DCC approves Rs 3,050 cr penalty on Bharti Airtel, Vodafone Idea for attempted 'stifling' of Reliance Jio; telecom operators plan legal recourse
The incumbent telecom operators said they are exploring all options, including legal recourse, to protect their interest.
In October 2016, Trai had recommended imposing a total penalty of Rs 3,050 crore on Airtel, Vodafone and Idea
Airtel, Vodafone and Idea (now merged) were allegedly denying inter-connectivity to Reliance Jio
The DCC had last month approved imposing penalty on Airtel and Vodafone Idea
The Digital Communications Commission (DCC), the telecom department's apex decision-making body, on Wednesday approved imposing a cumulative penalty of Rs 3,050 crore on Bharti Airtel and Vodafone Idea for not providing points of interconnection to Reliance Jio.
The Telecom Regulatory Authority of India (TRAI) in 2016 recommended the penalty against Bharti, and what was then Vodafone Group Plc's India unit and Idea Cellular, saying the three denied points of interconnection to Jio, a move it termed as anti-consumer and aimed at stifling competition, Reuters reported.
The incumbent telecom operators said they are exploring all options, including legal recourse, to protect their interest, a PTI report said.
Vodafone Idea reacts to penalty in POI matter says, "We will explore all options, including seeking legal recourse to protect our interests." pic.twitter.com/3pVqFmDCjr
— CNBC-TV18 (@CNBCTV18Live) July 24, 2019
"DCC has accepted Trai recommendation on penalty on Airtel, Vodafone Idea. It will send the same recommendation to the competent authority in government for their decision," Telecom Secretary Aruna Sundararajan told reporters.
In October 2016, Trai had recommended imposing a total penalty of Rs 3,050 crore on Airtel, Vodafone and Idea (now merged) for allegedly denying interconnectivity to Reliance Jio.
The penalty on Airtel and Vodafone works out to be about Rs 1,050 crore each. In the case of Idea, it comes to about Rs 950 crore. Since Vodafone and Idea have now merged their businesses, the new entity Vodafone Idea will have to bear their penalty burden.
Both Vodafone Idea and Bharti criticised the decision.
"This issue pertaining to points of interconnection has been examined by the DoT, various parliamentary and judicial authorities with no case for any default established," Vodafone Idea, India's biggest wireless carrier said in a statement, adding, it will "explore all options, including seeking legal recourse" to protect company interests.
"Upon receipt of the formal communication intimating the levy of penalty, we will approach the appropriate forum. We have complete faith in the judicial process and the law of the land," an Airtel spokesperson said.
The spokesperson argued that the requested points of interconnect were provided within the prescribed time limits and were more than the numbers requested for.
"All these facts were presented to the authorities. It is, therefore, disheartening that those facts have not been considered while taking this arbitrary decision of imposing the penalty," the spokesperson said.
Trai's recommendation had come on a complaint by Reliance Jio that over 75 percent of calls on its network were failing as incumbents were not releasing sufficient number of points of interconnection (PoIs).
Vodafone Idea, in a statement, said the issue pertaining to points of interconnection has been examined by the DoT, various parliamentary and judicial authorities with no case for any default established.
"From media reports its appears that even the DoT committee examining the TRAI recommendations was not unanimous and in fact at least 4 committee members out of 7 had differing views on the subject.
"Further, the jurisdiction to decide any interconnection dispute between two service providers lies exclusively with TDSAT," the statement said.
It added that the Supreme Court, in a judgment dated 5 December 2018, clearly stated that proceedings under the Trai Act have not been concluded due to absence of findings on some key aspects.
"As India's leading telecom service provider, we abide by stringent norms of governance and compliance with all applicable laws and regulation while conducting our business in an ethical and conscientious manner. We will explore all options, including seeking legal recourse to protect our interests," the statement said.
The DCC had last month approved imposing penalty on Airtel and Vodafone Idea. However, before imposing the penalty, the commission decided to seek Trai's views on revising the Rs 3,050 crore suggested penalty, citing the "present financial health of the sector".
The Telecom Regulatory Authority of India, however, maintained its stand saying it is not in a position to modify its previously recommended penalty on the operators as it is bound by the provisions of the Trai Act.
Reliance Jio, built at a cost of over $30 billion by India's richest man Mukesh Ambani, offered free services for months after its launch. That forced its three rivals—Bharti, Vodafone and Idea—to cut prices and accept lower profits as well as sparking a wave of consolidation in the sector.
--With agency inputs
Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd which publishes Firstpost
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