11, ఫిబ్రవరి 2012, శనివారం

The issues arising out of the Judgment of the Supreme Court cancelling 122 telecom licenses


                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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