the spectrum usage charges while others pay only 2%, even though they
both hold the same quantum of spectrum. Thirdly, one operator gets 4.4 MHz
spectrum as start-up allocation while others are denied additional allocation
of even 1 to 2 MHz and are asked to achieve arbitrarily hiked subscriber
numbers. It is thus disturbing the level playing field, which is essential and
is envisaged under NTP-99. Articles 14, 19 and 21 of the Constitution impose
level playing field. Rule of law requires reasonableness and fairness.
14. The impugned decision is against public interest. The reason
given for policy change in the Press Release of 19.10.2007 is that dual
spectrum was being permitted in order to further enhance the penetration of access
services for rapid expansion of tele-density. The said decision does not
further this cause.
46. The learned counsel for the 1st
Respondent, Mr. Vikas Singh argued that there was nothing irregular in the
Government admitting to the concept of dual technology and consequential grant
of GSM spectrum to CDMA operators. His case is that the licence conditions do
not prohibit the use of dual technology. He pointed out that vide a letter
dated 17.8.2006, the Cellular Operators’ Association of India wrote to the then
Minister of Communications & Information Technology welcoming the entry of
Reliance and others into GSM; his argument is that having done so, COAI is
estopped from now raising the issue of dual technology. On 17/18.10.2007, the Government while
accepting the TRAI Recommendations, decided to permit dual use technology by
the existing licensees, and asked Reliance, Shyam and HFCL to pay the requisite
fee, as per the Recommendations of TRAI. This clearly shows that DOT is
ensuring a level playing field. The learned counsel also referred to the
judgement of the Delhi High Court which had clearly held in favour of the grant
of dual technology to the Respondents.
47. Stating that he was making his
submissions to assist the Tribunal in arriving at a proper perspective, the
learned counsel for the 2nd Respondent, TRAI, Mr. Saket Singh
explained that paragraphs 4.12 to 4.16 of the TRAI’s Recommendations dated
28.8.2007 were more in the nature of setting out the common belief and that the
comprehensive discussion on the issue started from Para 4.17 onwards and is
specifically contained in paras 4.18 to 4.22. He stated that technology
neutrality was not explicitly stated in the licensing policy due to which
different interpretations were given by different persons to suit their needs.
In paragraph 4.25, the Authority stated that there is need to bring clarity to
the entire issue and recommended in Para 4.27 the manner in which the
alternative technology may be permitted.
48. Mr. Mukul Rohtagi, learned counsel for 3rd
Respondent, argued that the licence conditions do provide for dual technology.
According to him, clause 43.5 of the licence clearly provides for use of any
technology for provision of services under the licence. This clause only
requires the licensee to indicate the type (s) of systems to be deployed. The
very use of the word ‘type(s)’ means that GSM and CDMA can be used.
According to him, the reference to maximum of spectrum in this clause is only
with regard to concerned spectrum band. He also points to clause 5 of the
licence which permits DOT to amend the licence and states that the amendment
was duly carried out. According to the counsel, UAS licences are technology
neutral as provided under clause 23.1. Clause 43 of the licence does state that
a specific authorisation for use of frequency is to be taken from the WPC wing
but does not, at the same time, state that only one technology can be used.
49. Referring to the contention of the
counsel for Petitioners that Bharti Airtel and BPL Mobile were not allowed to
use dual spectrum, the counsel stated that BPL Mobile applied for CDMA spectrum
under the GSM licence which was rejected by DOT on 21.1.2000. Also, he stated
that during the period 1999-2000, there was no concept of UASL and that licences
were separately issued for Basic services and Cellular services. It is only in
the year 2003 the technology neutrality was recognised and therefore the
Government could not have agreed to grant of dual spectrum to that time. As
regards Bharti Airtel, it is contended that they had surrendered their licence
but sought to keep the spectrum which was not permitted.
50. Arguing that the application of Reliance
Communications made in February 2006 was valid, the learned counsel pointed out
that the Petitioners also did not challenge the application at that time and
there was no change in the licensing regulations between then and now. The
Petitioners themselves having welcomed the entry of Reliance Communications
along with other operators (Shyam and HFCL) into the GSM fold, are now estopped
from raising any objections. Denying the charge of undue haste shown by the
Government in issuing the in-principle approval, the counsel pointed out that
the DOT had taken more than 15 months to consider the application made in
February 2006. The Recommendations of TRAI were received in August 2007 whereas
the decision was taken only in October 2007.
51. As regards the lack of equal opportunity
and disturbance of level playing field, the learned counsel stated that neither
the Petitioners had applied for dual spectrum under the UAS licence nor have
they been denied the same while issuing the in-principle approval to Reliance
Communications, Shyam and HFCL. Referring to the question of the in-principle
approval having been issued before the licence is amended, the counsel stated
that the licence can be amended only after the payment of entry fee as per
clause 18.1 of the UAS licence, and as such there was no irregularity in the
procedure that was followed.
52. Referring to the allegation of the
Petitioners that Reliance did not have adequate coverage under CDMA in the areas
licensed to it, the counsel stated that Reliance was not the only service
provider to whom this dual technology approval was given. Secondly, although Reliance
Communications (RCom) started its services only in the year 2003 unlike Airtel
and Vodafone who started their services in 1994-95, Reliance has a subscriber
base of 52 million as on 31.12.2008 as compared to 85 million of Bharti Airtel
and 60 million of Vodafone. The counsel also pointed out that Reliance has paid
entry fee twice for the same licence. The counsel argued that, if any, it is
the Petitioners who have enjoyed the benefit of repeated changes in the licence
conditions.
53. Referring to the alleged violation of
clause 1.4 of the UAS licence, the learned counsel stated that this is not a
case of issuing of 2 licences but of issuing of GSM spectrum through an
amendment in the relevant clauses of the existing UAS licence. Besides, the
proviso to clause 1.4 clearly states that clause 1.4 is not applicable to
existing licensees and that in as many as 8 Telecom Circles, Reliance was not
given GSM spectrum.
54. The learned counsel for the 5th
Respondent, Tata Teleservices Ltd, Mr. Ramji Srinivasan referred to the Press
Release issued on 13.9.1999, which clearly provided for technology
neutrality. The counsel pointed out that
a copy of this Press Release was marked to the Cellular Operators Association
of India, who never challenged the same. The COAI cannot now say that there was
a change in the policy of the Government of India. The counsel stated that the
Consultation Paper issued by TRAI on 12.10.1999 referred to the Government's
decision to allow technology neutrality and that TRAI's view was that
application of new technology should not be held back as it offers better
services to customers, and the protection of customer interest. The counsel
stated that the case of COAI is based on the use of the word ‘or’ instead of
‘and’ and that it ignores the various facts. According to him, there are
judgements indicating that the circumstances so warrant, the construction could
be liberal. The learned counsel also
pointed out that the Consultation Paper issued by TRAI on 12.10.1999 which
records that on 15.9.1999, DOT gave MTNL an amended licence for providing
Cellular Mobile service with technology neutrality i.e. MTNL received a licence
to use the technology other than GSM to provide cellular mobile service. On
16.9.1999, MTNL requested for TRAI’s approval of its tariffs for the new
service and received it the next day.
55. Learned counsel pointed out that taking
advantage of technology neutrality policy announced on 13.9.1999, existing
CMSP's allegedly applied for allocation of spectrum in 800 MHz band. According
to him, the letter dated 9.4.2001 only seeks a justification for demand of
additional spectrum. Nowhere is it stated that the requests are rejected
because of non-admissibility of dual technology. He also states that COAI has
not gone back to DOT giving justification for CDMA. Besides, he contends that
this is only one letter and cannot be the basis for the argument of COAI. The
counsel also states that Bharti’s surrender of the licence was a voluntary act
and not because it was not permitted crossover technology. They elected to go
by UAS Licence and surrendered their Basic licence by virtue of which they had
the CDMA spectrum.
56. We have carefully considered the various
aspects. At the outset, we would like to state that nothing was placed on
record to show that the 800 MHz band was also allocated for the purpose of GSM.
So we do not wish to enter into the question whether the CDMA operators could
have offered GSM in their allocated/contracted 800 MHz spectrum. Indeed, by
advancing this argument, the Petitioners appear to tacitly admit that CDMA and
GSM services can be offered under the same licence.
57. From the above narration of the pleadings
and arguments on the issue of validity of the decision regarding technology
neutrality and allocation of dual spectrum as well as the manner of
implementation of this decision, the following questions arise:
A.
Is technology neutrality
a new decision? Is a licensee required to abide for all time by its initial
choice of either GSM or CDMA platform?
B.
Was TRAI wrong in
recommending that cross over technology/ allocation of dual spectrum be
permitted under the same licence?
C.
Was DOT wrong in
deciding the issue at its level instead of taking the Cabinet’s approval?
D.
Was DOT wrong in allowing Reliance communications
Ltd. to make necessary payments and complete formalities before announcing the
decision on 19.10.2007? Was it done in a non-transparent manner?
E.
Does giving dual technology effectively mean a
new licence? Does it affect the Petitioners’ right for a level playing field
involving Articles 14, 19 (1) (g) and 21 of
the Constitution?
F.
Whether the allocation of
start up spectrum of 4.4 MHz + 4.4 MHz to CDMA operators was appropriate?
G.
Whether Government was
right in treating the two streams of spectrum -- CDMA and GSM -- separately for
the purpose of computing the spectrum usage charges?
H.
Whether DOT had
disregarded TRAI’s Recommendations regarding contingent roll-out obligations?
58. In examining the question whether
technology neutrality is a new concept, we have looked at various documents.
The National Telecom policy 1999 (NTP-99) states that it is of vital importance
to the country that there be a comprehensive and forward-looking
telecommunications policy, which creates an enabling framework for development
of the Telecom industry. It states that the policy framework must focus on
creating an environment which enables continued attraction of investment in the
sector and allows creation of communication infrastructure by leveraging on
technological development. The Press Note (1999 series) dated 13.9.1999 issued
by the DOT refers to the stipulation that Cellular Mobile Service Providers
(CMSP) under the new licensing regime shall be free to provide all types of
mobile services using any type of network equipment that meets the relevant
International Telecommunication Union (ITU)/Telecom Engineering Centre (TEC)
standards. It states that the technology neutral approach for provision of
cellular mobile services will enable faster and cost-effective roll-out of the
cellular networks by leveraging technological developments. Accordingly, the
Telecom commission decided that all new cellular mobile service providers will
be technology-wise neutral. The only stipulation is that the technology must be
digital. The existing licensees of cellular services on their migration to the
NTP-99 regime in terms of migration package already offered to them will also
be permitted to expand their networks using any other technology or the GSM
technology to which they have been bound so far as per the existing licences.
(Emphasis supplied). As pointed out by the learned counsel for the 5th
Respondent, a copy of this Press Note was also marked to the Cellular Operators
Association of India. There is no evidence on record to indicate that this
policy was contested. In its judgement dated 22.8.2008, the Delhi High Court
held that “it is apparent that even as back as in 1999, the Respondent no.1 had
notified technology neutral Cellular Mobile Service Providers and also
envisaged expansion of networks by using any other technology. Admittedly, this
communication was endorsed to and received by the Petitioner no.1 and is
unchallenged in any legal proceedings”. It is also seen that in an Approach
Paper dated 15.11.2006, presented by the COAI for allotment of 2G spectrum,
COAI itself acknowledged that technology neutrality was introduced into
cellular services through NTP-99.
59. The learned counsel for Petitioners, Dr.
Singhvi argued that the Press Note dated 13.9.1999 should be read along with
the letter dated 9.4.2001 addressed by the DOT to COAI and other cellular
operators wherein it dealt with requests for additional frequency spectrum in
900/1800 MHz band for cellular services and for allocation of frequency
spectrum in 800 MHz band for CDMA services. Para 3 of that letter states that
"the cellular services are to be operated by the existing licensees in the
designated Cellular Mobile Telephone Service band i.e. 890-915 MHz paired with
935-960 MHz. The operators have been permitted to operate the Cellular Mobile
Telephone Service in any technology. However, the technology shall be digital
and has to operate in the designated frequency band. As such, no additional
frequency spectrum needs to be allocated". The contention of the counsel is
that this paragraph is a clear indication that dual spectrum is not permitted.
60. We have perused the letter dated 9.4.2001
and are unable to agree with this contention. All that the para 3 of this
letter states is that the technology shall operate in the designated frequency
band. Nowhere is it stated that the request is rejected because of
non-permissibility of dual technology. It goes without saying that any
technology has to operate within the designated frequency band. It cannot
obviously operate in any band whatsoever. It is for the WPC wing, through the
medium of the National Frequency Allocation Plan to designate the frequency
band for each technology. This is all that the letter states and there is no
scope for its misinterpretation and for reading non-permissibility of dual
spectrum into it. We therefore do not agree with this contention of the learned
counsel for the Petitioner.
61. An addendum to the New Telecom Policy was
issued on 11.11.2003, on which day the guidelines for the Unified Access (Basic
and Cellular) Services Licence were also issued. These guidelines stipulate
that Government in the public interest in general and consumer interest in
particular and for the proper conduct of telegraphs and telecommunication
services, has decided to move towards the Unified Access Services Licensing
regime. As a first step, Basic and Cellular services shall be unified within
the service area. The guidelines provide that the Unified Access Service
providers are free to use any technology without any restriction.
It is also stipulated that the existing operators shall have an option to
continue under the present licensing regime (with the present terms and
conditions) or migrate to new Unified Access Services Licence (UASL) in the
existing service areas, with the existing allocated/contracted spectrum. The
licence fee, service area, roll-out obligations and performance bank guarantee
under the Unified Access Services Licence will be the same as Fourth Cellular
Mobile Service Providers (CMSPs). The service providers migrating to unified
access services licence will continue to provide wireless services in already
allocated/contracted spectrum and no additional spectrum will be allotted under
the migration process for Unified Access Services Licence. The existing BSO's
(Basic Service Operators) after migration to Unified Access Services Licensing
regime were allowed to offer full mobility, with the stipulation that they will
be required to offer limited mobility service also for such customers who so desire.
From these provisions, one clearly gathers that as early as 1999 and definitely
after November 2003, the concept of technology neutrality was very clearly
enunciated.
62. We now turn to the question whether dual
technology is permitted as per the existing licence conditions of the UAS
licence, and for this we need to examine the relevant clauses of the licence.
The UAS Licence, which is valid from 20 years from the effective date, contains
the following important clauses in so far as the resolution of this issue is
concerned:
1.3.1 The
merger of Indian companies may be permitted as long as competition is not
compromised as defined in conditions 1.4 (ii).
1.4 The
LICENSEE shall also ensure that:
(i) Any change in shareholding shall be subject
to all applicable statutory permissions.
(ii)
No single company/legal person, either directly or through its associates,
shall have substantial equity holding in more than one LICENSEE company in the
same service area for the access services namely; Basic, Cellular and Unified
Access Service. ‘Substantial equity’ herein will mean ‘an equity of 10% or
more’. A promoter company/Legal person cannot have stakes in more than one
LICENSEE Company for the same service area.
Note: clause 1.4
(ii) shall not be applicable to Basic and Cellular Licensees existing as on
11.11.2003, and in case one of them migrates to UASL it shall not be necessary
to surrender the other licence. Further, Basic and Cellular licensees existing
as on 11.11.2003, shall not be eligible for a new UASL in the same service area
either directly or through its associates. Further, any legal entity having
substantial equity in existing Basic/Cellular licensees shall not be eligible
for new UASL.
(iii) Management control of the LICENSEE
Company shall remain in Indian Hands.
5. Modifications
in the Terms and Conditions of Licence
5.1
The LICENSOR reserves the right to modify at any time the terms and conditions
of the LICENCE, if in the opinion of the LICENSOR it is necessary or expedient
to do so in public interest or in the interest of the security of the State or
for the proper conduct of the telegraphs. The decision of the LICENSOR shall be
final and binding in this regard.
18.3
Radio Spectrum Charges:
18.3.1
The LICENSEE shall pay spectrum charges in addition to the Licence fees on
revenue share basis as notified separately from time to time by the WPC Wing.
However, while calculating ‘AGR’ for the limited purpose of levying spectrum
charges based on revenue share, revenue from wireline subscribers shall not be
taken into account.
18.3.2
Further royalty for the use of spectrum for point-to-point links and other
access links shall be separately payable as per the details and prescription of
Wireless Planning & Coordination Wing. The fee/royalty for the use of
spectrum/possession of wireless telegraphy equipment depends upon various
factors such as frequency, hop and link length, area of operation and other
related aspects etc. Authorisation of frequencies for setting up Microwave
links by Licensed Operators and issue of Licences shall be separately dealt
with WPC Wing as per existing rules.
23. TECHNICAL CONDITIONS:
23.1 The
Licensee shall provide the details of the technology proposed to be deployed
for operation of the service. The technology should be based on standards
issued by ITU/TEC or any other International Standards
Organisation/bodies/industry. Any digital technology having been used for a
customer base of one lakh or more for a continuous period of one year anywhere
in the world, shall be permissible for use regardless of its changed versions.
A certificate from the manufacturers about satisfactory working for a customer
base of one lakh or more over the period of one year, shall be treated as
established technology.
23.5 The
frequencies shall be assigned by WPC from the designated bands prescribed in
the National Frequency Allocation Plan-2002. (NFAP-2002) as amended from time
to time. Based on usage, justification and availability, spectrum may be
considered for assignment, on case by case basis. The frequencies assigned may
not be contiguous and may not be the same in all cases, while efforts would be
made to make available larger chunks to the extent feasible. The detailed
guidelines for allocation of frequency spectrum and charges thereof etc would
be separately issued from time to time.
43.5 As extracted in para 40 above.
63. As can be seen from the licence clauses
extracted above, clause 23.1 only states that the licensee shall provide the
details of the technology proposed to be deployed for the operation of the
service. The only stipulation is that the technology must be digital and must
have been used for a customer base of one lakh or more for a continuous period
of one year anywhere in the world, and that it should be based on ITU or TEC
standards. Clause 23.5 also states that the frequencies shall be assigned by
WPC from the designated bands under the NFAP. Nowhere is there any stipulation
that the licensee shall be guided only by one technology or that the
frequencies will be assigned only in one band. Clause 43.5 starts with the
stipulation that spectrum allocation and frequency bands is subject to
availability and as per guidelines issued from time to time. This is the
operational proviso. Even going into the details, none of the clauses
specifically prohibit dual technology or the allocation of dual spectrum.
Clause 43.5 (iv) clearly stipulates that the licensor has a right to modify or
amend the procedure of allocation of spectrum. In the light of this, we do not
find any provision to prohibit the allocation of dual spectrum. The argument of
the learned counsels for Petitioner is that what is important is whether there
is a specific provision providing for allocation of dual spectrum rather than
the lack prohibition against doing so. We do not agree with this proposition.
Even if we did, the very fact that clause 23.1 speaks of any digital technology
being permitted so long as it is as per standards means that the licensee is
entitled to provide its services in any technology including two or more
technologies. It is a different matter that this issue was never closely
examined till the matter was referred by the DOT to TRAI. The counsel for
Petitioner stressed on the use of the word ‘or’ in clause 43.5 (i) to point out
that only one of the technologies is permissible. The sentence reads as
follows. " Initially a cumulative maximum of 4.4 MHz +4.4 MHz shall be
allocated in the case of TDMA-based systems@200 KHz per carrier or 30 kHz per carrier on a
maximum of 2.5 MHz +2.5 MHz shall be allocated in the case of CDMA-based
systems @1.25 MHz per carrier, on case-by-case basis subject to availability.”
But a reading of the entire clause shows that it is meant for the initial
allocation. In fact, the entire clause proceeds on the assumption that service
providers would seek initial and additional spectrum in a given band. This does
not mean that there is a prohibition on seeking spectrum in other bands. The
licence is essentially a permission to provide Cellular services to the consumers.
In what band it is provided is not really relevant. So long as technology is an
approved technology, the service provider is free to provide such service. It
is true that the assignment of spectrum is subject to its availability and also
the guidelines that are prescribed from time to time. But this, per se, does
not prohibit the use of dual technology. We are of the opinion that the two
issues are different and must be kept distinct. We accordingly hold that a
reading of the NTP-99 document and the licence conditions reveals that the
concept of dual technology is not a new concept and that this is contained in
the above documents. This was also the finding of the Delhi High Court which
observed that “despite repeated queries to the Petitioners to point out
prohibitions under the policy with regard to the entry of additional service
providers or permissions to use of dual technology under the policy regime
which was in vogue in 1999 or as added to in 2003, no such prohibition could be
placed before this court”. It also held that “nothing could be pointed out in
the recommendations, policies or licences to suggest any prohibition in a
cross-over of the technology”.
64. The counsels for Petitioners contended
that the past conduct of the Government clearly showed the dual technology is
not permissible. But, as was brought out by the counsel for Respondents, the
case of BPL Mobile and Bharti Airtel are entirely on a different footing. The
case of the counsel for Petitioner is that on 28.10.1999, BPL Mobile, which had
a licence and an operational network based on GSM, had asked for two pairs of
CDMA frequency. Vide a letter dated 21.1.2000, the WPC wing of the DOT had
rejected this request on the ground that the specific frequencies asked for
have been earmarked for basic services application. The counsels for
Respondents point out that the concept of technology neutrality was brought in
only through an addendum to the NTP-99 in November 2003 and that during the
period 1999-2003, DOT could not have agreed to the grant of dual spectrum under
separate licences for Basic and Cellular services. The learned counsel for
Petitioners, Mr. Vaidyanathan, invoked the principle of contemporaneous
exposition to state that actual practice must be taken into consideration for
construction of a statute and cited the cases of State of Tamil Nadu v. Mahi Traders and Others [(1989) 1 SCC 724],
wherein the Supreme Court held that "the contemporaneous exposition by the
administrative authorities is a very useful and relevant guide to the
interpretation of the expressions used in a statute", as well as the case
of Ajay Gandhi and Another v. B. Singh
and Others [(2004) 2 SCC 120] wherein the Apex Court held that "for
construction of a statute, it is trite, the actual practice may be taken into
consideration".
65. We do not agree with the contention of
the learned counsel for petitioners. As brought out by us above, the concept of
technology neutrality was contained in the NTP document, at least after the
Press Note of September 1999. However, while the concept of technology
neutrality was available, as long as the licences for Basic and Cellular
services were separate and each of them had their own designated frequency
band, the question of operating Cellular services in a frequency band
specifically earmarked, through a licence, to Basic services was not
permissible. In our opinion, this was the reason why the WPC wing rejected the
request of BPL Mobile . It would have been appropriate if the WPC wing had
given detailed reasons for their decision. It is normal practice that
administrative directions or correspondence do, at times, lack the necessary
detail. At the same time, there is nothing on record to indicate that BPL
Mobile had appealed against this decision or had asked for its review. It would
therefore not be correct, in our opinion, to quote this particular case and to
argue that the same logic should be applied to the UAS licensees who stand on a
different footing. On the principle of Contemporanea
expositio, the Apex Court dealing with this principle in the Ajay Gandhi case, cited supra, referred
to the comment in Francis Bennion's ‘Statutory Interpretation’ 4th
Edn. wherein the comment was that "the concept of legislative intention is
a difficult one. Contemporary exposition helps to show what people thought the
Act meant in the period immediately after it was passed. Official statements on
its meaning are particularly important here, since every Act is supervised, and
most were originally promoted, by a government department which may be assumed
to know what the legislative intention was". The Apex Court also referred
to the case of R. v. Wandsworth London Borough Council [(1996) 1 All ER 129:
(1996) 1 WLR 60 (HL)] wherein the House of Lords held that "a departmental
circular is entitled to respect. It can only be ignored when it is patently
wrong". Therefore, going by the above interpretation, it is clear that the
NTP document as well as the Press Note and the UAS licence conditions should be
taken as an unambiguous exposition of the policy laid down, which is one of
technology neutrality.
66. In so far as Bharti Airtel is concerned,
it was brought to our notice by the learned counsel for the Union of India that
the company has, vide a letter dated 12.10.2004 communicated to the Government
of India that they would surrender, in the Madhya Pradesh circle, the UAS
Licence to which they had migrated from their Basic licence. They had however
requested DOT to allow them the continued use of the CDMA spectrum, while at
the same time seeking the refund of entry fee paid by them at the time of
acquisition of the said licence. In their letter, the company had indicated
that "it makes no practical or
commercial sense to continue to maintain two identical licences for the same
service area, competing for the same set of subscribers, deploying similar set
of expensive infrastructure and duplicating resources that no investor would
reasonably want to fund. ...... in summary, the licence has been rendered
commercially unworkable and the performance of the contract frustrated. It is
in these circumstances that we are constrained to exercise the option of
surrendering the licence." The Petitioners’ claim is that since they
were not allowed to retain the CDMA spectrum, the concept of dual technology is
understood to be not valid. But a perusal of the Company's letter dated
29.9.2006, which is part of the pleadings, shows that the Government allowed it
to utilise CDMA spectrum for the first year under the other licence and
it was only thereafter that the Department had started asking the Company to
surrender the CDMA spectrum. The point to be noted in this case is that Bharti
Airtel had surrendered the UAS licence to which it had migrated from the Basic
licence. Obviously, if its licence is itself surrendered, the Company cannot
expect to retain the spectrum which flowed from that licence. It is not as if it
had asked for CDMA spectrum on the basis of the other UAS licence which it
continued to be in possession of. As such, it would not be correct to argue
that the obligation imposed on Bharti Airtel to surrender the CDMA spectrum is
a reflection of the Government’s policy not to allow dual technology. Two
aspects of Airtel's letter of 29.9.2006 are significant in this respect.
Firstly, it is admitted that the Company was allowed to use the CDMA spectrum
under another licence, which was a GSM licence. Secondly, the letter itself
states that BSNL is also providing GSM and CDMA services to its customer. Both
these would not have been possible had DOT followed a policy of prohibition of
dual technology.
67. Now, the question arises as to why, if
the concept of dual technology was already provided for, the DOT had to seek
the Recommendations of TRAI, why did TRAI give its Recommendations and why were
they accepted by DOT. It appears to us that there was avoidable confusion in
this regard. Para 2 of the letter dated 13.4.2007, extracted at Para 20 above,
only states that the Government is contemplating to review certain terms and
conditions in the Access Providers licence, namely, inter alia, “permit service
providers to offer access services using combination of technologies under the
same licence”. This was interpreted as stating that the Government would now like to permit the
combination of technologies. But a proper reading of Paras 2 and 3 shows that
the Government only sought the Recommendations of TRAI in terms of clause 11
(1) (a) of the TRAI Act on the review of the terms and conditions in the
Access Provider’s licence mentioned in Para 2. In other words, the DOT did not
seek any clarification from TRAI as to whether or not combination of
technologies is permissible. If this was the intention, Para 2 (iv) would have
been differently worded. What it really wanted was a review of the terms and
conditions on which the Access Service provider is being allowed combination of
technologies.
68. In our view, the confusion has been
created by TRAI in its Consultation Paper dated 12.6.2007. Having noted in Para
4.4 thereof that the initial CMTS licence was amended on 1.10.1999 to make the
licence technology neutral, the Consultation Paper analyses the licence
agreements and then concludes that the option for various technologies by the
licensee has been addressed within the four corners of the National Frequency
Allocation Plan. Referring to clause 23.5 of UASL, which states that
"based on usage, justification and availability, spectrum may be
considered for assignment, on case-by-case basis", the Consultation Paper
concludes that "evidently, the availability of spectrum in specified bands
has been linked with usage and justification thus indicating a legacy
baggage." It then refers to the guidelines for Unified Access (Basic and
Cellular) Services Licence on 11.11.2003 and states that the guidelines reiterated
that the service providers migrating to unified access services licence will
continue to provide wireless services in the already allocated and contracted
spectrum. Thus it envisages continuity of technology in providing telecom
services. Further, the guideline mentions, "the unified access service
providers are free to use any technology without any restriction". The
paper concludes that based on the above analysis, it can be said that there is
a legacy baggage on the licensees along with predetermined spectrum bands for
the deployment of technologies. In our view, it is in drawing this conclusion
that the Consultation Paper went wrong. The clauses referred to in the
Consultation Paper deal with spectrum. As indicated by us above, there is no
specific prohibition on provision of more than one technology by licensee.
69. It is true that the spectrum allocation
is based on availability and justification. It is also true that the licence
agreements, for provision of unified access services after migration from CMTS,
state that the licensee operating wireless services will continue to provide
services in already allocated/contacted spectrum. This only means that on
migration, the licensee will continue to operate in the same spectrum band and
with the same allocated/contracted spectrum. In other words, there is no change
in so far as spectrum is concerned between the date prior to migration and the
date immediately after migration. Nowhere is there any stipulation that the
once spectrum is allocated in a band, the licensee is barred from introducing
any other technology. It would have been useful if this had been carefully
analysed by TRAI and brought out clearly so as to avoid any confusion. In fact,
this is the position that was taken by TRAI itself in its Recommendations on
Unified Access Licensing given on 27.10.2003. Para 7.31 of these
Recommendations, dealing with spectrum related issues, reads as follows:
"Service providers migrating to the Unified Access Licensing Regime will
continue to provide wireless services in the already allocated/contracted
spectrum and no additional spectrum would be allotted only because of
migration. There shall be no change in the spectrum allocation procedure as
part of migration process." (emphasis supplied). On the other hand,
the Consultation Paper of TRAI dated 12.6.2007 only added to the confusion
instead of clarifying matters. It then goes on to speak of the necessity for
having more than one technology and then identifies the issues that may require
resolution. But in Para 4.15 again, the Consultation Paper states that "a
simpler version may be to treat the existing licensee seeking plurality of
technology as a new licensee without necessary requirement of forming a new
company." In our view, the first issue for consideration posed in Para
4.17 (Q1) of the Consultation Paper dated 12.6.2007 was unnecessary.
70. The Recommendations in chapter 4 of the
TRAI's Recommendations dated 28.8.2007 are equally significant. Para 4.6 states
that "technological neutrality is being effectively pursued in terms of
freedom to choose any technology by the licensee". Having said this, it
goes on to state that "however, the specific mention of certain spectrum
bands reveals the framework of licence as structured by the Department."
Having analysed the various aspects, Para 4.16 of the Recommendations states
that "the licensee is given the option of choosing technology of its own.
However, he has to indicate the technology mainly because of specific spectrum
bandwidth requirement for each technology. In the entire licence agreement it
is only stated that the licensee shall provide the details of technology
proposed to be deployed for operation of the service. Accordingly, the growth
path of the licensee is confined to the technology chosen at the early
stage." This clearly gives the impression that the TRAI itself is stating
that there can only be one technology and which remains the one chosen in the
initial stages. During the course of hearing, however, the learned counsel for
TRAI, Mr. Saket Singh mentioned that what is stated in the Recommendations upto
Para 4. 16 is only the common belief or perception which the Authority has
outlined. Unfortunately this was not brought out explicitly in the
Recommendations. If the intention of TRAI is to bring out in these paragraphs
the common belief and state that this is not the correct interpretation, it
should have stated so very clearly. For, what follows from Para 4.17 onwards is
different from what was narrated upto Para 4.16.We are therefore of the view
that in analysing this issue, TRAI did not exhibit the required degree of care
and has itself given the impression that what was being done is something that
was new. This was avoidable.
71. The next question for consideration is
whether the DOT erred in taking a decision on its own without referring the
matter to the Cabinet. The contention of the learned counsel for Petitioners,
Dr. Singhvi is that the UASL regime having been brought in through an amendment
of NTP-99 by way of a Cabinet decision in the year 2003, it was incumbent upon
the DOT to secure cabinet approval for a decision providing for dual
technology. Mr. Vaidyanathan, counsel for Petitioners argued that as per
section 14 of the General Clauses Act, if a decision has been taken by the Government
in a particular manner, the review of such a decision has also to follow the
same procedure. We do not agree that in the facts of the case, the learned
counsels for Petitioners are correct. This is for two reasons. Firstly, as was
fairly conceded by Dr. Singhvi himself during the course of hearing, seeking a
Cabinet approval is a matter of procedure for decision-making in the
Government. So long as the decision is communicated by the competent authority
in the Government, it is not a matter for adjudication whether such a decision
has been taken with or without the approval of the Cabinet. Secondly, and more
importantly, as brought out above, technology neutrality is not a concept that
has been newly introduced. It is a concept that already exists. So the General
Clauses Act is not attracted in this case. Besides, neither the letter dated
18.10.2007 addressed to the 3rd Respondent by DOT nor the Press
Release dated 19.10.2007 speak of technology neutrality as a new decision. In
fact, Para 2 clearly states that the unified (Telecom) Access Services (UAS)
licences are technology neutral. It only speaks of spectrum allocation
including for the alternate technology. The learned counsel for Petitioner laid
emphasis on Para 4 of the Press Release which states that "it has also
been decided that the existing private UAS Licensees may be permitted to expand
their existing networks by using alternate wireless technology i.e. the present
UAS Licensee who is using GSM technology for wireless access may be permitted to use CDMA technology and
vice versa." He sought to lay emphasis on the word ‘permitted’ to state
that it is a case of fresh licence or an amendment to the existing licence.
This is taking a too technical view of the matter. Firstly, a Press Release is
only meant to give information to the public and is not a legal document.
Secondly, it is common knowledge that administrative use of language is
different from legal use of the language. For these reasons, we reject the
contentions of the learned counsel for Petitioner and hold that in taking the
decision reflected in the letter dated 18.10.2007 or the Press Release dated
19.10.2007, no impropriety was committed by the DOT regarding impropriety of
decision-making.
72. The next question is whether the DOT was
wrong in allowing CDMA operators to make payments and complete formalities
before announcing the decision on 19.10.2007 through a Press Release and
whether it was done a non-transparent manner. The contention of the learned
counsels for Petitioners is that on 18.10.2007, an in-principle approval is
granted to RCom for allotment of dual spectrum, without there being any such
policy in existence. This decision was acted upon on 18.10.2007 but was
announced on 19.10.2007. On 18.10.2007 itself, RCom was told that the date of
payment of fee would determine the priority date for allocation of spectrum,
following which the requisite fee was paid by the Company on the morning of
19.10.2007, even before the Press Release was issued. The contention of the counsels
is that this is not a matter just between the DOT and the CDMA operators but
that the GSM operators were also to be informed since they would also be
concerned parties as the policy provided for alternate technology i.e. CDMA to
GSM or vice-versa. It is contended that the policy has to be pronounced and
made known to all before it is implemented.
73. We have examined the matter. We had
already indicated our view that the concept of dual technology or allocation of
dual spectrum is not a new decision. As such, it would not be appropriate to
state that unless the Press Release was issued, a letter to the CDMA operators
could not have been issued. The Petitioners contended that the application
dated 6.2.2006 of RCom is void ab initio and non est. The learned counsel for
the 3rd Respondent has countered this stating that this application
was never rejected and just because it is pending for more than one and a half
years is no reason why it should be considered as invalid. We must straightaway
reject the contention that this is an invalid application. COAI was aware of
the application dated 6.2. 2006 of RCom and had also issued a response
welcoming the entry of this company and other CDMA operators into the GSM fold.
If they felt that this was an invalid application, on any ground whatsoever,
they should have represented to the DOT accordingly. There is no evidence on
record to indicate that this has been done. As regards the contention that
unless the GSM operators have been informed, the decision could not have been
operationalised, we find no basis to hold such a view. It is not their
contention that they had similarly applied for alternate technology or for dual
spectrum.
74. A reading of the Press Release shows that
it is to inform the public of the following major decisions: (A) that there
will be no cap on the number of access providers in any service area; (B) that
the roll-out for wireless services shall be taken from the date of spectrum
allocation, including to those licensees who are awaiting the initial spectrum
allotment; (C) that Government has accepted TRAI’s recommendation of enhanced
subscriber linked criteria for frequency allocation and has set up a Committee
in Telecom Engineering Centre (TEC) to further study and give a report to the
Government; (D) that the existing private UAs licensees may be permitted to
expand their existing networks by using alternate wireless technology and that
the spectrum for the alternate technology, CDMA or GSM (as the case may be)
shall be allocated in the applicable frequency band subject to availability
after payment of prescribed fee; (E) the existing UAS licensees, who have already applied for allocation of spectrum
for the alternate technology shall also be considered for allocation of
spectrum in alternate technology from the date of payment of prescribed fee;
(F) BSNL and MTNL being incumbent operators shall be permitted usage of
alternative technology and allocated spectrum for the alternate technology
without paying the prescribed fee; (G) for the purpose of payment of licence
fee and spectrum charges, the stream-wise revenue of different technologies
shall be considered.
75. It has been brought to our attention by
the learned counsel for the Union of India that the Press Release was also
prepared on 17/ 18.10.2007 but for administrative reasons, the same could not
be issued before 19.10.2007. Now the question is as to how the Petitioners are
adversely affected by the action of the DOT in issuing the letter to the CDMA
operators ahead of the Press Release. Considering that the date of payment of
prescribed fee is the reference date for allocation of spectrum, it is possible
to argue that the interests of GSM operators were involved. But in an affidavit
filed on 13.11.2007, the Union of India indicated that contrary to the
impression of sought to be created, that the persons who had made payment
pursuant to the in-principle approval issued on 18.10.2007 would get priority
over the existing operators’ request for additional spectrum, all the
applications will be decided on the basis of the norms that would be finalised
after receipt of the report of the Committee constituted under the chairmanship
of the Additional Secretary, DOT. It was also indicated that there are three
categories of applicants. The first category was in respect of pending
applications for allocation of spectrum to existing operators, which were to be
decided on the basis of the norms that will be finalised after receipt of the
Committee's report. The second category of UAS licensees who were issued licences
in December 2006 and who had not been allotted initial start up spectrum were
to be allotted start up spectrum after the first category was dealt with. It
was only thereafter that the third category, viz., those to whom in-principle
approval was issued on 18.10.2007 will be considered for grant of start of
spectrum. Subsequently Union of India had filed an affidavit on 18.8.2008
wherein they have confirmed that this pattern was adhered to in subsequent
allocations of spectrum, which have been made in various service areas. In the
light of this, it does not appear to us that any injury was caused to the
Petitioners, whose applications may have been pending, vis-à-vis the CDMA
operators.
76. As regards the allegation that there was
undue haste on the part of DOT in issuing the in-principle approval to the CDMA
operators, what is undue haste is difficult to be defined. The fact in this
case is that an application of February 2006 was spending, the matter was
referred to TRAI, its Recommendations were received in August 2007 and a
decision was taken in October 2007. And the same was communicated to the
concerned Parties on 18.10.2007.At best, it can only be said that there was
minimal time lag between the time the decision, its communication to the CDMA
operators and the date of payment by RCom. The insinuation there is that the
prompt payment by RCom is indicative of some prior information. But this is at
best an insinuation, not backed up by any evidence regarding mala fide action
on the part of DOT. In the case of Chairman
& MD, BPL Ltd. v. S.P. Gururaja and Others [(2003) 8 SCC 567], the
Supreme Court held that "undue haste also is a matter which by itself
would not have been a ground for exercise of the power of judicial review
unless it is held to be mala fide. .... the question as to whether any undue
haste has been shown in taking an administrative decision is essentially a
question of fact. ... A decision which has been taken after due deliberation
and upon due application of mind cannot be held to be suffering from malice in
law on the ground that there had been undue haste on the part of the State and
the Board". We do not find any ground to level mala fide intention on the
part of DOT and accordingly hold that the issue of early completion of
formalities is not a matter that would require intervention at our level.
77. We now come to the question whether the
impugned decision of 19.10.2007 resulted in any disturbance of the level
playing field insofar as the Petitioners are concerned. The arguments in this
behalf were led by the learned counsel for Petitioners, Mr. Vaidyanathan. His
contention is that the decision of 19.10.2007 has led to a situation where a
class of super operators was created whereby the CDMA operators are now allowed
also the GSM spectrum, thereby negating the investment of existing GSM
operators. His contention is that the GSM operators made and continue to make
investments in the expectation that, according to the license conditions, the
CDMA operators would not be allowed the GSM spectrum. According to him, the
impugned decision has disturbed the level playing field and attracts the
provisions of Articles 14, 19 (1) (g) and 21 of the Constitution. He referred
in this context to the decision of the Supreme Court in the case of Reliance Energy Ltd. and Another v.
Maharashtra State Road Development Corporation Ltd. and Others [[(2007) 8 SCC
1] wherein the Apex Court held that "level playing field is an
important concept while construing Article 19 (1) (g) of the Constitution...
When Article 19 (1) (g) confers fundamental right to carry on business to a
company, it is entitled to invoke the said doctrine of level playing
field".
78. We have considered the matter. As
indicated by the Delhi High Court in its judgement dated 22.8.2008, "the
phrase ‘level playing field’ alludes to the requirement of fairness i.e.
fairness in competition so that no advantage is shown to either side". We
are unable to see how the Petitioners’ right to a level playing field is adversely
affected on account of the impugned decision of DOT. As we have held in para 63
above, the concept of technology neutrality is already enshrined in the NTP-99
and also the licensing conditions. The Petitioners have not been able to place
before us convincingly that a new decision has been taken which has completely
altered the position to their disadvantage. Even assuming that technology
neutrality is not a new concept, a reading of clause 5 of the UAS license
conditions extracted in para 62 above, clearly shows that DOT as licensor has
the right to alter, at any time, the licence conditions, if in the opinion of
the licensor, it is necessary or expedient to do so in public interest. As
such, insofar as the Petitioners are concerned, they knew even at the time of obtaining
the UAS licence that the licence conditions are liable to be changed at any
time in public interest. Secondly, the COAI itself had issued a letter to the
Minister of Communications & Information Technology welcoming the entry of
the CDMA operators into the GSM fold. As such, to now level a charge of
disturbance of level playing field when the CDMA operators were given the GSM
spectrum would not be appropriate. Thirdly, the main objection of the
Petitioners is about the CDMA operators being given GSM spectrum. They have no
objection for the entry of new GSM players. It is an admitted position of the
DOT that, even with 25.9. 2007 as the cut-off date, there were as many as 232
new applicants to whom letters of intent were issued and start-up spectrum was
also given in as many as 84 cases. The Supreme Court in the Reliance Energy case, cited supra, had
also indicated that "the doctrine of level playing field is subject to
public interest and in the world of globalisation, competition is an important
factor to be kept in mind". Given these facts, we are unable to agree with
the petitioners that the impugned decision of DOT dated 19.10. 2007 has
disturbed the level playing field. We notice that the Delhi High Court also in
its judgement dated 22.8.2007 held that "prima facie, it cannot be held
that the decision of the Government confers any unfair advantage to any
particular person and consequently the submission that the Government has
disturbed the level playing field is to be rejected".
79. The next question
that is to be addressed is the Petitioners’ contention that even assuming that
technology neutrality and allocation of dual spectrum are to be permitted, the
CDMA operators ought not to be given GSM spectrum of 4.4 MHz + 4.4 MHz but
smaller quantities as are being given in the form of additional allocation to
existing operators i.e. 1.8 MHz/1 MHz. We have considered the matter and find
that the start up spectrum for GSM has always been 4.4 MHz +4.4 MHz. This is
evidently an account of technical considerations and has its basis in the cell
configuration. A minimum of 22 carriers are required and the bandwidth of each
carrier is 200 KHz, taking the minimum requirement to 4.4 MHz. It is also
noticed that the subscriber criteria for GSM spectrum, fixed from time to time,
have been speaking of a minimum of 4.4 MHz. Since the GSM technology has to be
implemented with new infrastructure by the CDMA operators, they should be
entitled to a minimum start-up allocation of 4.4 MHz as in the case of other
GSM operators. We accordingly hold that there is nothing irregular in grant of
4.4 MHz as start up spectrum to the Respondents.
80. We now turn to the contention of the
Petitioners that while TRAI had recommended levy of spectrum usage charges on
combined spectrum, DOT unilaterally changed it to permit levy of spectrum usage
charges separately for GSM and CDMA spectrum with the result that CDMA
operators would be paying much lower spectrum usage charges. We have analysed
the matter. GSM and CDMA are admittedly separate streams. They have their own
architecture and consequently, DOT has prescribed separate subscriber linked
criteria. It is therefore difficult to club both these streams for the purpose
of charging the spectrum usage charges. Besides, as per the Recommendations of
TRAI, DOT has charged entry fee of Rs. 1651 crore. This is besides the entry
fee that was charged for the CDMA spectrum. Having done so, it would not be
equitable to charge the company for the combined spectrum of GSM and CDMA. We
do not therefore agree with the contention of the Petitioners that those with
dual technology and dual spectrum should be charged the spectrum usage charges
on the basis of the combined spectrum.
81. Another contention of the Petitioners is
that the DOT had disregarded the TRAI's Recommendations for imposing contingent
roll-out obligation in case of dual allocation of spectrum. We have perused
Para 4.35 of the Recommendations made by TRAI on 28.8.2007, where it is
recommended that "if an existing licensee wishes to provide services using
another technology, then he must be treated as per the norms of spectrum
allocation in bands for alternate technologies. On payment of the specified fee
for the service area for which the LICENSEE wishes to provide plurality of
technologies, the licensee may be given additional spectrum equal to the
initial spectrum allowed in the licence for that technology. The Authority
further recommends that in order to ensure that this additional spectrum is
efficiently and properly utilised in a timely manner, the licensee should also
be required to fulfil the contingent roll out obligation." The letter
dated 18.10.2007 addressed to M/s Reliance Communications Ltd. states that
"the company shall meet the roll-out obligations and other stipulations of
the UAS licence (s)." In the light of this, we do not agree with the
Petitioners’ contention that the DOT has disregarded the Recommendations of
TRAI in respect of contingent roll-out obligation.
82. The learned counsel for Petitioners
argued that DOT had disregarded the recommendations of TRAI regarding the
one-time charges to be levied for allocation of spectrum. We notice that the
CDMA operators who have been given GSM spectrum were charged fee equivalent to
that paid by the fourth cellular operator. We would not like to further examine
this issue as we were informed by the all the counsels that this is the subject
matter of another writ petition being considered by the Delhi High Court.
83. One of the contentions of the learned
counsel for Petitioners is that the impugned decision, which is ostensibly in
public interest, is truly not in public interest. He states that firstly,
Reliance which is already offering both GSM as well as CDMA services (under
separate licences) in 5 service areas is lagging far behind its competitive
rivals in almost all states. Secondly, if faster roll-out for larger number of
subscribers was the justification, then allotting additional spectrum to
existing GSM operators would have been the best solution as they can serve larger
number of subscribers with smaller/same amount of spectrum utilising existing
infrastructure. Insofar as the first issue is concerned, the counsel for 3rd
Respondent, RCom, had already indicated that RCom’s subscriber base is
comparable to that of Bharti Airtel and Vodafone. As regards the second
contention, we are unable to agree with the contention of the learned counsel
for the simple reason that if this were to be accepted, there would be no
possibility of any other operator coming in. Since the start-up spectrum is
always 4.4+4.4 MHz, and since the coverage for the start of spectrum
proportionately is less than that for spectrum beyond 6.2 MHz, it will always
be argued that giving additional spectrum, even in small quantities, would be
more advantageous clearly from the point of coverage of more subscribers. But
this argument obscures the fact that competition is essential from consumers’
point of view. It has been the experience in the Telecom sector that prices
have fallen because of competition. We are however conscious of the fact that
this should not necessarily mean unlimited number of players in each service
area, a point which we will not take up here since it is not a matter before us
for adjudication.
84. In conclusion, we hold that the policy as
well as licence conditions clearly stipulate that the UAS licence is technology
neutral and that the technology choice is not confined to one technology for
all times. It is necessary for the
licensee to indicate the technology, as laid down in clause 23.1, following
which the allocation of spectrum will be made, subject to availability and
justification on a case to case basis, in the relevant frequency band,
including further spectrum allocation in that frequency band. If a licensee, at
a later date, chooses an alternate or an additional technology, in order to
provide access services to the consumers, all it has to do is to indicate the
other technology and await allocation of spectrum in the relevant frequency
band, again subject to its availability and justification. The rationale for
this approach can also be seen from the fact that technology is continuously
evolving and it is difficult to have a situation where a licensee is forever
barred from providing to its consumers the advantages of such new technology
just because it is constrained by the original choice. We hold that there was
nothing irregular in the action of the DOT in having issued the letter dated
18.10.2007 to the CDMA operators or in issuing the Press Release dated
19.10.2007.
85. The third
issue for consideration is whether the subscriber linked criteria fixed by
the DOT, as an interim measure, vide the order dated 17.1.2008 are arbitrary
and whether the criteria fixed therein are unduly high. The learned counsels
for Petitioners have argued that the criteria were deliberately fixed at an
unduly high level so as to deny additional GSM spectrum to the GSM operators;
that TRAI fixed the criteria for GSM spectrum allocation without having been
asked to do so by the DOT; that TRAI fixed the criteria without following the
due procedure; that several applications of GSM operators were made much before
even the reference to TRAI by the DOT and that they were found valid. The
contention of the learned Petitioners is also that the GSM operators were
denied additional spectrum by arbitrary and ad hoc enhancement of subscriber
linked criteria even as the start up GSM spectrum is given to CDMA operators.
We proceed to examine each of these contentions, which can broadly be grouped
as follows:
A.
Whether the subscriber
linked criteria were designed to adversely affect the interests of the existing
GSM operators?
B.
Whether the
Recommendations of TRAI regarding subscriber linked criteria were rightly made?
C.
Whether adoption by DOT
of the criteria recommended by TRAI was appropriate?
86. The first contention raised by the
petitioners is that the subscriber linked criteria were so fashioned as to deny
spectrum to GSM operators and give the same to CDMA operators. Mr.
Vaidyanathan, counsel for Petitioners states that Government wanted to find
spectrum for new licences as well as persons who wanted the crossover (dual)
spectrum. His case is that till the issue of the Press Release, even the
Government was following the criteria laid down on 29.3.2006 and was disposing
of the pending applications and also gave additional spectrum to BSNL and MTNL.
Suddenly, TRAI gave its Recommendations and Government with alacrity appointed
a Committee, which with equal alacrity submitted its report. But amidst all
this, DOT had accepted TRAI's Recommendations, and went ahead with the disposal
of applications on the basis of the Order dated 17.1.2008. But while those
permitted for crossover spectrum as well as new licensees were being given
spectrum, the existing licensees were being deprived of the same. The Union of India, in an affidavit dated
8.1.2008, submitted that even prior to the submission of the Recommendations by
TRAI on 28.8.2007, the TEC was asked to study the matter and make suitable
Recommendations. On receipt of the report of the TEC in October 2007,
representations were received from the industry. Keeping these as well as
TRAI’s Recommendations in view, Government constituted a Committee to recommend
revised subscriber base spectrum allocation criteria for allocation of spectrum
in a scientific and practicable manner. This Committee which was headed by the
Additional Secretary, DOT gave its report on 18.12.2007. In a further affidavit
filed on 18.8.2008, the Union of India stated that Government had formed another
Committee for allocation of Access (GSM/CDMA) spectrum and pricing. During the
course of hearing, we were informed that this Committee had not yet completed
its work. In this affidavit, and as brought out in para 75 above, it was also
stated that the existing operators were given spectrum ahead of the grant of
initial GSM spectrum for dual technology and that some of the new UAS licences
of 2008 were given spectrum only thereafter, while other new UAS licences of
2008 are still awaiting grant of initial spectrum. In the light of this, the
contention that the allocation of spectrum was made to favour CDMA operators
seeking GSM spectrum, by virtue of dual technology, adversely affecting the
interests of the existing operators does not seem to hold much ground. The
Petitioners may be under the impression, which they believe is reasonable, that
the entire exercise was deliberately aimed to affect their interests and to
promote the interests of their competitors. But the fact that they were given
spectrum ahead of the CDMA operators opting for dual technology shows that this
is not true. We accordingly hold that this contention does not merit further
consideration. However, the question
remains whether the Petitioners ought to have been given additional spectrum
that they were entitled to. This is an issue to which we will revert below.
87. We now turn to the question whether the
Recommendations regarding subscriber linked criteria were rightly made by TRAI.
The contentions raised by the Petitioners in this respect are that TRAI made
these Recommendations without having been asked to do so and that the procedure
followed by TRAI in making its Recommendations was in violation of the
principles of natural justice and particularly transparency, which is obligatory
as per section 11 (4) of TRAI Act. The learned counsel for Petitioners, Mr.
Vaidyanathan, referred to the letter dated 13.4.2007 issued by DOT to TRAI and
points out that there is no mention therein of any issue relating to spectrum
allocation. He points out that at para 2.39 of the Recommendations dated
28.8.2007, TRAI itself states that "the Authority is conscious of the fact
that DOT has not asked for any specific recommendation on the issue of spectrum
allocation or of pricing." Admitting that this is so but explaining the
reasons why TRAI made its Recommendations in this regard, Mr. Saket Singh,
learned counsel for TRAI, stated that with reference to a specific term of
reference, TRAI had, in para 2.37 of the Recommendations, recommended that
there should be no cap on the number of licences in a circle, The moment there
is no cap, the next issue to be considered was how to deal with distribution of
available scarce spectrum among different service providers. He explained that
TRAI was looking into spectrum management as a whole and had also recommended
that for a long term policy, a suitable Committee should be appointed. However,
having felt, at the same time, that the present subscriber linked criteria
needed to be tightened, TRAI did a theoretical simulation and gave an interim Recommendation,
which was found to be workable by DOT. During the course of hearing, it was
submitted before us that this issue was something that came up during the
course of examination of the responses of the stakeholders on the issue of
capping of the licensees in each service area. However, on examination, we find
that the Consultation Paper (issued on 12.6.2007) itself identifies that
availability of spectrum is a key issue that will determine the maximum limit of
the number of operators in a service area. This aspect is dealt with in paras
6.37 to 6.50 of the Consultation Paper. But for some reason, it does not find
place in the issues for consideration, listed at para 6.51 of the Consultation
Paper.
88. The further contention of the learned
counsel for Petitioners is that TRAI's Recommendations on subscriber linked
criteria for spectrum allocation were made in total violation of the principles
of transparency. There is an established practice of giving out Consultation Paper,
calling for views, and discussing them in a public hearing. In this case, none
of these procedures were followed. Then, turning to the Recommendations
themselves, the learned counsel states that transparency is lacking in arriving
at the Recommendations. None of the material therein is disclosed to anyone. He
argues that if TRAI wants to determine any issue, they must follow the set
procedure. Besides, TRAI does not come to a final conclusion but has suggested
the constitution of a multi-disciplinary Committee. Given this position, the
counsel questions the need for TRAI to determine various issues relating to
spectrum management including the subscriber linked criteria on its own,
particularly when it was not asked to do so. He also contends that none of the
issues listed in the Recommendations were disclosed to the stakeholders. It is
also contended that the theoretical simulation referred to in Para 2.60 of the
Recommendations, which was the basis for arriving at the recommended subscriber
linked criteria was also not disclosed to anyone. But, TRAI made
Recommendations which have a wide-ranging effect. Although TRAI issued a corrigendum after
certain discrepancies were pointed out, it did not change the numbers.
89. The contention of the learned counsel for
TRAI is that during the consultation process, papers were invited and both COAI
and Reliance made presentations. So, he contends, the presentation of COAI was
part of the consultation. Notwithstanding this, the counsel stated that there
is no statutory requirement that TRAI has to hold a consultation. The Authority
has the power to rely on data and make its decision. According to him, if there
is a process it is sufficient to ensure transparency. Besides, he argued, the
criteria recommended are only as an interim measure.
90. We are unable to agree with the
contention of the counsel for TRAI. As was pointed out earlier by us, the
issues relating to spectrum availability and management were identified in
detail in the Consultation Paper but no issue was posed for consultation. There
is also no averment to the effect that detailed comments were received from
stakeholders on the subject. The only submission is that both COAI and Reliance
had made presentations. During the course of hearing, the learned counsel for
Petitioners stated that the paper presented by Reliance was not made available
to them but they were only asked to make some suggestions. Without going into
the correctness or otherwise of this submission, suffice it to say that receipt
of comments even from two institutions does not tantamount to an open
consultation. To this extent, we hold that TRAI had failed to observe the
prescription in the TRAI Act that it should observe the principle of
transparency. It is expected of institutions like TRAI to follow a uniform
procedure while making its Recommendations. It cannot choose the procedure to
suit its convenience.
91. The next question for consideration is
whether the subscriber linked criteria accepted by the Government are right. There
were in all three Recommendations before the Government. The first was the
Recommendations of TRAI dated 28.8.2007, wherein the Authority had indicated
certain criteria which were higher than the criteria adopted vide the order
dated 29.3.2006. Even before the Recommendations of TRAI were received, the DOT
had asked TEC to look into the criteria to be adopted. The TEC gave its report
in October 2007, when the industry represented against the criteria adopted by
the TEC. In order to address the various concerns, DOT constituted a Committee
called the Spectrum Review Committee on 6.11.2007. This Committee submitted its
report on 18.12.2007. It was a fractured report and after setting out divergent
views of its Members, the Committee left it to the Government to decide on the
criteria. Government accordingly issued orders on 17.1.2008, adopting, as an
interim measure, the criteria recommended by TRAI. The DOT had also separately
constituted another Committee for allocation of access (GSM/CDMA) spectrum and
pricing. It is understood that the report of this Committee is awaited. This
clearly indicates that the DOT had not finally decided on the subject and that
the criteria adopted for allocation of spectrum are only of an interim nature.
Nevertheless, we proceed to examine the appropriateness or otherwise of the
criteria recommended by TRAI.
92. But before doing so, we would like to
briefly refer to the contentions of the Petitioners regarding the criteria
recommended by the TEC. In an affidavit filed on 6.11.2007 the Petitioners
assailed the report of the TEC on the ground that the report was a hastily
prepared and rushed exercise, that the Committee was not a multi-disciplinary
Committee as suggested by TRAI in its Recommendations dated 28.8.2007, that
there was non-transparency in the calculations; that the increase was arbitrary
and illegal and that the principles of natural justice as well as of level
playing field have been violated. Subsequently, in an additional affidavit
filed on 30.9.2008, the Petitioners have also questioned the technical
parameters which formed the basis of TEC report and also presented a report
prepared by one Dr. Chris Davis, Director, Quotient Associates Ltd, which is
said to be an internationally repeated Agency. Arguing on their behalf, the
learned counsel for Petitioners pointed out that the report of Dr. Davis
clearly identifies the arbitrary nature of the TEC calculations in respect of
various parameters. Countering this argument, the learned counsel for Union of
India charged that the Petitioners had filed the additional affidavit only with
the ulterior motive of stalling wider competition. He submitted that the
criteria adopted by TEC were arrived at in a fair and transparent manner after
making a full presentation to all the stakeholders including the Petitioners
and that the concept paper as well as other papers were posted on the TEC
website. He detailed the various steps taken by the TEC along with their dates.
He also pointed out that the reply to the additional affidavit clearly brings
out the lacunae in the case of the Petitioner. The learned counsel for 3rd
Respondent contended that the intention of the Petitioners is to create
confusion and to mislead the Tribunal, and requested that the objections of the
Petitioners need to be rejected on this ground alone. He also pointed out that
the Petitioners had raised the same issue of calculations of TRAI and TEC
before the DOT Spectrum Review Committee on 26.11.2007 and that these were
considered by the Committee. He also referred to his client’s letter dated
30.11.2007 explaining to the DOT Committee the flaws in the case of the COAI.
He further submitted that DOT had constituted as a Committee of technical
experts on 16.6.2008 including the representatives of COAI and AUSPI.
93. Insofar as the Recommendations of TEC are
concerned, we do not feel it necessary to consider the question whether or not
the Recommendations made by TEC are valid. At this stage, and as only
preliminary comments, we find that TEC’s calculations of the number of
subscribers that can be supported by a given amount of spectrum is based on
scientific method of traffic modelling and with technical understanding of
practical network operations. The criteria adopted by the TEC regarding the
carrying capacity of the BTS (Base Trans-receiver Station) also appear to be
realistic. TEC’s exercises for estimating
special utilization efficiency also appear to have been carried out in a fair
and transparent manner as deliberations were held with stakeholders, inputs
from stakeholders considered and analysed. We also notice that after these
Recommendations were issued and made public, representations were made by the
Industry to the Government and that the DOT had constituted a Spectrum Review
Committee to go into the entire matter. On this Committee's recommendations,
DOT decided to adopt the subscriber linked criteria recommended by TRAI, as an
interim measure. Simultaneously, the DOT also constituted another Committee on
16.6.2008 under the chairmanship of the Additional Secretary, DOT and with
various Members including technical experts from different institutions, the
Ministry of Defence as well as COAI and AUSPI. We are given to understand that
this Committee has not yet completed its task and that its report is awaited. In
the light of this, it is obvious that the TEC report did not form the basis of
any Government decision. We do not find it necessary to pass a judgement on
this issue as firstly, this report has not been acted upon by the DOT; and
secondly, the entire issue is under review by a Committee constituted by the
DOT in June 2008. There can however be no denying the fact that deployment of
technologies, solutions and network elements is not a one-time exercise and
that all available technologies and innovative solutions need to be exploited
to the full extent on regular basis for the most efficient use of available
spectrum.
94. Having dealt with the criteria set by the
TEC, we now turn to the criteria recommended by TRAI. Since DOT adopted, albeit
as an interim measure, the subscriber linked criteria recommended by TRAI, what
is to be examined is whether these criteria are arbitrary and are unduly high.
In their original petition, the COAI contested these Recommendations on the
ground that it had not taken into account the fact that actual spectrum
requirements are governed by the hotspot (dense urban) areas in big cities and
not by the service area as a whole; that the BTS configurations adopted were
incorrect; that TRAI had not taken into account the requirements of data
capacity and that it had also not taken into account the spectrum required for
in building solutions and micro-sites etc. It is also pointed out that when
they had taken up these issues with TRAI, the latter issued a corrigendum on
13.9.2007 but did not make any changes in the numbers. The learned counsel for
Petitioners pointed out that while technically only a BTS configuration of
4+3+4 and maximum traffic capacity of 56 erlangs is feasible for 6.2 MHz of GSM
spectrum, TRAI has assumed traffic as high as 104/146 erlangs and a BTS
configuration of 6+6+6 and 8+8+ 8. Although subsequently TRAI corrected this
configuration, it stuck to the traffic capacity and the subscriber base. The
learned counsel stated that the very fact that TRAI issued a corrigendum shows
that its original calculations were not based on proper technical analysis.
Besides, TRAI did not take into account data capacity requirement in a network
as well as spectrum required for in building solutions. Another factor that led
to TRAI’s overestimate in the subscriber base is the assumption regarding
capacity utilisation for practical at 102%. He stated that while the realistic
figure should be 71% capacity utilisation, even TEC takes into account only
85%. According to learned counsel for Petitioners, if capacity utilisation
figure of 71% is adopted, the subscriber base will only be 10 lakh instead of
15 lakh.
95. In its Reply, the Union of India had only
stated that the subscriber linked criteria adopted in the order dated
29.3.2006, are outdated and are no longer relevant. In its reply, TRAI relied
once again on the Recommendations dated 28.8.2007.
96. A perusal of TRAI’s Recommendations dated
28.8.2007shows that the Authority wanted that the issue of spectrum allocation
criteria, pricing methodology and management system should be taken up as a
holistic and the long-term policy issue and should address the four dimensions
of the problem viz., measures to increase spectrum efficiency, spectrum
allocation criteria, efficient pricing of spectrum and the need for improving
spectrum management. In the section dealing with the measures to increase
spectrum efficiency, the Authority spoke of twenty different measures available
to achieve this objective. Dealing with the issue of subscriber base criteria,
the Authority itself states that the subscriber based criteria for spectrum
allocation has several limitations and problems, especially in the current
market environment. Para 2.50 of the Recommendations outlines the deficiencies
of the subscriber base criterion inasmuch as it does not consider subscriber
base density across service areas, does not account for subscriber
distributions between service areas and has led to over reporting of the
subscriber base. In Paras 2.51 and 2.52, it is also stated that this criterion
also causes problems from a network planning perspective and that "given
these problems with the subscriber base criteria, it is necessary that in a
truly competitive, growing market, where technology neutrality is the norm, spectrum
assignments should not be based only on subscriber base growth." In Para
2.60 it is stated that "the Authority is conscious of the fact that due to
paucity of time it is not possible to frame and recommend revised allocation
criteria for a longer term framework taking into account the latest spectrum
efficient techniques and the foregoing discussion." However the Authority,
on the basis of some theoretical simulation, suggested revision in the criteria
as per the table given therein. However the Authority recommended that in order
to frame new spectrum allocation criteria, a multi-disciplinary Committee may
be constituted. It is thus clear that although it is a laudable objective, the
Authority, admittedly because it did not have adequate time and based only on
theoretical simulation, arrived at some subscriber norms, "as an interim
measure so that the task of spectrum allocation is not stalled." It
is significant that there was no reference to TRAI to review or examine the
spectrum allocation criteria. Nor is there any indication anywhere that the
spectrum allocation has been ‘stalled’ because of lack of revised norms. Under
the circumstances, it is not clear as to why TRAI chose to recommend revised
subscriber norms based on a theoretical simulation and that too, without an
opportunity being given to all stakeholders to debate the issue. This is all
the more incomprehensible when the Consultation Paper itself has identified the
need to assess the adequacy of spectrum requirements including to the existing
operators. We cannot help but observe that TRAI ought to have been more
careful, painstaking and transparent in attempting this exercise.
97. But, the question arises whether DOT
itself was wrong in adopting the revised criteria. There can be no doubt that
spectrum is a scarce national resource and must be utilised in the most
efficient manner. And this was apparently engaging the attention of the DOT,
precisely why it referred the matter to TEC even prior to receiving the
Recommendations of the TRAI. Obviously, spectrum allocation not being a term of
reference to TRAI, DOT could not have foreseen that TRAI was making
Recommendations in this regard. The TEC submitted its report on 26.10. 2007 and
the report was made public on 31.10.2007. The criteria recommended by TEC were
more stringent than those recommended by TRAI and therefore immediately after
the report's Recommendations were known, there were representations from the Industry
and DOT decided to constitute a Committee headed by the Additional Secretary,
DOT. This Committee, which is known as the Spectrum Review Committee, gave its
Recommendations on 18.12.2007. From a perusal of this Committee's report,
accompanying an affidavit filed by Union of India on 8.1.2008, it is seen that
this Committee went into several details and consulted experts on the subject
besides TEC, COAI and AUSPI. Having studied the subject, within the limited
time available to it, the Committee noted that "India is the only country
in the world that is using a subscriber linked criterion for incremental
spectrum allocation to operators." The Committee recommended that "it
is time to look at other criteria for deciding incremental spectrum allocation,
possibly in combination with a subscriber linked criterion." It also
recommended that "keeping in view the immediate task at hand, as an
interim measure, until such time as a Committee as recommended above is
constituted and it completes its work, (two experts) felt that criteria
recommended by TRAI, which is the regulatory body, may be considered by
Government. However, (one expert) was of the view that for GSM systems TEC
criteria may be considered while for CDMA, the TRAI criteria may be considered.
In view of the sharp divisions among the members of the Committee regarding this
important issue, the Committee felt that this decision is best left to the
Government." It can thus be seen that the Government was left with the
task of having to choose between the various Recommendations. It finally
adopted, on 17.1.2008, and as an interim measure, the Recommendations of TRAI. We
note that the Delhi High court had concluded that “it was observed (by the
three Committees-TRAI, TEC and the DOT Spectrum Review Committee) that the 2006
norms had lost all relevance in the matter. None of the expert bodies have even
remotely suggested adherence to the 2006 norms”.
98. The petitioners have questioned the right
of DOT to apply the revised subscriber linked criteria with, what they term,
retrospective effect. The learned counsel for petitioners Dr. Singhvi argued
that subscriber linked criteria cannot be applied with retrospective effect and
that the legal principle of retrospectivity is that it cannot be read even into
an Act unless it is specifically expressed or very clearly implied. The counsel
pointed out that it is just not available for subordinate legislation, let
alone executive orders. In this context he relied on the judgement of the
Supreme Court in Kusumam Hotels (P) Ltd.
V. Kerala State Electricity Board & Ors. [2008 (9) SCALE] and also the
case of Chairman, Railway Board and
Others v. C.R. Rangadhamayya and Others [(1997) 6 SCC 623]. In the Kusumam Hotels case, the Apex Court
observed that "it is also not in dispute that all administrative orders
are to be to be considered prospective in nature. When a policy decision is
required to be given a retrospective operation, it must be stated so expressly
or by necessary implication. The authority issuing such direction must have
power to do so." In the Rangadhamayya
case, the Apex Court observed that "it has been held that such an
amendment having retrospective operation which has the effect of taking away a
benefit already available to the employee under the existing rule is arbitrary,
discriminatory and violative of the rights guaranteed under Articles 14 and 16
of the Constitution." We have considered the argument of the learned
counsel for petitioner as well as the judgements of the Apex Court in both
these cases. The central point to the argument of the learned counsel is that
to receive additional spectrum is a right vested in the petitioners. The
judgement of the Supreme Court in the Rangadhamayya
case, cited supra, was in the background of vested right having been
available. The Supreme Court held that in many of the decisions of the Supreme
Court cited in that particular case, the expressions "vested rights"
or "accrued rights" have been used by striking down the impugned
provisions, and that the said expressions have been used in the context of a
right flowing under the relevant rule which was sought to be altered with
effect from an anterior date and thereby taking away the benefits available
under the rule in force at the time. We have already held in paras 42 and 43
above that the petitioners do not have any vested right to receive additional
spectrum. We have also held that it is an undisputed fact that the allocation
of spectrum beyond the contracted 6.2 MHz is subject to justification,
availability and on consideration on a case-by-case basis. Insofar as the Kusumam Hotels case, cited supra, is
concerned, it was again a case where the appellant therein had a right which
was sought to be removed with retrospective effect, without any authority, and
it was therefore held that the respondent therein i.e. the Kerala State
Electricity Board had no right to issue the appellant with the
demand-cum-disconnection notices with retrospective effect. Here again, the
facts of that case are entirely different from the present case, where the
petitioners did not have any right to receive additional spectrum on any given
date.
99. The
real issue for consideration is whether the decision of the DOT in adopting the
Recommendations of TRAI as an interim measure is itself flawed. Two aspects
have been brought to our notice in this regard. The learned counsel for the 1st
Respondent, Union of India, pointed out that the actual subscriber base
achieved by the Petitioners as on 31.12.2008, with the available spectrum that
was allotted to them prior to January 2008, was more than the subscriber linked
criteria recommended by TRAI. He gave figures of the available subscriber base
in the four Metro cities. The position of the spectrum allocated, the criteria
prescribed by the order of DOT dated 29.3.2006, the Recommendations of TRAI and
the Recommendations of TEC Committee as well as the subscriber base as on
31.12.2008 in the four Metro cities emerges as shown in the Table below (Page 62).
100. It
is interesting to note that some of the operators such as MTNL in Mumbai (MTNL
figures for Delhi are not given), BPL
Mobile in Mumbai , BSNL in Kolkata and Chennai and Reliable Internet Ltd and
Dishnet Wireless Ltd in Kolkata have subscriber base even less than what was
prescribed in the Order dated 29.3.2006. In all other cases however, the
subscriber base is close to the figure recommended by TRAI. It is agreed by all
parties that the problem of spectrum availability is more in the Metro circles
than in the non-Metro circles. It would therefore be reasonable to assume that
the figures in the Metro areas reasonably represent the overall situation.
Accordingly, we hold that the DOT, particularly given the background brought
out above, was right in adopting the criteria recommended by TRAI as an interim
measure. We would however direct DOT to appropriately revise these figures
within one month of the receipt of the report of the Committee constituted by
it in June 2008, and apply the same to all the allotments that were made in
pursuance of the 17.1.2008 order.
TABLE
(referred to in para 99)
|
A statement showing the
available spectrum, recommended subscriber linked criteria and subscriber
base (VLR) as on 31.12.2008 in four Metro cities. |
|||||||
|
S. No. |
SERVICE AREA |
OPERATOR |
Spectrum Allotted* |
Subscriber linked criteria (Figures in Lakh) |
Subs-criber Base (VLR) as on 31.12.08
(in lakh) |
||
|
|
|
|
|
Order dt. 29.3.06 |
TRAI Recommen-dation dt. 28.8.2007 |
TEC Recommen-dation dt. 26.10.07 |
(as reported by UOI) |
|
1. |
Delhi |
Bharti Airtel
Ltd |
10+10 MHz |
16 |
30 |
48 |
34.29 |
|
Vodafone Essar |
10+10 MHz |
16 |
30 |
48 |
28.32 |
||
|
MTNL |
12.4+12.4 MHz |
21 |
50 |
63 |
-- |
||
|
Idea Cellular
Ltd |
8+8 MHz |
10 |
20 |
34 |
16.49 |
||
|
2. |
Mumbai |
BPL Mobile |
10+10 MHz |
16 |
30 |
58 |
10.88 |
|
Vodafone Essar |
10.2+10.2 MHz |
16 |
30 |
58 |
29.74 |
||
|
MTNL |
12.4+12.4 MHz |
21 |
50 |
75 |
10.25 |
||
|
Bharti Airtel |
9.2+9.2 MHz |
16 |
30 |
58 |
21.73 |
||
|
3. |
Kolkata |
Bharti Airtel |
8+8 MHz |
6 |
20 |
36 |
18.34 |
|
Vodafone Essar |
9.8+9.8 MHz |
10 |
30 |
50 |
20.67 |
||
|
BSNL |
10+10 MHz |
10 |
30 |
50 |
7.52 |
||
|
Reliable
Internet Ltd |
6.2+6.2 MHz |
4 |
15 |
20 |
3.75 |
||
|
Dishnet Wireless Ltd |
4.4+4.4 MHz |
2 |
5 |
6 |
1.64 |
||
|
4. |
Chennai |
Aircel
Cellular |
8.6+8.6 MHz |
6 |
20 |
31 |
11.96 |
|
Bharti Airtel |
9.2+9.2 MHz |
6 |
20 |
31 |
-- |
||
|
BSNL |
10+10 MHz |
10 |
30 |
43 |
8.26 |
||
|
Vodafone Essar |
8 + 8 MHz |
6 |
20 |
31 |
9.95 |
||
101. We now turn to the fourth issue raised by the petitioners which is one of alleged
impropriety in allocation of additional spectrum to BSNL and MTNL even while
the applications of some of the GSM operators were pending. A principal grievance of the Petitioners is that
their applications for allocation for additional spectrum which were made long
before the receipt of TRAI’s Recommendations were kept in cold storage and that
they were not allocated spectrum in time. It is contended that it is unfair on
the part of the DOT to now deny the spectrum to which they were admittedly
entitled, on the ground that the subscriber linked criteria have now been revised.
The learned counsel for Petitioners brought to our attention letters written by
the DOT to M/s Bharti Airtel stating that their applications for additional
spectrum have been examined and found eligible but that the additional spectrum
can only be allocated on its availability. It is their contention that the
applications must be disposed off with reference to the rules prevailing at the
time of application and not on the date of decision.
102. It is also contended by the counsel for
petitioner that BSNL and MTNL were allocated spectrum of 10 MHz to BSNL in all
service areas (8 MHz and West Bengal) and 12.5 MHz to MTNL in Delhi and Mumbai.
And they have been given the spectrum in March/May 2007, in accordance with the
criteria laid down in the Order dated 29.3.2006. He argued that by giving
spectrum to these two PSUs in excess of their eligibility under the subscriber
linked criteria and also out of turn allotment vis-à-vis other GSM applicants,
DOT had not only discriminated against private GSM operators but also violated
the principle of level playing field. Everywhere, BSNL was given 10+10 MHz
except in respect of West Bengal. But strangely, Bharti Airtel whose
application was found meeting the criteria in September 2006 was not given
spectrum and it was required to abide by the criteria adopted in January 2008.
He states that NTP-99 enjoins a level playing field among all operators
including the public sector operators. He states that the NTP-99 document talks
of ‘level playing field’ even with reference to DOT. He also refers to the
Press Note dated 13.9.1999 which states that "the Deptt. of Telecom/MTNL
would operate cellular services under the same terms and conditions of licence
has would be applicable to private operators", as well as the judgement in
the case of Cellular Operators
Association of India and Others v. Union of India and Others [(2003) 3 said SCC
186].
103. The learned counsel also cited the
decisions of the Hon’ble Supreme Court in the cases of Union of India and Others v. Asian Food Industries [(2006) 13 SCC 542];
Y.V. Rangaiah and Others v. J.
Sreenivasa Rao and Others [(1983) 3 SCC 284]; and Union of India and Others v. Dev Raj Gupta and Others [(1991) 1 SCC 63]
to support his case that the petitioners have a vested right because the rule
prevailing at the time of application was the relevant rule. His contention is
that his client’s application was found eligible but spectrum was not allotted
only because of lack of availability. It would now be iniquitous and unjust to
apply the revised criteria, particularly when BSNL and MTNL were allotted
Spectrum in March/May 2007.
104. Countering this charge, Mr. Vikas Singh,
learned counsel for Union of India stated that firstly, the criteria laid down
on 29.3.2006 are outdated and are no longer relevant. It is precisely because
of this that DOT had asked TEC to look into this issue and make its
recommendations. Secondly, he states that PSUs can be treated differently and
cited the judgement of the Honourable Supreme Court in the case of Indian Drugs and Pharmaceuticals Ltd and
Others v. Punjab Drug Manufacturers Association and Others [(1999) 6 SCC 247]
in support of his contention.
105. We have carefully considered the matter.
The licence conditions clearly state that spectrum will be made available
subject to availability and justification on a case by case basis. In this
particular case, DOT had given letters to Bharti Airtel in November 2006 and
January 2007 stating that the applications in respect of Mumbai Metro service
area (letter dated 16.11.2006), West Bengal Telecom service area (letter dated
24.11.2006), Rajasthan Telecom service area (letter dated 3.1.2007) and UP-East
service area (letter dated 11.1.2007) have been found to be meeting the
applicable criteria. The issue of these letters have not been controverted nor
is the fact that both BSNL and MTNL were given additional spectrum. There are
two issues here. Firstly, whether the petitioners are entitled for the spectrum
on the basis of the letters issued by DOT. The letters from DOT to Bharti
Airtel are more or less uniform in their language. The letters state in each
case that "your requirement for additional GSM spectrum vide letter dated
.... has been received and found to be meeting the applicable criteria.
However, as no spectrum is presently available, your requirement has been noted
and will be considered along with other similar pending requirements and in
its order of priority, once the spectrum becomes available." Now the
question is whether these letters confer any legitimate right on the party for
spectrum allocation irrespective of changes, if any, in the allocation
criteria.
106. The counsel for Petitioner sought to rely
on the judgements cited above, to support his case. As we have already held in para
43 above, the Asian food industries case
does not apply. For the reasons elucidated by us, the petitioners do not have
any vested right. In the Y.V. Rangaiah
case, cited supra, the Apex Court held that "posts which fell vacant
prior to the amended rules would be governed by the old rules and not by the
new rules." In the Dev Raj Gupta
case, cited supra, the appellants,
Union of India, made a demand for conversion charges on the basis of the rate
prevalent in April 1981 instead of the rate prevalent on February 15, 1978. The
Apex Court held that February 27, 1981 was the date on which a proper
application was made by Dev Raj Gupta and others. Noting that the appellant had
not replied to this letter till January 12, 1984, the court directed that
"(14) ......in the absence of anything else on record, it will have to be
held that the date with reference to which conversion charges are to be counted
is February 27, 1981. (15) The authority
has calculated additional premium with reference to May 27, 1981 on the footing
that the outer limit for granting permission was three months from the date of
receipt of the application. There is no justification for the authority to hold
thus, for they are expected to process the application as early as possible and
not to wait till the end of three months."
107. We hold that these two cases are not
relevant to the present case. There is a material difference between the two
situations. The Dev Raj Gupta case is
really one of admonition that every application must be dealt with expeditiously
and that there cannot be an assumption that delay would be involved. In the
present case, there is no such allegation that the application was not
responded to quickly. The allegation is only that the follow-up action was not
taken and that in the meanwhile the criteria have changed. The principle in the
Y.V. Rangaiah case also does not
apply. In that case, the issue involved was one of promotion to certain posts.
In the present case, on the other hand, there is a clear stipulation in the
license conditions itself that additional spectrum would be allocated subject
to eligibility and availability on a case-to-case basis. Suffice it to say, we
do not agree with the contention of the petitioners that they are entitled to
spectrum on the basis of the letters received by them from DOT.
108. Technology, particularly in a sector like
telecommunications, is forever evolving and the demand is always growing.
Spectrum being a scarce resource has to be utilised most efficiently and the
parameters of the efficiency also have to keep pace with the advances in
technology. It would therefore be incorrect to assume or to argue that criteria
once established will remain frozen. It is noteworthy that three Committees
which went into the issue -- TRAI, TEC, and the DOT Spectrum Review Committee
-- have all stated that the criteria need revision. In a situation such as
this, it would be inappropriate to argue that the criteria laid down in March
2006 should be applied. There is also no evidence on record to indicate that
the Petitioners, who have received the above letters from the DOT, have
reminded the Government about allocation of spectrum. It is also true that the
subscriber base of these petitioners has also increased and could be
accommodated within the available spectrum. The country is adding about 9-10
million subscribers every month and a majority of this addition is in the GSM
segment. The very fact that there has been admittedly no allocation of spectrum
to the petitioners for the last one half years shows that the spectrum
available with the GSM operators was adequate to absorb the increased
subscriber base. And this itself justifies the revised subscriber linked
criteria. Under such circumstances, it cannot be said that it would be in the
public interest to give additional spectrum to the Petitioners on the basis of
March 2006 norms. We notice that the Delhi High Court has, in its judgement of
22.8.2008, also held that even if it was to be held that the letters mentioned
above contained a promise or created any vested right in the petitioners or
individuals, interests of the public at large as well as equity would override
any individual rights. Our view is that no vested rate is created." The
Delhi High Court also observed that the reports of the three committees
mentioned above have separately found that the petitioners and other GSM
operators are catering to a subscriber base well beyond the parameters
indicated by the government for the spectrum allocated to them. It has also
observed that "it is also an admitted position that no capital expenditure
has been incurred and no technology advancement has been effected by the GSM
operators to improve efficiency. On the contrary, there is a reluctance to
upgrade systems for optimum and efficient utilisation of the allocation."
In their Petition as well as in the course of arguments, the petitioners have
attempted to show that they have indeed invested in new and advanced technology
in order to more efficiently use the spectrum available with them. We would not
like to go into this issue since we do not have adequate material before us to
judge the position either way. It is for expert bodies such as the Committee
constituted by DOT to examine the case of each licensee in a service area and
determine whether the service providers have achieved the desired spectral
efficiency, keeping in view the available technology and the costs involved.
109. We now come to the question of, both BSNL
and MTNL having been given additional spectrum. There is no satisfactory
explanation as to why BSNL and MTNL were given the additional spectrum. There
is no material available before us to indicate whether these two Public Sector
Undertakings (PSUs) applied for the spectrum for the respective Circles, and
whether they satisfied the subscriber linked criteria for allocation of
additional spectrum. As can be seen from the statement at Para 93 above, at least in respect of Mumbai, even on 31.12.2008,
MTNL had only 10.25 lakh subscribers with 12.4 MHz whereas as per the
subscriber base criteria fixed vide the order dated 29.3.2006, the subscriber
base required was 10 lakh even for allocation of spectrum of 10 MHz. It can
reasonably be assumed that the subscriber base of MTNL in Mumbai would have
been even less than 10.25 lakh when they were allocated spectrum of 12.4 MHz.
It is possible that similar is the case with some of the BSNL circles, since
the statement at para 93 above also
indicates that BSNL’s subscriber base was below the prescribed limits in
Kolkata and Chennai circles. There is therefore reasonable ground to infer that
BSNL did not perhaps meet, in the first instance, the criteria even of
29.3.2006. Even if they did, there was no rationale for treating the PSUs
differently and giving them additional spectrum when the same was not being
given to the other operators. Level playing field is a principle specifically
laid down in NTP-99. In fact, NTP-99 laid out a principle of level playing
field even with respect to DOT, which as Government is sovereign. The learned
counsel for Union of India sought to apply the judgement in the Indian Drugs & Pharmaceuticals case,
cited supra, and argued that the PSUs can be treated differently and that the
principle of level playing field does not apply vis-à-vis them. A perusal of
this judgement shows that what was under challenge was the validity of the
policy decision of the Government of Punjab, which was set aside by the Punjab
& Haryana High Court, whereby directions were issued to the purchasing
authority that certain medicines used in the government hospitals and
dispensaries were to be purchased from public sector manufacturers only. The
Hon’ble Supreme Court referred, in this context, to the case of Sarkari Anaj Vikreta Sangh v. State of M.P
[(1981) 4 SCC 471] where the Supreme Court held that "if the
government took a policy decision to prefer consumers co-operative societies
for appointment as agents to run fair price shops,.... there can be no
discrimination." The Supreme Court also referred to the case of Hindustan Paper Corporation Ltd v. Govt. of
Kerala [(1986) 3 SCC 398] wherein the Apex Court held that "preference
shown to government companies cannot be considered to be discriminatory as they
stand in a different class altogether and the classification made between
government companies and others for the purpose of the Act is a valid
one." Accordingly, the Supreme Court observed that “ in our opinion, the
High Court in that case has not considered the various judgements referred to
by us hereinabove, some of which are of a Constitution Bench of this Court,
which has upheld the classification made between private undertakings and
public sector undertakings." Accordingly, the Supreme Court set aside the
decision of the Punjab & Haryana High Court.
110. We have carefully considered this judgement.
In the present case, there is a document NTP-99 which clearly upholds the
principle of level playing field. The relevant portion of this document reads
as follows:
"Availability of adequate frequency spectrum is
essential not only for providing optimal bandwidth to every operator but also
for entry of additional operators. Based on the immediately available frequency
spectrum band, apart from the two private operators already licenced, DOT/MTNL
would be licensed to be the third operator in the service area in case they
want to enter, in a time bound manner. In order to ensure a level playing field
between different service providers in similar situations, licence fee would be
payable by DOT also. However, as DOT is the national service provider having
immense rural and social obligations, the Government will reimburse full
licence fee to the DOT. "
112. Secondly, it is not the contention of the
Union of India that the discrimination in favour of BSNL and MTNL is a matter
of policy in public interest. In this case, both BSNL and MTNL are licensees
and are covered by all the conditions of the licence. Allocation of spectrum to
them would be on the same basis as for the private operators. We therefore hold
that the ratio laid down by the Apex Court in the various cases cited above in
the Indian Drugs & Pharmaceuticals
case do not apply to the present case. Besides, in this era of
liberalisation, there cannot be any discrimination between public and private
sector operators. We accordingly hold that allocation of additional spectrum to
BSNL and MTNL on the basis of the criteria laid down in the order dated
29.3.2006 is a discrimination against the private GSM operators. Strictly
speaking, since the plea taken by the Union of India as well as both these PSUs
is that this additional spectrum was allocated only on trial basis, there
should be no difficulty if we order that this additional spectrum should be
withdrawn forthwith. But, as brought to our notice, BSNL has already advised
its offices to put this spectrum to commercial use. And these instructions must
have been acted upon. Given this position, we are conscious that withdrawal of
the spectrum given to these two PSUs would most likely cause inconvenience to
the Public and we would like to avoid the same. We accordingly direct the DOT
to immediately review the subscriber base of these two PSUs in all the Circles
and withdraw such spectrum which is beyond the criteria laid down by the DOT in
their Order dated 17.1.2008. This will restore the level playing field between
the private and public sector operators. Further, our direction to DOT in para 100
above to apply the revised criteria to all the operators would apply to BSNL
and MTNL as well. Needless to say, BSNL and MTNL must utilise their spectrum
with as much efficiency as is expected of the private sector.
113. One of the issues raised by the Respondents
is that the Petitioners herein are desirous of continuing their monopoly in the
GSM arena and that they are against competition. This is fiercely contested by
the learned counsels for Petitioners who have marshalled certain facts to
indicate that their clients are not against competition. We feel it is
unnecessary to go into this issue. It is in the nature of business that
Companies compete with each other. It is also natural that those who occupy the
field would be loath to see new entrants coming in and sharing the pie. It is
equally natural for new entrants to want to enter into areas which are found to
be commercially attractive. We, therefore, feel it unnecessary and, in fact,
futile to go into this question and have deliberately avoided dealing with this
issue.
114. In conclusion, we hold as follows in
respect of the issues identified by us in para 14 above:
I.
We hold that there is
thus nothing in either the NTP-99 document or the licence conditions or the
correspondence/orders to support the contention of the Petitioners that they
have a vested right up to 15 MHz. We hold that the Petitioners do not have any
vested right to receive GSM spectrum beyond 6.2 MHz.
II.
On technology
neutrality, we hold that the concept of technology neutrality was very clearly
enunciated as early as 1999 and definitely after November 2003. We hold that a
reading of the NTP-99 document and the licence conditions reveals that the
concept of dual technology is not a new concept and that this is contained in
the above documents. We are of the view that in analysing the issue of
technology neutrality, TRAI did not exhibit the required degree of care and has
avoidably given the impression that the concept of technology neutrality was
something new. We hold that in taking the decision reflected in the letter
dated 18.10.2007 or the Press Release dated 19.10.2007, no impropriety was
committed by DOT. We do not find any ground to level mala fide intention on the
part of DOT and accordingly hold that the issue of early completion of
formalities is not a matter that would require intervention at our level. We
are unable to agree with the petitioners that the impugned decision of DOT
dated 19.10.2007 has disturbed the level playing field. We hold that there is
nothing irregular in grant of 4.4 MHz as start up spectrum to the Respondents.
We do not agree with the contention of the Petitioners that those with dual
technology and dual spectrum should be charged the spectrum usage charges on
the basis of the combined spectrum. We do not agree with the Petitioners’
contention that the DOT has disregarded the Recommendations of TRAI in respect
of contingent roll-out obligation.
III.
On the issue of
subscriber linked criteria, we hold that the Petitioners’ contention that the
subscriber linked criteria were designed to adversely affect the interests of
the existing GSM operators does not merit consideration. We hold that in
arriving at the subscriber linked criteria, TRAI failed to observe the
principle of transparency. It is expected of institutions like TRAI to follow a
uniform procedure while making its Recommendations. It cannot choose the
procedure to suit its convenience. We hold that TRAI was wrong in arriving at
revised subscriber norms based on a theoretical simulation and that too,
without an opportunity being given to all stakeholders to debate the issue.
TRAI ought to have been more careful, painstaking and transparent in attempting
this exercise. However, an analysis of the actual subscriber of different
service providers in the Metro Circles reveals that the figures are close to
the criteria laid down by TRAI. We hold that DOT, given the background of the
Recommendations of TRAI, TEC and the DOT Spectrum Review Committee was right in
adopting the criteria recommended by TRAI as an interim measure. We however
direct the DOT to appropriately revise these figures within one month of the
receipt of the report of the Committee constituted by it in June 2008, and
apply the same to all the allotments that were made in pursuance of the
17.1.2008 order.
IV.
We hold that allocation
of additional spectrum to BSNL and MTNL on the basis of the criteria laid down
in the order dated 29.3.2006 is a discrimination against the private GSM
operators. We accordingly direct the DOT to immediately review the subscriber
base of these two PSUs in all the Circles and withdraw such spectrum that is
beyond the criteria laid down by the DOT in their Order dated 17.1.2008.
Further, our direction to DOT to apply the revised criteria to all the
operators would apply to BSNL and MTNL as well.
115. Before leaving, we would like to point out
that considerably avoidable confusion was caused on account of three factors.
The first is the fact that, as indicated above, TRAI did not interpret the
licence conditions properly with reference to the concept of Technology
neutrality. It has now taken the stand that what is detailed in the earlier
part of their Recommendations on this subject is the popular perception. If
this is truly so, it could have been made explicit alongwith the reasons why
this perception is incorrect and that TRAI does not agree with it. Secondly,
while we have held that the DOT was not wrong in adopting the subscriber linked
criteria recommended by TRAI and we also see that the figures therein are
reasonable, we cannot help but comment on the manner in which these criteria
were arrived at. It is important that TRAI should have subjected this exercise
to a proper process of consultation as per their normal practice.
116. The third and more important aspect is the
Recommendation of TRAI on the number of service providers in each service area.
TRAI’s Recommendation was that there should be no cap and that this should be
left to market forces. In their affidavit filed on 18.8.2008, Union of India
have indicated that "after receipt of the TRAI recommendations on no
capping of number of licences in any service area, there has been a spurt in
the number of applications for grant of UAS licenses received by DOT."
Therefore, DOT announced, through a Press Release dated 25.9.2007, a cut-off
date of 1.10.2007. It was indicated that till the cut-off date, 575
applications for UAS licences were received of which 343 applications were
received after 25.9.2007. As per the affidavit, keeping in view the large
volume of applications, the competent authority decided to issue Letters of
Intent to only those eligible applicants who applied on or prior to 25.9.2007
in each service area. This number was 232. Even here, as per a Statement in the
affidavit, Only 24 new UAs licensees of 2008 could be allocated spectrum and as
many as 88 new licensees of 2008 are awaiting allotment of initial GSM
spectrum. Now, it is common knowledge that spectrum is a scarce commodity. It
can be argued that a licence, per se, does not entitle the licensee to receive
spectrum and that in the absence of spectrum, the licensee is required to roll
out services using wireline technologies. This would however be a specious
argument as it is common knowledge that, today, the Cellular Mobile service is
the preferred service, for reasons of cost and popular choice. It is also a
well-known that for efficient and economic operations, including laying out of
networks, a certain minimum spectrum is essential. The average spectrum
allocation per operator in other countries is higher than in our country.
Already, as indicated by TRAI itself, there are 6 to 9 operators in each
service area and there is demand for additional spectrum. It is therefore
puzzling as to why TRAI recommended a no cap policy on the number of service
providers. In our view, DOT would be well advised to review this policy keeping
in view the various relevant parameters and take an appropriate decision. We
also note that the Press Release dated 19.10.2007 speaks of guidelines
regarding merger and acquisition to be issued separately. We are confident that
Government in DOT would keep in view the requirements of adequate spectrum for
efficiency of spectrum utilisation while expeditiously formulating the merger
and the acquisition guidelines.
117. At the end, we must record that we have
been greatly helped, in dealing with this case, by the arguments and wisdom of
the various counsels. We would like to convey our sincere appreciation to all
the arguing counsels as well as those who have assisted them for making our
task easy by taking us through the various facets of the case.
118. The petition is accordingly disposed of.
Taking into consideration the various aspects of the case, we decide not to
impose costs on any of the parties.
........................J
(Arun Kumar)
Chairperson
..........................
(J.S.
Sarma)
Member
.........................
(G.D.
Gaiha)
Member