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Says Airtel-Vodafone-Idea pacts violate licence terms; firms may move TDSAT.

In a setback to Bharti Airtel, Vodafone and Idea Cellular, the department of telecommunications (DoT) has ordered them to immediately stop 3G services in telecom circles where they don’t have spectrum. The three operators have roaming pacts and offer pan-India 3G mobile services without having spectrum in several circles.

“We have come to a conclusion that 3G roaming deals are in violation of the terms and conditions of the licence and will ask operators to stop their services through such arrangements with immediate effect,” DoT Secretary R Chandrashekhar said.

The clearance to take action on the issue came late last night from communications minister Kapil Sibal. A letter to the operators expected to be dispatched this evening will make it clear 3G services provided through roaming agreements are not legally tenable. The decision came after the law ministry, telecom regulator Trai and an internal unit of DoT echoed the view such agreements violated licence conditions.

Under the rules, an operator can be fined Rs 50 crore per circle at the most for any violation of licence conditions. The licence can be withdrawn in extreme cases. However, for that, the DoT has to issue a show-cause notice to the errant operator and provide 60 days to reply before any action. DoT made it clear it was yet to decide what action would be taken for violation of licence conditions.

Spokespersons for Bharti Airtel, Vodafone and Idea Cellular declined to comment on the issue. However, the news saw stocks of the effected operators go down. Bharti Airtel’s share price was down 1.77 per cent at Rs 335.45 and Idea Cellular’s shares were down 1.21 per cent at Rs 81.70. Vodafone is not listed.

Reliance Communications which is also into 3G, has preferred not to roll out services through roaming. Aircel, which had a one-way roaming pact with Tata Teleservices, had to stop services in nine circles after the Tata company decided to switch off the network when the dispute on the issue came under scrutiny.

Top executives of the telecom operators said they would challenge the action in TDSAT, the quasi-judicial body for telecom disputes, and seek a stay. Experts say there are nearly 15 million 3G customers in the country, of which only 25 per cent are active customers. The total number of customers who will get impacted would be very limited.

The final decision on the legality of the issue could also determine the ground rules of the next big battle in telecom: in broadband wireless access (BWA) or 4G, which offer much higher data speeds than 3G.

With Bharti having BWA spectrum in only four circles, Aircel in eight and Vodafone in none, roaming agreements would have provided these players an opportunity to become pan-India 4G players. Bharti Airtel Chairman Sunil Mittal, in an interview in Barcelona early this year, had announced the company would like to be a pan-India 4G player through roaming agreements with others. Qualcomm, which has BWA spectrum in four circles, was looking at tying up with one of the operators and talks were on with Bharti, something both sides deny.

However, these players have to contend with Mukesh Ambani’s Infotel Broadband, in which Reliance Industries Ltd has bought 95 per cent stake. It is the only operator with BWA spectrum across the country.

Operator Number of
circles with
3G spectrum
with 3G
Major cities where
services offered
without spectrum
Bharti Airtel 13 20 Pune, Nagpur, Kolkata, Gujarat
Vodafone 9 20 Hyderabad, Thiruvananthapuram
Idea Cellular 11 19 Delhi, Kolkata, Mumbai
Aircel 13 13
Tata Teleservices 9 9

Source By Business Standard

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