The face-off between the Department of Telecommunications (DoT) and operators over 3G roaming agreements is set to continue with  the two-member judge panel handing out conflicting judgments, following a hearing by the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) on July 3, 2012.  The judges – TDSAT chairman Justice S.B. Sinha and member P.K. Rastogi – reached different conclusions on whether 3G roaming agreements should be allowed or not. While Sinha approved the operators’ appeal against DoT’s directive to stop the provision of 3G services through roaming agreements, Rastogi maintained that the operators should not be allowed to offer these services in areas where they have only 2G licences.

Sinha stated that DoT had not provided telecom operators sufficient time to respond with their views on 3G roaming agreements. He therefore directed the department to restart the process and  provide enough time to the operators to  respond to the directive.

The making of the controversy

The stiff competition and excessive bidding for 3G spectrum in 2010 prevented operators from winning a pan-Indian 3G licence. Most operators bid and later acquired licences for the circles where they were already leading in terms of revenue and/or subscriber base. However, after launching services in their licensed circles, they entered into agreements with one another to provide seamless connectivity to consumers as well as utilise the unused spectrum in some of the circles.

In June 2011, Vodafone India launched 3G services in Andhra Pradesh and Kerala through an  arrangement with Idea Cellular and Bharti Airtel. Most of the other 3G licensees followed suit and signed similar agreements with one another to offer 3G roaming services in circles where they did not have licences. The move was well received by customers who did not have to change operators in a bid to access 3G services in areas where their existing operator could not provide them those services.

However, in October 2011, the Telecom Regulatory Authority of India (TRAI) sent a letter to R. Chandrashekhar, secretary,  DoT, bringing to his notice that operators had entered into roaming agreements and were offering 3G services in non-licensed circles. TRAI’s objection was that by entering into such agreements, operators were not paying any licence fee which meant a loss of revenue for the government. While TRAI’s move came almost four months after the operators had signed such agreements, DoT took action in this regard in December 2011. The department sent notices to operators ordering them to immediately terminate their 3G services.

Consequently, Aircel and TATA DOCOMO cancelled their agreements in six circles – Gujarat, Haryana, Madhya Pradesh, Maharashtra, Rajasthan and Uttar Pradesh (West). However, the incumbents – Vodafone, Idea and Airtel – stuck to their argument that these agreements were valid as per the existing licence conditions and based on their written communication with DoT before the auction. Moreover, most of the operators stated that had they known such pacts were not allowed, their strategy for bidding in the 3G auctions would have been very different. They jointly wrote to the prime minister asking for a refund of the spectrum auction money with interest if these roaming arrangements were deemed illegal. They also moved TDSAT against DoT’s directive, following which the tribunal restrained DoT from taking any action against the operators, untila judgment was passed. Meanwhile, the operators continued providing 3G services through roaming agreements.

Conclusion

In the past, roaming arrangements have helped service providers offer seamless 2G services across the country, and also reduce operational and capital expenditure. Through 3G roaming agreements, operators can leverage the superior coverage of their partners in individual circles, improving the quality of services provided to end-customers. Analysts are also of the view that 3G roaming agreements allow efficient usage of spectrum and increase the penetration of mobile broadband services.

DoT, on the other hand, strongly believes that these pacts violate the operator-government agreements on 3G. The National Telecom Policy, 2012, which allows spectrum sharing for 2G spectrum, has kept 3G spectrum out of the purview of sharing. This is likely to pose a serious challenge to the uptake of 3G services in the country, which has been below expectations so far.