The judgment of the Supreme Court on 2-2-2012
cancelling 122 telecom licenses and spectrum allotted with those licenses
resulted in several issues to the Telecom Operators, DoT and the customers.
The DoT, it is learnt, is seeking
legal opinion on 24 issues subsequent to this judgment. The main issues among
these 24 are:
a)
The fate of 73 licenses
granted during 2001 to 2007—whether they are also illegal and hence require to
be cancelled and if not, whether there is a possibility for litigation on this
issue
b)
The fate of the 37 dual
technology licenses granted in 2007-08---whether these licenses also are
illegal and require to be cancelled or not(These 73+37 are in addition to the
122 licenses cancelled by the Supreme Court)
c)
Among the 122 licenses
cancelled by the Supreme Court, there are some licenses of Idea and S Tel who
procured 3G spectrum also, besides 2G spectrum in some circles. Since these
licenses are cancelled, what will happen to 3G spectrum allotted to them in the
auction?
d)
Whether the entry fee paid
for these 122 licenses cancelled has to be refunded to the concerned operators
by the Government?
e)
Whether the bank guarantee
of these 122 licenses has to be encashed or refunded
f)
These licensees have taken
loan from lenders/bankers and the government is a signatory to all these loan
agreements. In such case, whether the lenders/banks have a claim on the
licenses
g)
Since the Supreme Court has
given 4 months time, upto 1-6-2012, for
closing the operations of these 122 licenses, whether penalties can be imposed
on these companies during this period for the violation of rollout obligations
h)
Whether the pending court
cases against these companies whose licenses were cancelled by the Supreme
Court have to be pursued or not
i)
What will happen to the
Merger and Acquisition cases involving the companies whose licenses are
cancelled(Allianz and Etisalat, Idea-Spice and Unitech group companies)
j)
Can DoT approve the
launching of new services by these companies during this 4 months period before
their closure
While the DoT and the Government
are facing the above issues, the private operators whose licenses are
cancelled, are facing the following issues:
a)
How to retain their
customers during the 4 months before closing their operations?
b)
Whether they can file and
succeed in a review petition seeking review of the Supreme Court judgment
cancelling their licenses and whether to file the review petition or not
c)
Even if there is no other
alternative except to close their operations, meanwhile whether they can
participate in the auction for the spectrum (which was allotted to them, but
cancelled due to Supreme Court judgment) afresh and secure it meanwhile so that
they can continue their operations? If so at what cost they can get the
spectrum in the auction. These companies are demanding that the incumbents
whose licenses were not cancelled by the Supreme Court should not be allowed to
participate in the auction for purchasing the spectrum cancelled to them and
only they be allowed to repurchase it by participating in the auction.
d)
Whether they can get the
amount paid by them as entry fee for securing the license and spectrum which
was cancelled to them
e)
The foreign companies
Telenor(Norway) invested around Rs 14000 crore in Uninor. Similarly Sistema
(Russia) invested Rs 12000 crore in Sistema Shyam. Some other foreign companies
also invested in the companies whose licenses were cancelled. What will happen
to this huge investment? They are pressurizing through their governments on the
government of india to protect their
investment.
The customers of
these companies whose licenses are cancelled will not have any problem since
they can migrate to other operators with the same number. But to retain the
customers with them, these operators whose licenses are cancelled are still
announcing concessions in tariff and saying that they will continue their
business(perhaps by participating in the auction afresh for the spectrum which
was cancelled to them).
But should the
companies whose license was cancelled due to illegal allotment be allowed to
participate afresh in the auction to
acquire spectrum once again?
The proper
course will be to cancel all the 122 licenses
given in 2008 which were declared illegal by the Supreme Court in its
judgment dated 2-2-2012, and also to
cancel the 73 licenses given during 2001-2007 and the 37 dual technology
licenses granted in 2007-08, since these 73+37 licenses also are as much
illegal as the 122 licenses cancelled by the Supreme Court. While doing so, no
entry fee should be refunded to them and they should not be allowed to
participate again in the bidding.
But if such a
ban is imposed on the companies whose licenses are cancelled/should be
cancelled, then the number of operators will be reduced and it will result in the domination of a few
companies. It will lead to monopolistic practices and increase in tariff for
the customers. Already the big telecom
companies like Airtel, Vodafone etc have started increasing the tariff. If the
present low level tariff is found making the telecom companies unviable, then
what is the way out?
All these
private operators are doing business with loans taken from the banks with the
signature of the government on the loan agreement. In such case, what is the
necessity for the private operators? These private operators are not fulfilling
their responsibilities towards society—rolling out their network in backward
and hilly areas, national security, provision of employment etc.
Since spectrum
is a scarce resource and a valuable national asset and public good, it should
not be given to the private operators for trading. The spectrum should be owned
and utilized by the Government for providing telecom services. The only way is
to nationalize all the private telecom companies. Such renationalization took
place in the telecom sector in some South American countries.
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