Reliance Jio Case: TRAI Defends Penalty On Airtel, Vodafone, Idea

Telecom regulator Trai today stoutly defended its recommendation of Rs. 3,050 crore penalty on Airtel, Vodafone and Idea Cellular for their alleged failure to provide adequate points of interconnect (PoIs) to newcomer Reliance Jio for completing phone calls.

In a point-by-point response to queries raised by the Department of Telecommunications (DoT), Trai said the three incumbent operators "intentionally denied and delayed" provision of points of interconnect to Reliance Jio "only to restrict a new entrant...causing a lot of inconvenience to consumers".

Trai said after its intervention Bharti Airtel, Vodafone India and Idea provided points of interconnect (PoIs) at much shorter notices (in some 7 instances within 2-3 days) implying that they were capable of providing such PoIs without any delay.

It said telecom operators are bound by licence conditions that make it obligatory on it "maintaining Quality of Service" and "a breach thereof is liable to be treated as breach of terms and conditions of the licence".

Stating that it is mandated by law to ensure effective interconnection and quality of service to the consumers, Trai said non-compliance of terms and conditions of the licence warrants recommendations for the revocation of the licence.

"However, the Authority was mindful of the fact that revocation of the licence will entail significant consumer inconvenience and therefore in view of the larger public interest involved, the Authority recommended a penal action of Rs. 50 crore per circle," it said.

DoT had in February asked Trai to clarify on almost a dozen points including the basis of which the penalty amount was calculated and the provision in the law that enabled it to do so.

Trai said there is no provision in the licence or regulations to deny/delay provisioning of PoIs during the test phase. "On the contrary, the testing cannot be completed unless sufficient PoIs are provided," it said on the incumbents contesting testing by Reliance Jio.

On contention of Airtel, Vodafone and Idea that 14 paisa per minute they get for completing a call from rival network was below cost, Trai said the present termination charge has been prescribed after a comprehensive consultation process.

"It fully recovers the cost incurred by the terminating service provider. Therefore, there is no question of loss to terminating service providers due to asymmetry in traffic with Reliance Jio," it said.

Trai contested DoT's contention that it should have waited before issuing show case notices to the incumbents for failing to provide PoIs, saying "when the Quality of Service parameters were so bad and millions of consumers were suffering due to blatant and wilful violation of the licence conditions and Trai's Regulations" it could not have waited.

On the issue of show-cause not mentioning the penalty amount and it finally recommending the penalty after examining the replies of the operators, Trai said non-mention of the potential penalty amount does not make the recommendations legally untenable in any manner.

Trai said it took cognisance of all the submissions of Airtel, Vodafone and Idea including the efforts made by them but the steps taken were insufficient to bring down the PoI congestion to the desired level. Also that the three operators "appeared to have ulterior motive to stifle competition."

As per Trai's recommendation, the penalty for Airtel and Vodafone worked out to about Rs. 1,050 crore each, while in case of Idea Cellular stood at about Rs. 950 crore. The regulator, in fact, had stopped short of recommending cancellation of their telecom licences saying it may lead to significant consumer inconvenience.

The matter was placed for before inter-ministerial panel Telecom Commission which decided to sent reference back to Trai and reconsider some of the points on which it has recommended penalty.

Trai also pulled up the DoT over its view in the reference note.

"As per the TRAI Act 1997, DoT is required to send back the recommendations to the Authority for its reconsideration, however in this case, DoT has sent its view on each and every paragraph of the analysis and facts of the case which has never been the practice till date.

"However, the Authority has decided to overlook this aberration and has given its response to the relevant comments of the DoT," the regulator said.

Bharti Airtel said the Trai assessment is incorrect and appealed to DoT to reject it.

"We disagree with Trai's observations and believe that the penalty has been recommended on the basis of an incorrect assessment of the situation on ground," it said in a statement.

"We request the DoT to reject these recommendations and take into consideration the actions taken on ground by Bharti Airtel. The fact is that we have provided PoIs to Jio at an unprecedented pace despite the provision of 90 days in the license," it added.