Contested penalties: Why toothless Trai struggles to curb spam, improve quality

The Telecom Regulatory Authority of India (Trai) imposed penalties worth ₹45 crore in the fiscal ended March 2025 (FY25), according to data flagged by the Comptroller and Auditor General’s (CAG's) audit of the regulator’s financial statements. But Trai recovered just 3% or ₹1.37 crore in FY25.

That compares with penalties worth ₹2.7 crore and ₹2.5 crore recovered in the previous fiscal.

Telecom service providers are increasingly challenging Trai’s orders in the appellate tribunal. Unlike the Securities and Exchange Board of India (Sebi) and the Reserve Bank of India (RBI), Trai lacks a stronger statutory authority.

One fallout of the limited power is the regulator’s inability to address service quality issues and contain the menace of spam calls.

“Enhancing the enforcement powers of the telecom regulator has the potential to deliver tangible benefits to consumers, particularly by improving compliance with quality-of-service norms, strengthening grievance redressal mechanisms, and deterring persistent regulatory violations," said Deepika Kumari, partner at King Stubb & Kasiva, Advocates and Attorneys.

“A regulator with effective enforcement ‘teeth’ can drive greater discipline in the sector, reduce prolonged non-compliance, and create a more transparent operating environment for telecom service providers," she said.

Queries emailed to the Cellular Operators Association of India (COAI) and Trai did not elicit any response till the press time.

Trai's statutory powers

According to the Telecom Regulatory Authority of India Act, 1997, Trai’s powers are primarily regulatory, advisory, and enforcement-focused through directions. Its power to enforce orders is limited. And it relies on the Department of Telecommunications (DoT) for licence actions.

However, regulators like Sebi can pass binding orders independently.

The capital markets regulator levied a total penalty of ₹813.83 crore against various securities market violations in FY25, according to its annual report for the year. Sebi was able to recover ₹504 crore as part of the recovery proceedings, which include amounts from previous years. However, as of 31 March 2025, Sebi has a pending recovery worth ₹1.04 trillion, higher than ₹1.02 trillion in FY24.

Trai can impose financial disincentives for specific violations, such as failure to take action to curb spam, non-compliance with reporting requirements, and poor-quality services, among others. The total penalties imposed by Trai on telecom operators over the last few years have now crossed ₹150 crore.

Telecom operators usually challenge the regulator’s orders in the Telecom Disputes Settlement and Appellate Tribunal (TDSAT).

In January last year, the telecom operators even secured an interim stay from the TDSAT on penalties imposed by the regulator over the years for failing to curb spam. They argued it was not fair to punish them for failing to curb spam, given the delay in implementing long-delayed spam prevention rules. The case has been pending for a year, and the next hearing is scheduled on 27 January.

“Telcos have been going to the court even for regulatory penalty orders. This has actually diluted the effectiveness of Trai as a regulator compared to other regulators in the country," said Satya N. Gupta, a former principal advisor at Trai. “There is a need to empower Trai and give it the power to enforce penalties and also to grant licences. In fact, Trai should be equipped with machinery in line with the TERM (Telecom Enforcement and Resource Management) cells in DoT."

TERM cells are field units of DoT responsible for ensuring that telecom operators comply with licence conditions, network security, quality of service, and monitoring radiation norms, among other things.

Push for amendments

Trai has sought amendments to the law to improve its ability to regulate operators and recover penalties.

“Trai has been established under TRAI Act 1997, inter alia, to regulate the telecommunication services and to protect the interest of service providers and consumers of telecom sector. In order to ensure effective discharge of its functions under TRAI Act, 1997, the Authority has, sent various proposals for amendment in the TRAI Act, 1997 to DoT," the regulator said in its annual report.

An official, speaking on the condition of anonymity as details are not public, said, “Trai has proposed that in case any penalties are levied, there must be a provision to deposit 50% of the penalties by the operators. This is because usually the penalties are challenged in the Courts by the operators to seek a stay."

Trai has also argued for a change in its funding model to secure necessary flexibility and independence, similar to Sebi, RBI and the Insurance Regulatory and Development Authority of India (IRDAI). It suggested to the DoT that if a minor portion of the licence fees recovered from service providers is utilized for its operational expenses (administrative charges), the need for government grants would cease.

Regulator faces pushback

Last year, DoT also rejected the regulator's request to encash bank guarantees if the operators don't pay them the financial disincentives. Trai has also proposed that the DoT should allow it to have its own pool of bank guarantees to encash when telecom operators refuse to pay penalties.

In November, telecom service providers also opposed the regulator’s proposal to impose turnover-linked penalties of up to 1% for filing incorrect or incomplete financial reports. The government relies on these filings to verify operator revenues, compute statutory levies such as licence fees and spectrum usage charges, and intervene to ensure fair competition and protect consumer interest.

Reliance Jio Infocomm Ltd called Trai’s proposal for a financial disincentive up to 1% of annual turnover as beyond the powers granted by the Trai Act and “unsustainable" in law.

“The proposed 1% of turnover disincentive would therefore be punitive, unjustified, and open to challenge as a manifestly arbitrary exercise of power under Article 14 of the Constitution," Jio said in its feedback on 7 November.

The operator said the draft amendment lacks transparency, as it does not explain why the changes are necessary or how increasing financial disincentives will improve compliance.