INDIA BUSINESS WORLD - FEBRUARY 2007
The Month that was ...

DOT SEEKS NOD TO SLAP RS 400-CR FINE ON TELCOS

THE Department of Telecom (DoT) has sought the Telecom Commission's nod to impose a combined fine of Rs 400.15 crore on seven telecom companies including Bharti Airtel, Reliance Communications, Hutch-Essar and Tata Teleservices for failing to fulfil their roll-out obligations.

According to the DoT, these telecom companies, which held basic service licenses and CMTS licenses were allowed to migrate to Universal Access Service (UAS) Licenses, which stipulated that these players complete "90% in street as well as in building coverage within one year of acquiring the UAS licence". However, none of these companies submitted the requisite certification to prove that they had completed the stipulated roll-out obligations, states DoT's communication to the Telecom Commission.

The DoT has asked the Telecom Commission to levy a fine of Rs 7 crore per service area, where these companies had failed to fulfil their roll-out obligations. It has said that Bharti Airtel had failed to fulfil its roll-out obligations in 6 service areas leading to a penalty of Rs 42 crore, Tata Teleservices in 18 service areas resulting in a Rs 126 crore penalty, Reliance Infocomm in 21 service areas at Rs 147 crore and Dishnet wireless in 7 service areas at Rs 49 crore. Other operators include, Tata Teleservices (Maharashtra) which faces a fine of Rs 14 crore, Hutchison Essar South at Rs 8.15 crore, and HCL Infonet and Shyam Telelink at Rs 7 crore each, the DoT added.

These operators however opposed the DoT move to impose penalties for failing to fulfil their roll-out obligations. In their written reply, they have submitted that "the main reason for the delay in the provision of service was because of the delay in allocation of the frequency and SACFA clearances". They have also told the DoT that "in view of the present telecom environment of intense competition, the government may consider the removal of the clause on roll-out obligations in the licence".

Initially, the DoT had calculated the total penalty amount to be to the tune of Rs 406 crore. However, in August last year, the issue was re-examined and the fine amount was computed to be Rs 400.15 crore, sources added.