TDSAT's split verdict on 3G roaming pacts; Telcos to move Supreme Court
The Telecom Disputes
Settlement and Appellate Tribunal (TDSAT) Tuesday delivered a split verdict in
the 3G roaming case in which mobile operators had challenged a government order
asking them to stop offering services beyond their licensed zones through mutual
The two members of the bench, comprising chairman Justice (retd) S.B. Sinha and member P.K. Rastogi, had different views on the order, with one favouring the department of telecom that held the roaming
pacts illegal while the other supporting the operators who had challenged it.
The TDSAT is short of one judge as the technical member has retired.
Following the ruling, the Department of Telecom (DoT)
is all set to issue fresh notices to the operators.
As the tribunal said both sides can appeal to a higher court, the operators are
likely to move the Supreme Court.
"We will most certainly look up at options including moving the Supreme
Court once we receive a communication from the DoT,"
Rajan Mathews, director general of the Cellular
Operators Association of India (COAI), told IANS.
Vodafone and Idea Cellular had entered into roaming agreements to offer 3G
services such as video calling, mobile TV and multi-media gaming in areas where
they did not have 3G spectrum.
The DoT had last December asked the operators to
terminate their 3G roaming agreements calling those illegal. The department
also said the government was losing revenue because of the agreements.
The operators had then moved the tribunal challenging the DoT
order, saying it would harm customers and investment in the sector.
Tuesday's judgement, however, would not affect the
services being offered by these operators at the moment.
Following the orders, shares of Bharti Airtel shot up 3.21 percent at Rs.319.80 while that of Idea
Cellular by 4.57 percent at Rs.81.25.
Prolongs uncertainty in
But executives of these companies said they will continue with the
3G roaming pacts. Telecom department officials, however, point out that Justice
Sinha, who ruled in favour
of the carriers, also said the government may send fresh notices to mobile
phone companies against 3G roaming alliances, and give them adequate time to
An executive with a mobile phone company said this situation could
have been avoided if the government had appointed a third member to the tribunal.
"The TDSAT has a three-member bench, but the government has not replaced
one of its technical members who retired last year," he said.
Vodafone and Idea had won 3G airwaves in 13, 9 and 11 circles, respectively, in
the 2010 auctions and their intra-circle roaming pacts ensured that customers
could access high-speed data services on a pan-India basis. India is
divided into 22 circles. The Tatas and Aircel had also forged a similar agreement, but called off
the alliance after DoT began investigating these
The telecom department and sector regulator Trai
viewed these pacts as illegal, a position that received the backing of the law
ministry, and on December 23, 2011, ordered telcos to
stop offering pan-India 3G services within 24 hours. But a day later, the GSM
incumbents obtained a stay order against the government's directive. These telcos have argued that DoT had
told them that intra-circle roaming would be allowed before they participated
in the 3G auctions of 2010.
Justice Sinha in his order on Tuesday
said the licence permitted inter-circle roaming and
the same should apply to intra-circle roaming as well. But Rastogi
said telecom operators were not permitted to enter into intra-circle roaming
arrangements with other telecom operators.
"The telecom operators who were not successful in getting 3G
spectrum in certain service areas are not permitted to enter into any
arrangement to provide 3G services to its customers," he ruled.
Telecom analysts said the split verdict prolonged the uncertainty
prevailing in the sector, but were divided in the impact of the development.
"The fact that the bench did not unanimously write off
operators' plea is a positive emanating from the situation. While operators may
approach the apex court, the strength of their argument may coerce DoT to possibly take a relook at
its directive," said Prashant Singhal, telecom industry leader with Ernst & Young
But Harit Shah, a senior research analyst
at Nirmal Bang Institutional Equities, told ET NOW,
this newspaper's sister channel, that the tribunal's order was a 'big blow for
"This is definitely a negative development for telecom
companies. This would obviously make it slightly more difficult to monetise 3G investments," he said.