Published: Sun, May 28, 2017
Research | By Chelsea Rogers

TRAI defends decision to impose penalty on 3 firms

TRAI defends decision to impose penalty on 3 firms

The company's strategy to hand out freebies to win over customers caught the competition by surprise, resulting in heavy losses for established players like Bhati Airtel, Vodafone, and Idea.

New telecom entrant Reliance Jio has said that the government suffered a revenue shortfall of over Rs 400 crore in FY17 on account of violation of license conditions by the incumbent telcos. TC had also sought clarity on the number of subscribers that Jio had on the date of the launch basis which the penalty amount was recommended and provision of law under which penalties were recommended.

It said that post its intervention Bharti Airtel, Vodafone India and Idea provided points of interconnect (PoIs) at much shorter notices (in some seven instances within two-three days) implying that they were capable of providing such PoIs without any delay.

The telecom regulator on Wednesday refused to reconsider its October 2016 order imposing fines adding up to Rs3,050 crore on the country's top three telcos, citing wilful violation of quality of service (QoS) norms possibly with the "ulterior motive to stifle competition".

ET had first reported on May 13 that Trai would double down on its stand against DoT's objections. "On the contrary, the testing can not be completed unless sufficient PoIs are provided". It said "the fact is that we have provided PoIs to Jio at an unprecedented pace despite the provision of 90 days in the licence".

Hong Kong Based financial services provider UBS AG has released its telecom report for the month of March, and have stated that Jio's aggressive and fast growth mode has slowed down.

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"Non-compliance of terms and conditions of the license under the TRAI Act, 1997 warrants recommendations for the revocation of the license".

On the point that Trai did not take into consideration incumbents' augmenting activities before issuing recommendations, the regulator said it did.

"We disagree with Trai's observations and believe that the penalty has been recommended on the basis of an incorrect assessment of the situation on ground", it said in a statement.

"However, on finding that the incumbent operators are not willing to provide adequate POIs to RJIL as per its projections and demand, the Authority had to issue show cause notices to the telecom service providers". The penalty break up for Airtel and Vodafone is Rs 1050 crore each and Rs 950 crore for Idea Cellular.

Trai's reply on penalties will go back to the TC, an inter-ministerial panel which comprises the Department of Industrial Policy and Promotion secretary, economic affairs secretary, Niti Aayog chief executive officer and IT secretary as members, which will take the final call. "In this context, the denial and delay in providing POIs when the QoS parameters were not being met can not be explained in any other manner but wilful".

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