New Delhi: The department of telecommunications (DoT) is divided over the legality of third-generation (3G) mobile roaming services that allow firms to offer high-speed connections in circles for which they didn’t win spectrum in the auction held last year.
Roaming agreements signed by Bharti Airtel Ltd, Vodafone Essar Ltd and Idea Cellular Ltd allow them to offer 3G services in each other’s circles. Some sections in DoT hold the agreements amount to spectrum sharing and are, therefore, illegal, while the operators are firm these are well within the rules governing intra-circle roaming.
“3G services are being provided by operators having no valid 3G service licences, by way of intra-circle roaming agreements with 3G services licence holders,” according to an internal DoT note that was reviewed by Mint. The 29 September note by the Telecom Enforcement Resource and Monitoring cell recommended that action be initiated against the operators as the arrangements were illegal. The action would be based on the Income-Tax Act as well as telecom rules.
The access services division, which looks into operational issues of the telecom sector, is itself unclear about the issue and has sought clarifications from various divisions, including those dealing with legal, finance and licence fee matters. It has also asked that if the intra-circle roaming rules apply, whether revenue reporting processes need to be changed.
Operators that have 3G spectrum pay revenue share to the government at different slabs. Others pay the percentage that applies to 2G operators.
“Whether such arrangements can be categorized as intra-circle roaming, spectrum sharing or MVNO (mobile virtual network operators)” is among the issues that need to be clarified, said another internal note, this one by the access services division.
Spectrum sharing refers to an operator using another’s spectrum, but building a network of its own based on that. Similarly, MVNOs use the spectrum and network of another operator, but offer their own services.
“There are loopholes in the policy. I don’t know if the operators went into the auction knowing that they could do this. That is unlikely, looking at the amount they finally paid for the spectrum,” said a Mumbai-based analyst with a multinational brokerage firm.
Airtel, Vodafone and Idea announced on 14 July that they had signed roaming agreements among themselves offering 3G services in areas where they did not win spectrum.
Similarly, Aircel Ltd has started offering services in five circles, including Haryana, Madhya Pradesh, Gujarat, Maharashtra and western Uttar Pradesh, where it did not win spectrum. The company has signed roaming agreements with Tata Teleservices Ltd in these circles.
The Telecom Regulatory Authority of India (Trai) is also looking into the matter and has sent queries to the operators concerned. In its reply to the regulator, Idea said the provision for intra-circle roaming in the licence agreement does not specify for which spectrum it applies.
Vodafone said in its reply that DoT was specifically asked in the pre-bid conference whether intra-circle roaming would be allowed, to which it had replied in the affirmative.
In a conference hosted by DoT in 2010 to clarify queries on the 3G auction, officials had clarified that roaming agreements would be as per bilateral agreements between operators as applicable in the unified access service licence agreement.
On 12 June 2008, DoT inserted clause 2.2 (a)(i) that permitted intra-circle roaming, enabling telecom licensees to switch over to an established operator’s network in a circle until their infrastructure was established.
This was aimed at enabling the new operators that had received 2G licences in January that year to start offering services as soon as possible. Interestingly, none of the new operators took advantage of the move, though state-owned Bharat Sanchar Nigam Ltd (BSNL) had entered into an intra-circle pact with Swan Telecom (now Etisalat DB Telecom India Pvt. Ltd).
According to a senior DoT official, the issue was sparked by BSNL asking DoT for a clarification on whether such 3G roaming was allowed.
Last month, Delhi-based Supreme Court lawyer Yakesh Anand filed a petition against the government through DoT, finance ministry, home ministry and Trai as well as the operators on this issue. Additional solicitor general A.S. Chandioke has till 30 November to present the government’s stand on the agreements in reply to the petition.
For their part, the telecom companies say there’s no breach of regulations.
Bharti Airtel’s spokesperson said the company is in complete compliance with licence conditions and that all agreements are as per stated government policy. The Vodafone spokesperson said that the arrangement to provide 3G services is in complete compliance and agreement with government policy and guidelines.