DoT affidavit stating zero loss

8/2/2019 DoT affidavit stating zero loss

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. . . 1

IN THE SUPREME CQURTOF IND IAI C IV IL A P PE LL ATE J UR IS DIC TIO N

SPE CIA L. LE AV E PE TIT IO N (C IV IL) N O. 24873 O F 2010In the m atter of:

. C entre for P ub lic Inte res t L itig atio n & O rs.Versus

. .. Pe t it ione rs

Union of India & Ors .. , Pespondents

CO UNTER AFF IDAV IT O N BEHALF OF RESPONDENT NO .1

I . S ita R am M eena. aged about 34 years, working ar, Asslsta-it DirectorGeneral ( AS I) , OE ipar tme~t otTelecommunlcatlons, G overnm ent o f India,S an cha r S haw an, A sho ka R oad, New D eihl 11 000 1, do hereby solemnlyaffirm and declare on oath as under:1. I am working as the Assistant D ire cto r Gene ra l ( AS- I) , Department of

T ele commun lc an cn s, G o ve rnment o f India an d am acqua in ted w ith', .the fucts of the instant case o n the basis o f officia l records. I am

, .icompetent a nd authorised to swe ar this Counter-Aff idavit.

A t the outset, the I eponen t denies each and every averment. ', .

contention and subm ission m ade by th e Petitioners in the S pecialLeave Petition as well as in the ir Applic atio ns fo r brin ging on re co rdadd itiona l docum ents. N othing contained there in should be taken asa dm itte d u nle ss e xp re ssly a dm itte d, in thi s Coun te r -A f fidav it .

3 . This Counter-A ffidavit is being filed for the lim ited purpose ofopp osing th is S pecial Leave Petit ion. The A nswe rin g R e sp on de nt


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" 2I" -.,

r equest s t ha t h e may be perm itte d to file a . fu rth er deta ile d a '< fic ia viLfso requ ir ed subsequent ly .

I. P RE LIM IN AR Y S UBMIS SIO NS4 . The Answer ing R esponden t subm its tha t F IR N o. R C-D . \1.200Q.A-

0045 da ted 21 .10 .2 009 has been registered by the ~B I underS ection 1 20 -8 o f the Indian Pena l Cod 'e read w ith S ec tio n 1 3(2 ) readwith 13(1)(d) of the P reven tion of C orruption Act 1988 againstc erta in u ~~ no wn offi91als o f Department of Telecommunicat ion.u nk nown p riv ate p ers 9n sl c ompan ie s a nd other'S. The prayer of tilePet lt i1mers before theiHon 'b le DelhlHlgh court w as that either the

. ; !

inv~stlgation should be monltore~ ~yi the C ourt or be handed o ve r toa Spec ia lln ve stig a~ ve - r:~ am .( at.p age 1 1 4 o f th e SLP ).

5. The lim ited question that falls for the considera tion of th is H on'ble .Court In this Spec.lal L ea ve P etitio n Is w he th er the H on 'ble Delhi.H ig h C ou rt w as ju stifie d In d l~mls sln g th e w rit p etitio n file d by th eP etitio ners. T he H on'ble H igh C ou rt has follow ed the judgem ent ofth is H o n'b le C o urt In . K l m g a 'N ima Lepcha v State o f S ikk im, reportedin (2010) 4 S C C '''51 3. and held that in IIg l,t o f. th e aforesaid

. judgemen t. it was. not in~lIne~ to exercise its .ex traordlnaryjuri sd ic tion f9r direct ing monitor ing of th e In ve stig atio n o f th e CB t.

6 . It is re sp ec tfu lly s ubmitte d th at th e H on'b le H ig h C ourt's judgementdeclining to e xe rc is e Its e xtra ord in ary ju ris dic tio n d oe s not ca ll forany inter fe rence .from this Hon'ble Court. TD e I~gal position is well

> settled th at C o urts w i l l no t Interfere with o r monito r in ve stig a tio nse xc ep t in ra re a nd e xtra ord ln arv c j~ cumsta nc es , whe re th e materials


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; . ; :.. 30/1 rec ord w ou ld clea rly e sta blish tl)a t O C fo rexarnpls) w itnesses are

. 'Ibeing th reatened, e vidence ,is be ing dest royed or the inves tigat ion i';;not being done In 'a proper m anner. That is no: the situation in thein sta nt c ase,

7 , E ven In the Specia l Leave Petition , the Petitione;'s have been unab leto poin t out any specific defic iency in the investigation and have on ly,made ,a vague and' defamatory allegation that "CBI h 3S had a,re pu ta tio n o f bein g p lia nt to the , Government at th e Cen tre " (a t

page 11 of the SLP ). S uch an a ll9gation 'can never form the basisfo r th is H on'b le C ourt to m on ito r tho inv es tig ation o f the C B I.

8 . It is therefore resp ectfully subm itted that on the above ground alone,. . .t his Special Leave Petition should be d ism is sed,9. H owever, th e Petit ioners have made severa l fa lse allegations

regard ing the ; po licy of the G overnment o f India in re la tion toallotment of 2G spectrum, and 'are trying to mislead this Hon'bleCourt . Hence, t hi s Coun ter -A f fi dav it s~ ts out th e c orr ec t position ini' .

: .. . ~relation to the said pulicy an d sequence of events in Ialation toa llo tment o f 2G spect rum . .

10 , There are 'broadly fo ur iss ue s that h av e b ee n ra is ed in th is m atter:(a ) The decision to r io t auc tion 2G spectrum and to m aintain the

same entry fee since 2 00 1;

(b) The a lleged revenue loss caused by th e a bo ve d ec is ion ; ,

(c) The alleged pre po neme nt o f the-cut-of date for receipt ofapp lic atio ns ; anJ


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4(d ) T he g ra nt o f lic en se s to a lle ge diy In elig ib le a pp lica nts .T h es e Is su es a re dea lt with In deta il below.

, ,o f mob il e commun lca tlonsand t o e consequen t a llo tmen t o f s pec trum

I!. SPECTRUM ALLOTM ENT AND PR IC ING11; It Is re sp ec tfu lly s ubmitte d 'a t th e o uts et th at th e Iss ue o f a llo tm en t

and pric ing of spectrum falls square ly }n the dom ain of ex ecutivepo licy m aking, and In w hich th e ~ co pe fo r ju dlc .la l re vie w Is highlyrestric ted. N onelhelese. the Issue Is dealt w ith on m erits in deta ilbelow.

12 . It Is r espect fu ll y subm i tt ed th at th e is su e rela tin g to a llot ne nt a ndp ric in g o f 2G spectrum needs to be considered !n light o f the New'T e le com Po llc v ( "NTP" ) 1999. th e o bje ctiv es o f th e te le co rn se cto r

' .

Identified by the F ive Y ear Plans and th e re commenda tio ns o f, TRA Imade from tlmeto t lma,.and se,tual exper ience, o f ope ra ti ons In thesector.

13 . It is Sl bmitte d th at th e d ec is io n to a llo w fre sh c om pe titio n in th e fie ld. 'was a s a -re su lt o f a 'd elib era te p olic y d es ig ne d to ' se rve th e g re ate rpublic good of increased teledenslty and cheaper ca ll ra tes. A fterln tro du ctlo n o f UAS ~ ic en sln g r eg ime , u nlim ite d c ompetitio n h as b eenin tro du ce d in p ub lic in te re st. Te ledenslt y a ls o has Increased to ahuge .ex tent. F urther,the annual fee receivab le by D O T has beenIn cre as in g y ea r a fte r y ea r a s s ub sc rib er b as e and ope ra to r re ve nuesh av e been increasing.

14 , ln so ta r a s teledensity is concen; ledi i t may be noted that in M archi '1

2 007 , rural tetedenslty was about 6% and tota' te 'edenslty w as about


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5

2100022000 ...20000 .. '"18000 .. ,.15000. . l4000 .-&.. . 12000.5, . . 10000 . . " ": ..... 0"S O O O ~.~. , , . . ,6000 , . . . , .'",


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_._--- .. -- - -~-.-.,--'''~-'-' .. , .. .~~.-. . . . " .. ~~~~

16, F rom the above, it m a y be appreclajsc that the revenue share of theg ov ernment h as been increas ir ig year to year, T ill M arch 2010, theGovernment has collected about R s. 77,933 crore under therevenue s ~a re re gim e. It is the largest, non-tax revenue of th eGovernment.

17 . It is pe rtinent to sta te that as a resu lt o f Inc :reased competit ion,callin g cha rges wh ich hovered at an average of Re. 1 pe r minute ( forlocal calls) have now :'come dow~ to around H e. 0 .30 per minute.T he concept of "per-seeend ta~i ff l ~has b ee n In tro du ce d by all! ..operators. It I s submit ted that s~6h to w ra te s V Y Q u i d not have come

, . ln to effect had th e new com petitors been ma,de to , pay spectrum'cha 'rges fa r in excess of wha t the orIginal players il 1 the f'e id hadpaid.

~8 . 1 submit tha t the present policy of grant of r.ew Unifird Access, ' -Service ( UUAS " ) Licences and ' 2(3 Spectrum Is a consistent and, .

t ransparent polic y o f th e Government since N ovem ber 2 0L l3 . T here >

has been no devlatlon In th e policy approved by the C abinet on 31s tOctober 2003. The above decision is based on NTP 1999. F iveY ea r P lans and TRA I recommenda tions from time to t ime.Es t~ blis he d p olic ie s re ga rd in g Is su an ce of lic ense, a lloca tion ofspectrim and cha rges t he re on have b ee n follow ed s in ce N ovembe r2003 by t he success ive Gove rnmen ts till date . T he c om ple te d eta ilsa n d facts b f Licensing of Cellular Mobile T elephon e Service( "CMTS ") ! Un if ie d ACC,;dSS Serv ic es ("U AS ") L ic en ce s a nd a llo ca tio n

; .o f s pe ctrum a re s ubmitte d in d~ta1l1below.,

6


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7fA . Background i

i :)1 9. T he t~lecommunications service sector h istork::ally operated in a

monopol is t ic environment w ith the sovere ign G overnm ent hav ingex clu siv e p riv ile ge to work, m alnt~ .ln a nd op era te te legraphs.Cons~~quen '! :Y I . ll resources were"a lso ma in ta in ed and ope ra te a byth e dl3partments o f the. government. This practice had been thetra ditio n a cro ss th e, wo rld . W ith the g ro wth o f the w orld e co nomy,this sec to r was II be r~ lI se d over a p erio d of t ime In various parts ofth e world. E ac h c ou ntry , de pen din g up on its e con om ic condlt lcns..opted for the ex pansion of te lecommunications service by way ofp artlc lp atlo n o f p riv ate s ec to r s o a s to p ro vid e ~ ffo rd ab le s erv lc e toI ts peop le .

20 . The N ationa l T elecom P olley, 1994 for the firs t tim e opened up th ete le ecm serv ice sec to r fo r private sector part icipat ion. A true c op y o f,the , re levan t ex tracts . of NTP 1994 . Is annexed here to asAnnexure R1 1 .

21. After the llberallzatlon of the t~lec6rn sector for access services, withth e comin g o f p riv ate 'o pe ra to rs , ;th e field w as broadly divided intofixed line providers (b as ic se rv ice s) a nd m ob ile operato i S. Whilebasic service, operators did not require any ei~rmarking of m ajorchunks o f spe ctrum (except for WLL services in C OMA technology in800 M Hz band), CMTS service providers did require specif ic, . ,earmarl< ln g o f s ce ctrum ln 900 and 1800 M H z bands, also calledGSM spectrum, This spectrum for CDMA and GSM technology iscollective ly know n as "2 G spectrum". Sub se qu en tly . th e E x is tin gBasic and CMTS o pe ra to rs were p erm itte d to rn;grate to the U nite d


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8,.Access service license (UASL ) regim e and new access serviceslicence were to be awarded In the U AS L category only under whichb oth b asic a ,.d m ob ile servIce can be provided.

22 . The l icensing ofceilLlIar services was done in phases. In the firs tphase, in November 1994,_ m e C ellu lar M ob ile T ele ph on e S ervice s("CMTS") l icences were awarded In.each of the four Metro cities ofDellll, M umbal, Kolkata and C hennal. L lcensoswere awarded to Joperators based on tlie ir satisfying a predetermined s et o f c rite ria .

. I . . t , : ,The l icence fe e payable by each operator w as also predeterm ined -1 .that is , there was no bidding precess, S pectru"!' charges and royaltyfo r u se o f s pe ctrum were t) syable sepa ra te ly .. .23. In th e se co nd p ha se .J n December 1995, two CM TS L icences wereawa rd ed In 1 8 te le cem elrcles based on a bldding process. T he bidswere for the I !cenc~ fe e amo un t, wh ich was 'sp'ead over a 1 0ye ar.,licence period. The spectrum aH ocation w as assured and there wereno separate upfront' charges for spectrum . H owever, a separatew ire less operating licence was' to be obtained a nd a nn ual sp ectru musages charges were payab le sepa ra te ly at applicable rates. Thesuccessful operators had a duopoly - the understanding was that fo rthe duration of the ir license, there would be n~ otherr-pe. ators inth eir circle s. H ow eve r, th e rig ht o f th e Governmen t was reserved too pe ra te th e se rvice s a s th ird cp era to r.

2 2\.. T enders were also; invited in January '1995 for award of B asicS ervic e O pe ra to r ( " s s o n ) licenses again based on bidding fo r

i -license fee payable over a period of 15 years. B asic Service;


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{,..- .9

llcen ses w ere granted .to five companies w ith an effective date as. t .Se'ptember 1 997 and:' toone more company w ith e ffective dale

: M arch 1 998 ,

. 25. W ithin a few years, It ~as realised b y a il c on ce rn ed that th e serviceproviders had m ade. very h igh 'b ids and huge Investm ents andco nseq ue ntly th e cost o f th eir operat ions, be ing passed on to th econsumers was very h igh . The .hlgh ea ll c ha rg .e s during th e I nitia l.era of ' ,r lva t lsa t lon are well known, As E I result, the business did notdevek p to the ex pecte d le vels. Commitments fo r h igh license feec ou ld not be honou red because of I nadequate revenue generation.

26.. . Thus the licensing framework of N Tp 1994 fa iled to achieve itsob ject ives because It co', ;cen trated o n ma xim iz in g revenue stream. ,a n d no t o n lncre ased teledenslty, g r o W t h o f the te le com sector andthe adV antage of technological advances being passed on to the: ,

."., .. .consumers. .large capital resources had been Invested by th eprivate l icensees In the te lecom sector and their non-viability was. 'a ffe ctin g th e d ome stic an d fo r~ lg n :~ na nc ia lin sM u tio ns fu nd in g th eprojects. Th is In turn was affecting the viab ility o f the telecorns erv ic e I nd us tr y its elf. ,It was evident that s ome p olic y-le ve l c ha ng eswere requ ired .

8, The creation o f TRAI27 . In 1997, th e T ele com R e gu la to ry Authority of Ind ia A ct was enacted,

w h i c h created. th e Te lecom ' Regu la to ry . Au thor it y of India ("TRAin).The functions of T RA I, C iS sp eC ified b y Sect i~n 11 of the A ct (asam ended In 2 00 0) are as follow s:


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10II(1 ) NotwW )standing a ny thin g co ntain ea in the In dian. T ele grap h A ct,1 885 , the fu nction s of th e A uthority s hallbe to(a) m ake recomm endations, either su o motu or on a.request from the licensor, on the follow ingm a t te rs , n a m e 7 y :=

(I ) ns (}d arid tlm lng for introduotlon of newsert/oe provider;terms liInd condltloris of l icense to 8 seNleerrov'der; .( if)

I .It .It *P ro vid ed fu rth er th at th e Cen tra ! Government shal l seekthe recommen'd~tlons of the. iAuthority in respect ofmatters specified, In sub-c /auses (I ) and (II) of clause (a )o f .th Is sub.:sectlon I n respect of new ile en ce to beis sued' to a se rv ice p rovider and the Autho rity s hallforward Its' recommem:lations within a penoa 01 sixtydays from th e da te on which that Government soughtthe recommendations. '. . .28 . O n 2 0.11 .1998 , a H igh L eve l'G roup on Telecom' was constituted by

the oovem ment to . m ake recom mendations on fo llow ing:

(a) P roposed new teieccm 'polley;( (b) Issues relating to existing lleensees of basic and cellular

services and suggest appropr iate remedial me as ure s w ith inthe f rame wor k o f th e new te le co rn policy;

(c) .Issue s re la tin g to tQ e T R A:.

C . . T he N ew T ele com Policr 199929. The recom mendations of the G roup ,on T elecom on changes in th e. . i.! -.te lecom policy and to resolve the problem s of the ex isting opera tors

: 'w ere c on sid ere d by ~the U nion Cabinet who approved the NewTelecom Polley 1 999 (N TP 1 999) which Is e ffe ctiv e fr om 01 ,0 4 .1 99 9.The objective of N TP 1999 is to facilita te investm ents and


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11 , J ;: ,: . t. '....'com petitlon In the telecorn sector. I~s thrust Is to create a m odern

, a nd , eff ic ient telecot1 ]m~nications infrastructure taking into account' , ! ,s" ~,!",~t~ ,.!: ~~t~'::!I~';.:Ii...;~ :'~.~~~ - '~ M , ,~ ~ . ,~ t , .the convergence o f IT ,~media , 'te la com ' and consdmer electronics.and thereby propel I n e l l a In to b ecoming fJ O IT su pe rpo we r,Reso lv ing th e problems of existing " ,1 ce ns ee swa s a ls o envisagedund er-the p olic y; It w as also' 'I n th e l~rger pub lic in terest. N TP 1999is the bedrock regard ing Issuance of llcence and allocatlon ofs pe ctrum fo r a ch ie vin g th e o bJ ec t!v e o f a va ila bility of a ffo rdab le and

, "effective c om l'l'lu nica tlo ns fo r th e c itiz en s w hic h :s a t th e c ore o ( th evision and goal of th 'e teleccrn policy;, A tru e co py of th~~relevante xtra cts o f N T P 1 999 Is a nn ex ed h ere to a s A nnex ure R1'..2.

30 . N TP '1999 at paragraph 3,1.1 provided a s follows:The entry of mQf'e operators In 6 s ervice ere s hall bebased on the recommendatIons of the TRAI w ho w illreview this as required, and no fater than every tw oye~ rs , ' "( ~MSP ope ra to f"$ w o uld bfl re quire d to p~y a one tim eentry fee. The ibas is ( or d fJUJ f;m ln ing the en tr y fee an dthe bas is for s election of ~dditio na l o pe ra ro rs w o uld berecommended by th! TRAI. Apart from the on e t imeentry fea, CMSP ope ra to (s w o uld also be re qu ire d topay licence fee based on a revenue share. If isproposed that/he appropriate level of entry, fee andp ercentage of i wenu s hp re ,a rra ng emen t fo r different, service erees W O Uld,/;le recommended by TRAI in atim e -b ou nd ma :n ne r. k eepin g in view the objectives oft f7e New Tele .om Pol icy .

31. In 'July 1999, the C entra l Government a ls o d ec id ed in favo ur ofmigration of ex isting licensees' to the revenue share regime ofNTP 1 999.. A ccord ing ly, a m igration package for m igration fromfix ed license fee t o . revenue share regim e was offered to ex istinglicen see s, e ffe ctive from 0 1 ,O~ .1999 . U nd er th e m ig ratio n pa cka ge


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-_.~--~.---...-- - _ ~~~- p,-~_, .... "" ... .. ,._. _ _ .. ----.- .. ,. _,,,,,_,. r__ ... .__,_"... .. .." e~ __,..,, . . ' .

12 'exist ing l icensees had to forego their duopoly r ights ano addit ionalo pe ra tor) w ere inducted In a multi poly regim e. 1\1 1he exist ing basic.an d cellu lar o pera tors m igrate d to the revenue shar ing regi116,

32 . T he Centra l G overnm ent PSU s v iz . M TN L and SSN L were alsog iv en C M T S Licences in 1 999-2 00 0 asthe th ird CM T S o pe ra to r.

33 . : . .It is re levan t to note Ithat even B .t that tim e, the decis ion of theIG overnm ent o f Ind ia ~ttracted som ~. adverse com ments from the

C om ptro lle r a nd AUdlt~rGe~eral ofln 'd la (ilC AO "). In Its R eport N o.6of.20 ( 0 - P&T , In the specia l A u d i t find ing In respect of l icensing of. ,te leeern services on "p,a ckag e of con cess ions to existing cellular and

I !,basic cellular opera tors" In the ' year 1999-2000 under N TP 99,I I aGsevernladverse aud it observa tions were made . It is w orth n otin g th at

the steps referred to in th is rep ort w ere co nsc ious p olicy dec is ion s o f. .D oT to boost th e g ro wth o f the te lecom sector and ' to "ba il ou t" theope ra tors In the T elecom S ector who were re po rte dly exper iencing

( ~ .f inancial distress on account o f 'h igh auction prices and lowerdemand t rajectory. However th e CAG in its re po rt severe ly criticizedth e d ec is io ns fa ke n then a nd h ad mad e s ev era l c ritic al observat ionssuch as:

IiIfjI"1.,.,

DoT g ranted a c omp rehens iv e pac kage o f" c once ss io nsand offer of'm igratlon 'rom ' fix ed licence tee regim e torevenue s haring regim e u ri('ier NTP-99 to the existingl icensees of . cellular mobile. arid bas ic setvices .byaccepting their pleas that thefr projections of market.s iz e had gon.a w rong. The above presumption w as notcorrect to' th e extent t h a t subscriber base o f cellularl icensees in me tros was- saYlers/. t imes hig/ler than theirprojections,' in telecom ' cirq les , incorrect comparisonsw ere used to show that actual demand for cellularsetvce: w as very Jow vis-awis expectGtions of thelics ns ees , F urther, no detailed study ebou: the fin anCia l


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~.f ',' 13via bility o f th e p ro je cts ' o f ba,s ic se rv ice lic en sees wasma~. 'DoT did not charge, any onetime entry fee from the~x is tin g lic en sees ,: fo r m ig ra tk ?n . to NTP -99. Outstandinglicence fee ha~ ~eefl treated as , one time entry feethough NTP ~ 99 pro vides fo r chargin g 0/ one tim e entryfee In eddltlon to licence fee. This led to J 1 U g e revenueloss to the government. It Is'dlfficult to a ss es s the los sat thIs s tage In the abs ence of TRAl's guldl~lInes.G,overnment Is sued o ffe rs of m igration to N TP 99 in E Ipremature manner w(thout (I ) finally. c le cfrlin g th fJquantum o f ~ '- evenue sha re cha rgeable B . ' 3 l icence 1ge ,( I Q denning the gross revenue and (III) f inalisingmodalities o( verificstlon o f g ro ss reven ue o f lice ns eesand- pre sc rlb ln g f9 ,co rds ~o b.e main ta Ined by eachlicensee to r assessment o( governmen t s hare . Theundue has te shown In is s u7ngoffe rs o f m ig ra tio n w i th ou tfinalis ing neces sary modalitie s Is frSU{lht w i t h th eserious risk of frauds and may also lead to demand fo rmore concessions to licens ees In tutiu on slmlJargroundsThe decis ion for m igration of ex is ting licens ees fromfix ed licence fee regim e to revenue s ha rin g re gim e hasbeen taken on the' basis of the adviCe of AttorneyG ene ral that cont inuance of thes e licensees under tnex is ting raglm e though legally p os s ib le , w o u ld c/ealeserious financial problems . . No s uch apprehens ionswere expressed by ' expert G roup onTelecommunications (Gon headed by DeputyCha irman P lann ing' Commis s ion, w ho was in a be,"ter'position t o make such e$sessment. (;1 0T did 110trecommend s w itchovet by , e xis ting licens ee s to NTP ,9 9after s tudy of financial conditions of the pmjects of theex is t ing l icensees prepared b y S te p. II ..~

D oT had in response to the sa id A ud it R eport. m ade ava ilab le to,:, 1 .C AG a para -w ise r~p ly w i t h a complete perspect ive on th e pol icyd ec is io ns , ju stify in g th e need fo r such a m ig ra tion package to enablemigration of existing basic and cellular service l icensees fromcornrnl'ted fix ed annual license fee to revenue sharing regim e andbring in rnultlpo ly regim e under the .m ig ra tio n p ac ka ge u nde r w hic hth e I ic:1sees gave away the ir righ t to opera te under a du op olyregime during th e va lid ity o f th eir l icenses. It is a w ell re co gn iz ed


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-- ,-, .. .- - - -- -. , -- .- -- -. ,. --- -- . .. - . ._- - .._ .- . .. . _ _-. " ' .- -'C~- '~" __"~"". _, ,_, .,_. ,. ._ . .. .. .. , . ..._"

14fact that the growth of mobile services started only ther safter and

tariffs started com ing dow n making 2G mobile services affordable byth e g en er al public ' and not regarded any more as a premium serviceo nly fo r ,the few who could afford I t. I t Is further re levant to note U ;a tafter the sa id report was submitted to P arliament, no decis ionthereon was taken b y,th e PAC ., '

34 . In September! Oc to be r .2 0 01 , based on TRAi 's recommendat ionsand approva l of the G overnment, 17 new L icenses were Lsued to 'private com panies as the fourth ce llu la r operators (one each in , tMe tro C itie s and rest In 13 T ele com C irc le s) . T he se lic en ce 's w erea w~ 'rd ed b a~ ed on bidding fo r upfront entry fee. The al otment ofspectrum was- assured f.under the "?ence and no upfront fee wascharged to r th e spectrum. Annual l icence fee and spectrum chargeswere payable separa te ly a t p resc ribed percentage of A djusted G rossRevenue ( "AGR") .

35. A comparis on of Entry Feefor ,1'\ 2 n~ an d 4th CM TS licences is

,"-'" ' .4_~41'\"._"O"":_.'"

- . . - ::. . . . .~.,. '" " "" '!- :. ; ." . ,. . ." -~. . . ,"

encloi ed at Annexure R1 -3 .

36 . O n 25.01 .2001 , the g uid elin es fo r issue of licence for basic servicesunder N TP 1999 was announced based on the recommendations of

. T R Ai, wherein the licensing of basic telep hon e service w as op en edon continuous basls on rece ipt o f app lication and sub ject tofultilment o f e li gib il ity cond iti ons. As pe r paragraph 26 of the said

'. j .' guidelines, the licensees were to be a llocated spectrum for w ire less, ,. I I faccess system in local area o n flrs t-e om e- flrs t- ee rv eo b as is . Based

on these guidelines, 25 B asic Telephone S ervice 'licences were


15/48

,",

(

J , . . .

, , 15

issued. A true copy of the re levant ex tracts of the said 2 0 0 . 1guidelines Is annexed hereto as A n nexure R 14 .

D . Objectives of the 10th an d 11 th Five Year Plans,37 . In 20 .0 .2 , the 10 th Five Year P lan (or the p~rjod 2002 -07 was

announced. It m ay be n ote d 'tha t th e F iv e Y e arP la ns a re p re pa re d~y the P lanning C omm ission and apprcvsc by the N ationalDevelopment Counci l . headed by the H on'b le P rim e M inister. Itcontained several lnltlatl~esl action points for the telecom sector.The ImpC lr ta ,n to ne s among th ese a re a s fol lows:(a)' .The telecom sector needs to be treated ;3S an In frast ructu re

sector fo r th e nex t d ec ade.(b ) Gover nment 's ' b ro ad polley of taxes and regulation for lhe

te le com s ecto r h as : to b e 'p romo tio na l In n atu re .(c ) Revenue gener at io n should no t be a m ajor determ inant of th e

macr o polic y governing the-sec tor ., '(d) The Guiding' P rin cip le s o f S p ec trum Po lic y u nd er 10lh plan are

that "Spectrll~' pollcy needs to be prom otional in nature;re venue con sid era tio ns p la yin g a seconda ry ro le ."

(e ) K eeping' in line wit,, ' the policy adopted by most of th eprogressive administrations,in th e w orld, the llc en ce fe e n ee dsto be aligned to the cost of re gu la tio n a nd a dm in is tra tio n o fUn ive rsal Se rv ice Obligslion ( "USOD).


16/48

.~" 16

(f) Specific planning w ould be requ ire d to prepare the grounds for .a mul ti~opera~or system t o d eve lo p and th e su bscribe r ba se toexpand w ithou t Imped iments ,

(g ) The I nc id en ce of licen~e fees In the fo rm re ve nu e share andspectrum c ha rg es h as to b e g ult;le d b y th is p rln clp le . A s partof the promot ional policy, there Is need f f . 1 r the TR/,I to worko ut a fre sh th e r ev~n ue shsnUlndUSO regime.

A true copy of the relevant extraqts 9f the 10 1 t Five Year Plan is,a nn ex ed h ere to as A nnex ure R 1& .

38 . In the ' 11 lh Five Y ear P lan (re leased on 251h JI.Jn9 2 00 8) also th eGovernment continues to trea t Telecom as infrastructure sector. . .S om e of th e pro motion al policies of the Governrrsnt in th e T e le com. ,Sector over a period of t ime as acknowledged ill -the E le ren th P la nd oc umen t fo r, g iv in g a boost to th e s ec to r, in clu de th e fo llo win g:

"

(a ) National Frequency Allocation P olicy 2 00 2 w as e volved .. .(b) G uide lines for U nified A ccess Service licence reg ime were

Issued on 1 1 "' N o vembe r 2 0 0 3.(c) FD I ceiling has been ra ised to 74% {elr v ario us te le com

services.

(d ) A ccess service provider ca n provide I nte rn et te le ph on y.Internet servlcest and broadband services. T hey can use then etw ork o f NLD/ l lD service,


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.{ 'Ii 17.-J .'

(e ) Prior e xpe rie nce in te le com sector is no more a prerequisi tefo r grant o f t elecom se rv ice l icenses.

(f) A nnual license fee .for N LD . IL D licences has been reducedfrom 15% to 6% of A djusted G ross R evenue (A GR ) with effectfrom 1 J an uary 2006.

(g )O elicens lng o f ~ .4 0-2 .4 83 5 G H z frequency band for indoora rid o utd oo r use and 5.15-5.13 G HZ frequency band forIndoor use.""';';~"'~l:'~i~~~


18/48

f , : 18India through various policies (e .g" N TP 1994 , N TP 1999,C on ve rg en ce . B ill), t~ ;h no lo glca l d eve lo pm en t, marke t tre nd s.Internat ionaltrends, th e need t o acce le ra teg l'ow th o f te lephonedensity, pub lic ' in terest and for the proper conduct o f th eServ ice /telegraphs , "Un if ied L i cens lngN r eg ime shou ld be in itia ted fo ral l se rv ices cove ring al l geographical a re as u sing an y te chn olo gywi th in ' sl x months. A s a . :breparatory step, Unified Access Service

! .'._ : fLicense ( "UAS L ") w lll b e'lm p !ement~ d fo r a cc es s services In eachcircle.

42 . With regards to entry fee for U ASL regim e, TRA I d elib er ate d 01' \. , ' " , . , 1 . - . - 1 1 ' ; , , , , \ . ; , 1 .. . : . . ,1'" .:.v;"~.$" -, .."H i";~:llr !;;jt.~ ,. '. '.va rlo~s ~~ tions 1 M t h e r~ f .Om~~nd~t i~~Sd ~ t e d 27 .10 .2003 . These. . ivarious. options I nc h: ld lnd .t he opt io n o f 'A u c tio n ing ' fo r en tr y fee ofUAS l icence were d iscu sse d In Its re port. T R AI re co rnme rd ed thatfo r fix in g th e 'e ntry fe e fo r mIgrating to U A SL Reglm e, the entry fe efo r fourth cellular operators shall be the entry" fee fo r mig ra tion t oUASL R egim e. A true copy of th e r ele va n t e x fra cts of the T RA Ireccm rnenoancna da ted '2 7.1 0.200 3 are annexed hereto as. A nn ex ure R 1 7 .

43 . Paragraphs 7 .15 to 7 .19 of the TRA I recommendation dated27.10 .2003 are ex treme ly re levant an d are reproc'uced beloW.

7 .15 To decide th e benchmark for the sntry fee forUnif ied Access L,.Icensing Regime t hr ee a lte rna tiv e scould be cons idered w hich are dis cus sed in thesubsequen t par swaphs .,7.16 The firs t altern,ative 'cpll/~. bfJ inv .itin g bids (10mex is t ing opera to rs as wel l a~ f~ m the nev: prospectiveUn if ied Acces s Licens Ing O per~ tors . This is possibleS i n o 2 add it iona l spectrum i s ' , now being mC3de a vailableb y lv 1in is tr y of . Defence. a rid the exis ting con trac tualcommnmente to existing cellular and W L L players c.an .


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e- ' 1 Deas ily be m et, leaving out a balance for more plajiHs.The benchmarks fix ed throu gh this proces s wi l l be up-to-date based upo'n the current market sifl ., 'a(ion and wil lb e d O ? 1 3 through , a tr a( Jsparent. p ro ce s s, The p roblemsassocIated w ith th e biddin g proces s are as follows:

I

i) The fix Ing of the benchm arks through a bloc ingprocess could be tripre time c01l!wm;ng andhence delay the Implementation of Un/.JedLicensing.ii) W h ile in vitin g p ic ;J sthe q ue stio n w i ll b e wh eth er i tshould be done w Ith spectrum or w ithout anyspectrum, I.e. only fo r migration to U nified

Licensing Regime. If the bids are Invited wi thouts pectrum , the n ow pros pective U nified Licensingoperators will no t be able 1 0 rol/ out th eir wirelessservices in the abse.nce of spectrum. If th es eparate bids are Invited for U nified Licens ingand spectrum , the. bidding process w ill becom eeven more time cons um ing and com plicated. Incase additional s pe ctrum Is g ive n for U nifiedLIc en sin g q pe ra tors , th e eXis tin g o pe ra to rs , w h ile. mlpret lne t o . . tJnlfled Aooes$ L lo en sln g Regime,. m ay als o ;em and additIonal s pectrum w ,hlch m aynot be available Immediately . This wil l stallm igration to the Unified Access LicensingRegim~.

. . . . .! .'.. _ .

. .iii) U nles s . the revised Ispectrum pricing andallocat ions guldelines .a r e finalis ed, there is noguarantee. that the tsp~ctrom w ould be madeavafJable (0 ex is ting ope la to rs will ing to migrate tothe Uflified UcensinqRegime. .Cons!dering a/ l ,thes e problem s, the Authority is of theopinion that thf! b i d d i n g process fo r fix i/1g up of thebenchmar ks fo r..m ig ra tio n - to . Vn ifie d L icens ing Reg imemay not be p re fe rable .. . .7.17 T t l G second alternative could be that bas icservice operators wilting tomigrate to Ur1 if ied AccessL ice ns in g Regime sho !J ld p ay th ,e differencl~ in entry feeof average of 1 s t and 2nd cellular operators and entryfe e paid by Bas ic Service O perators . This argum ent isn o t sastainable due t o the followIng reasons:/) CMSPs in pre NTP '99 era before migra tion didno t pa y an; lic en .se fee (revenue share).Ii) 1 st and 'J : c J CM SP s got the advant.3ge of early .entry t o the market i n aduopo !y regime.


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" 20

Some of tile operators have said th at th ey a re in cu rrin glosses. In t hi$ bus ines s lo s ses B r e incurred init iaJly, e.g.,Or~nge, one of the largest mobile operators in UK.,took alm os f' s eve n years to break even. even in Indiasome of the Service.' pro~'iders have s tarted m akingprofits. A number of s tudiE S have show n that even atp re sen t ta riff le ve ls the a d,jition of new s ubs crib ers is,prof itable.4 \ Q _ .~~~ ~~'" ? ~!f d~~~ ~~ I I~~~ rm~g~~a~~ ;h :~ : f, ~~ : s : h~g :n~~ ::: ~ ~ I~< ~ , the n ew U r.J fled:A cce ss L ic en s in g Regime . asps "I ./~ \""" w ould pay t he d i~ rence o( ~ he f ourth CMSP 's e xis ting VI'-\...J- ~r~ entry fee and the entry ' fee p e r f ! by them. . It may be"-.;j '-~' a T recalled thC'!t,even In the pas t,: entry to cellular and' 1 ' 6 ' ) '? '\ b as ic s ervic es h as been orj fixed fee ba sis , e.g ., for, ~ . / metros In the tase o f e etlu /s ra nd fo r th e s ec on d 830. ,

.. . ~ " , , , , , \ ~ \ ) - -: ; f ' - / ~ 7 . 1 9 It is recommended that the 3 rd alternative as ..".,.,(J /".,~ .,> mentioned in par,a-i".'18 ~ bove m ay be accepted fo r ~.-c.JI\y e ~ q fix ing the entry fee for m igration to Unified Access t . s ( ~V " 1 .; x . . ~'',.c.f'' L icens ing reg ime l( or Bas / cana eellu la r se rv ices at ffleG~._\j~.~v. circle level. ' : , , \ \ ' ~0.~. . . s > ~ . . Th u s, TRA I c o ns ld ;,e d ; nd r e c o m m e n d e d " ga ln sli lle a u cl lo nl ng 0 1 6 -. C _ ' 1 / spec.trum . The TR AI recom mendations were placed before G oM ~ r _. .: ?)(G ro ,u p o f M in is te rs ) o n 30.10.2003. T he recommendations of G oM a .~

were considere'd bY ' th e C a bi~ et o n 3 1.1 0.2 0.0 3. A s per th e C a bin et /"decision 'd ate d 3 1 .1 0 .:2 0 0 .3 , th e re commenda tio n s of G roup of

'" .Ministers (GaM ) o n T ele com matte rs c ha ire d by the then Hon'b leF in an ce 'M in is te r, in te r-a lia , o n issues' as quoted be low wereacprcvec:

, " The scope of NTp99 ' may be en hancl:d to providefo r l icensing of Unifie,d A cc es s S ervice s .fo r b as ic a ndcellular . licence services a'nd unif ied Licensingcomp ris in g a fl' tefs com s ervices . D e,oa rtm en t' ofTelecommunications may be' authoris 'd to i ssuenecessa ry adden 'dum to NTP 9 9to th i~ e tte c t.Th e re commenda tio ns o r TRA! w ith regard toimplementation of t ile ' Un1f ie 'dA'r;cess Licensing Regimefo r basic and cellu la r se rv ices may be accep ted.00 T may o e autboris ed to finalis e til:; details ofimplementation with the approval of the M in is ter o r


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21/ -,~

Commu~icat lons & IT in this . regard Including thecalculation of the en try fee dependin g 0,1 the date ofpaym ent bas ed on the prinCiple given 'by TRAI in itsrecommandat lon~.If new services' are introduced as 8 resun ofte ohn o/ogic al adv an cem s 'n t, w h ich req uire addit ionals pectrum over a nd .a bo ve th e spectrum already allottedI contra.ctad, al/oeatlon' of 'such spec/rum w ill beconsidered on p ayme nt o f a dditIo na l fefl o r charges;th es e w ill b e determlned as pe r guid elin es to be e vo /w ' din consu lt at ion w I t h TRAI. .

A true copy of th e commun ic ation' o f th e c ab ln et Secretariat dated, '03 .11 .2003 communicating the C abinet decis ion da te d 31.10.2003

along with the N ote for the Cabinet are snnexed hereto asAnnexure R1 8 ( C olly ),

45. Based on the above Cabinet decision, an addendum to NTP 1999. . . .. . .was notifie d on 11.11.2 '003. Also o n , 1.11.2003, "Gu ide lines. fo rUnified Access (Basic & Cellular) Serv ices Licence" w as Issuedwhe re in Gove rnmen t h ad dec 1ded to mov e towa rd s a Un ifi ed Access.. Serv ices Licensing re gl; "e . T h e g u l d e ; ' n n e s , Inter-alia, others st ipulate

1that "W i th the is sue. of the se .Guid~Jir les j a ll app lica tions = newAccess Se rv ices L icence shall .be in.the c ate go ry o f Unified AccessServices Licence~i' It r j 1 a y bencted thann keeping w ith the objective

. ;o f in cre as in g comp "tit!o n and te le de nsity , th ere w as n o requirementI

of prior experience In ,the te lecom sec to r, to apply for a U AS license,. . .." .This is recognised in the 1,th F ive Y ea r P lan also, wh ic h h as a lre ad y

been "extracted above.

T rue co pies of th e ad de ndum to N TP 1 999 and tile UASL guidelinesdated 11 .11 ,2003 are annexed hereto , as Annexure R \9 andA nnexure R 11 0 respecnvely,


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.,... 2246. O n 17 .11 .~003 , DoT decided to ~ccept and process t.le U AS L

applications sim ilar to the m anner adopted for Basic. ServiceL icense. O n 24 .11 .2003 , then H nn'b le M OC &IT approved tileapproach of grantlng .of U A S IIcenoes on F ' l rs t Come.F l rs t .Served

. .basis as the announced g uid elin es ha d made it open for newl icences to be Ise ue d on ;contlnuous basis at any t ime and spect rumwas t o' b e a llo tte d sub Je c~to avallablJlty.~ Th is In e ffe ct Impl ied th at a nIiappllcnnt who comes first wH l be gr~nted th e spectrum firs t s o it had, .r .re su lt ed In g ra nt o f 'lic en ce on F lrs t Come -F lr st Se rved basis . It is

I.

re spec tf ully submhted that once It had been decided to acceptapplications on a con tl~uoUS bas is , there was In fact no other . fa i rme th od o th er than Flrst-Come-Flrst-Serve.

47 . Thereafter, tw o Impo rta nt s ets o f re commen da tio ns w ere m ade byTR A I on 1 3.0 1,2 00 5 an d 1 3.0 5.2 00 5, w hic h are ex plaine d b elow .

48 . TRA I In Its recommendations on. 'U nlfied L icensing ' dated13!01.2005 envisaged convergence of lic en ce s f or various Telecomservices and, 8r9adcastirig serv ices an~ .prog res .'i ive ly mov ing awayfrom . licensing regime to a registration' regime. Therecom mendations o f T RA I on S pectrum P ric ing l~ L Icen se fe e w ereas fol lows :

9.0 Spectrum pricing:9.1 In t he ex ls ( ing polic y, spectrum ch arp es h av e tw occmponenis (i) ~ bne tim e s peclr~m chBrg.3 s w h ich are. paid as part of one time: entry fee by the setviceproviders and (ii} annual s p e c ( r u r r r cha rgEJS wh ic h a re. paid in the form' of p'e:rcentage'o f AGR. The spectrumrelate~ issues lnclualng . s p e c t r u m ~ ricing and itsal/ocatlon are already under a consultation process enddepending upon the comments received dur:ngcons ultation pro~ ces s and TR AI's ow n .9nalysis th e

~~ ~..-,-~~-'..:


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i/ .\ '23

spectrum recommenda.tions w ill be finalized. In thein te rim period till spec trum gu idelines are i ssued by theGovernment 07 India' based on TRAl'srecommendations, the ex is ting s pectrum plicing .andallocation procedures wi ll continue.'1 0 . O . License F e e : ~ .10.1 TRAI is of the view that the tetecom servicesshould no t be t re at ed as a s ource of reve nue fo r theGovernment. Impos ing lower l icense fee on the s ervice.p ro viders wou ld encou rage h ig he r g ro w th . fu rth er ta riffreduction and Increas ed: s ervice provider revenues .W i th in creased grow th, it wou ld be a win- 'win situation, fo r the in du s tr y and ,the Gove rnmen t.

A tru e copy ,o f the rele van t e xtra cts of the T RA l re comm en datio nsd ate d 1 3.0 1.2 00 5 is a nn ex ed he re to as A nn ex ure R 1-1 1.

49. Again the TRA! in its re commen da tio ns dated 13.0!).20050n'S p ec trum Re la te d Is su es ' gave f ol low ing recommenda ti ons on th e. 'issue of spectrum pr lc log:(a) A s In the ex isting fram e'llork the s pe ctrum c ha rq es s ho uld~ ., con tinue to h a v e tw o cem pcnents: one time spec tr um charge

and annua l s pec tr um cha rge. ( Pa ra 4 .1 ), (b) In UASl, the 9ne tim e spectrum charges and entry fee for;

license have net been separated. In other words, th e en tr y fee, I 'inCiudes one time spectrum charge a ls o . ( Par a 4,3.3),

(c), Existing method of .annual spectrum charge in terms ofpe rc en tage o f r evenue. sha re shou ld continue (Pa ra 4 .5.1 ). I

(d) I(eepl,lg In view the objectives of grow th, affordability ,penetration o f mobile services ' In semi-urban and r ur al a reasand also the aspect o f spectru l1 1 charges. Au tho rit y fu rthe rrecommends that eXisting c eilin g o n a nn ua l s pe ctrum c ha rg es


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24of 6% AGR should be brought down to 4% of AGR . (Para4 . 5 . 2 )

A true copy of the re levant ex tracts of the TR AI recommer dations. .d ate d 1 3.0 5.2 00 5 Is annexed here to as Annexure R1 12 . . It isrelevant to ' n ote that In neither of these recommendations of 2005,did th e TR~I sugges t auenon o f 2G epeetrum.

50 . In the meantime, the foreign direct lnvestment cei l ing was increased. Ito 74% for v ario us te le com s erv lc es . Copy of Press Note No.5 of2005 Issued "",/ the Department of P romotion and Policy vide No.I. ~., . .9(1 )/2002~FC dated 3 t"ov,ember 2005 regard ing 'E nhancement ofthe . Foreign . D i rec t Inves tment celling from 49 per cent to 74 per cent,in the T ele co m s ector' Is annexed hereto a s A nn ex ure R 1 -1 3.

51. A fter enhancement of FO lln . te lecom sector from 49% to 74% , DoT0 71 14 .1 2.2 00 5 I"tled r e v l a e d Gl.:l ldelinea for U nified Access

,. . ~

. .S ervices (U AS ) licences. T he~e gUidel ines, In te r- alia s tip ula te th at:(a) . licences shall be Issued wlthClut an y re stric tio n o n the. number

of entrants fo r prov is ion of 'Unified A ccess S erv ices in aService Area.

(b) The appl icant wll! be required to pay one tim e non-refundableEntry, annual L icence fee @ 10/8/6% of Adjusted G ross

, ;.Revenue ( AGR ) :fo r c ate go rY AlBIC s er vic e a re as r es pe ctiv elyan d spectrum ch .arg es on revenue share basis as specified byW PC wing.


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25A true copy of the 2005 UASL Guidelines Is annexed hereto as. -Annexure R1.14.

52 . The. guidel ines -Issued for U AS L leenceson 14.12 .2005 are th eex tant guidelines for grant of new U AS licence. A ll U A S licen cesIssued In year 2 008 were also governed by these deta iledguidel ines. It may be called that these guidelines were In turn basedon TR AI recomm endations limd the N TP 1999.

F.. TRA I R ecommen da tio ns o f 2 00 753 . Change ~appens at 'a rapid pace In the te le co rnm unlc atle n s ec to r.

In , erder . to ensure ' that the pollel~s keep pace with the'changes/developments In ,th~. telecommunication sector, the

, '

government contemplate'a to r~vlew certain term s and conditionsl icense. Since In troduction of UAS licensing regime In 2 00 3, 51 newUAS licenses had been issued till March 2007 ba se d on the p olicy o fcon tinuous award on First Come~Flrst . .S erved (FeFS) and spect rumwas also allocated based on F CF S ~aslsunder a separate Wireless

'. {Operating L icense, s~bjecno_ availability. The number of UASlI

applications has been increasIng and there were already about 5 to8 lic en se d A cc es s S erv ic e P ro vid ers in each serv ice area. The

increase in num ber of applications had increased the demand ofG SM spectrum in a s ub sta nUa l manner, ,

54 . A ccording ly on 1 3.4 .2 00 7 a reference w as m ade to T RA ! stat ing thatthe policy on U ni~ed Access servlce L icensing was fina lized inNovembe r 2003 based on its 'e arlie r recommendations. A s on date,158 licenses had been issued for pro'/id ing A ccess Services


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,I -::~ ", 't,

26

(CMTS/UASL/Bas lc) In the country w ith 5-8 A ccess S ervicep ro viders In each s erv l~ ea rea. The Access Service prov iders were

imostly provl? 'ng servIces, using th e wireless technology(C DM NG SM ). A s per the' 'present policy, any Ind ia n companyfulf ill ing the ellglbl,llty ~ r l t e r / a ca n 'apply for U AS license. T his was: '., .""Increasing ,.I'Ie dem and on spe,ctrU m In a substantia l manner,The i a fo re , TRA I was r~ques te d t o fU~lsh the ir recommendations In

I ;

terms o f clause 1,1 (1)(a) of T RA I A ct 1997 a5 am ended by TRAI, A m endm ent A ct 2000, on t he I ssue ,o f l imi t ing t h i S number o f ac ces sproviders In each $el1v'lce area and, review of certain term s and, I!cond it ions in the acc$s 's ,p rov tde r license men tioned thereof.

55 . Thereaf te r, o n 28 .0a . 20Q7 , th e TRA lls su ed its re co rn rn en da tlo ns o n"R eview of license term s and conditions and capping of r . ur nbe r o faccess p rc vld ers " a nd re commen de d th at th ere s ho uld n ot b e anycap on the number of access provIders in a servlce area. Thisre commenda tio n was a ccep te d by t he Governmen t.

56 . In these recommendaf lons, :th~ T RA Iagain revislted the issue o fpriCing of 2 G spectrum , and Its recommendations In this regard arereproduced below:

2.71 Spectrum pricing alm s to ens ure that the value ofth e speatrum is ref/ected' 'In the fees thatlicens ees 1pay for its acces s. There are genera llythree w a y . s In wh ich ~hlsls done:Adininis trative, Incentive P ricing wl ich. ! t' ,afie,mpts to ca/c:ulate the value of thespec/rum by a ~s es s ln g th e co st a ss ocia te deitner wi th the user employing analtern a tiv f; 1,s olu tio n, o r its oppot1un ity c os tfore.gone by denying access to ana/ t~rnat ive user.

I


27/48

,,'

ir

i .Beau tY Pa ra de s 'o r 'C ompa ra live S e/ eclio nwhl"h! fixes the' price, of the speotrum toenS("$ optimum utilizat Ion b y awarding, s p e c t 1 ; U r r tto the u s e r ( $ ) w ho s core highes tag~/nst a group of pre-set c rite ria ( su ch a sru ra l c overa ge o r th e fu lfilm (m t o f r oll~oLltobligation). .Spectrum Auction Is fully market-ba sedte ch niq ue . w h ere by s pe ctrum Is a ll(s rde d tothe N ghes t bIdder (or s om o ~mbin atlo n o fhighest priced bids ). . .

2,72 In each case,: th, aim is ' to chaflge s pectrumusers' behaviour towares the us e of lhe spec trum.to ensu re th at th e max im um (s ocial, e conomic orte chnical) ,b enefit Is a cc rued . However , in thepresent contex t, no neo( the se above techniqu.esof s p e c t f u m priCing a r e bein g co ns ide re d fo rreasons s ta ted In the en_su lngparagraphs .

2.73 T h e allocat/on of spectrum Is aftar me paymen t ofentry fee. a 'ld grant of licens e. The ~ ntry fee as itex is ts to day ' Is , In fact, a f(J sult of the " ) r i c e, .: dIs covered ihrO ugh a mark ets b as ed mec hanismapplicable fo r the giant 'J of licens to the 4thcellular operator.' Ih t~day's dynamism andunprecedented growth Q f te /ecom s ector, theentry fee' datsrmined t h e n 18e/so. mIt t he rea l, s tioprice for obtainIng a lic ense ; Pemaps , It need, tobRreassessed t h r o u g h a m arket meohanis m. O nt h e o the r' hand s pectrum us ag e chi~ rg e I s in theform of a royalty. which i. s l inked to tht: revenueearned by~ the. opefflto~ and to !hat ex ten t i t .captures t ile economic value of the s pectrum th atis us ed. "Som e stakeho/I.jers havl~ view ed the .c h a r g e s / f e ' e as a hybrid 'm odel of e x t r a c t i n geconom ic ren t for the acq uIs ition and also meetthf1 crite riq n o f e ffiC Ie nc y in th e u tm za tio n of 'thisscarce res ource. The Authority In th e c on te xtof 8001 9 00 and 1800 M Hz Is conscious of thelegacy f.e. prevailing practice an d the.o ve rridIn g c on plde ra tlo n o f le 'v el playing field.Though the dual charge In pres ent form does. not re flect the present value of spectrum itneeded to be continued fo r tre atin g alreadyspecifJe.d bands fo r 2G services I.e. 80 0, 900and 1801 ' MHz. It Is In this background thatth e Authority Is not .recommendlng th es tandard options pricing of spectrum,howev s r, It, ha s elsewhere ln the. recommend~ tion made a strqng case fora qo p tin g a uc tio n procedure in the afioqation

27


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/t "

\ . . . . . . . . ,, I , ' , " ,,

jli

c

of a ll other spectrum bands except 800, 900and 1 80 0 MH z.

2 .78 A .s far as 8 n ew en tran t Is concerned, thecl'''"(lo,, aris es w hether there Is any need fo rchange ln the pricing method%gyforIllo l'; ~ tlo n o f: ~ fpectr um In the 800 , fiO O and1800 . M H i bands. K eeping In view th eo bJ ec tiv e' o f g ro w th , a ffo rd ab lllty , p enetra tio nof wi re less ,e lY l ces In ,.m l-u rban and rurala reas , the A uthority Is not In favour ofchanging th e .pectrum f" reglm, fo r a newentrant. Opportun, i ty fO f e qual c ompetitio nhas a /w i lY ' b een one of, th e p rim e principlesof t he Au tho rity In sur igest lng a rogulatoryframe.w ork In te /ecom services . Anyd iffe ren tia l t rea tmen t to a new e ntra nt v is -a -vis incum ben ts in ,the wire less sector wil l goa ga in st th~ prin cip le of le ve l p la yin g fie/d.This Is 'Pffclflc and restr icted to 2G bands. on ly I.e. 80b , ~ 9 . , oand 1 80 0 MH z. This approachassumes m o r e s !gn l f!cance par ticu la r ly in th econtex t w here subsc r ibe r acqu is i ti on cost fo r anew entrant.Js , likely to be m uch higher than forthe in cumben t w i re le ss ope ra to l'$ .

2,79 In the cas e of s peotrum In bands o lh er th an 800,90 0 and ., a o o . M Hz I.e. bands that ere yet to beallocated, the Authority exammed variouspossJb/e'app roach~s fo r p ric ing an d has com e tothe conclus ion that It w ould be appropriate infuture fo r 8 market bas ed p ric :e d is cove rys y s tems . . I R response to the consultation paper , anumber 0 1 s ta ke ho ld ers have ~i / sost ro l 19lyrecommended that -the allocation of spec! 'U rns hould be immediafely de-linked from the J ice'1 seand the future allocation s hould tie based oneuak. The Authority in i ts re commenda tio n o nl IA llocation and pricing of spectrum for 3G an dbroadband w i re le s s a cc es s s e rv ic '3 s ~ . ha s a lsofavored auction. m ethodology for allocation ofspectrum Ior 3G and BW A services . It istherefore' .recommended that in future allspectrum excluding th~ s pectrum in 800 , 900and 1800 bands should.be auctioned s o as toens ure efficient util izat ion of this scarceresource. In the ; 2G~bands (800 M Hzl900MHzJ180d MHz ) ! the_allocation th rough auc tion. f 1 ! a y no t b e possible as the s ervice providersw e re a llo ca te d ~ ne ctrum' a f diffe re nt times o f th eirlice nse and t t i e amount of s pectr(Jm w ith themva rie s frdm 2X4.4 MHz to 2X10 MHz for GSMtechnology and 2X2.~ M Hz to 2X5 M Hz in COM A

28


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_-.--_ ... -"., -~-,.-.-.-" ---'--"-_""".~'''''''''--'''.-~.-,--,~ '-.-. -'""-""".".-~~''>~'~-'''"'''',..,. .,.~. . . . .~.. , - - , - ~ . , ." ..- . "_- ' . _ . - ,'_ . . . . . , . _ , . - ".. .~.

29

teG'hno/ogY'iThe~fore,; to 'dec lde th9 cut off afterwhich the s p e c tr u m I s auctioned w i l l be d iffi cu ltand m I g h t r a is e t h e I s su e of level plvying f i e l d ,(Emphasls suppl ied .)

A true copy of the above reccmmencatlons dated 28 ,08 ,2007 isannex ed hereto as Annexure R1.15.

57 , It i s evJdentf rom th e n bo ve extracts that inso far as 2G spectru.n isconcerned, the T RA l'srecom mendation w as to continue the ex istingpractice of a llo tm ent o f spectrum ra ther than auction , TR A I a lsospe~ lf lc ally c on sid er ed whether spectrum. sh?uld be auctioned fornew entrants and recomm ended aga inst such auction on the basisof the princip le o f level p la y in g f ie ld .

58, The above re ccm rrie nd ailcn s o f TRA I were received by DOT on29.8 ,2007. O n 10.10.2007 , th e Te le com Commis sion a pp ro ve d th es ~ld re co rn rn en da tlc ns a nd the file wa s s ubm itted to the com petentauthority fo r f inal decision. The Competen t Authority took aconsidered f inal policy decision on the recommendat ion and a P ress.Release was issued In th is regard on 19.10 .2007 , in ter-a liaimentioning that "Given th e central aim of NTP 99 to e ns ure rapidexpan s ion o f 't eledens ity an d th e ob jective to tran sform in a timebound m anner, th e telecommunications seetor to a greatercompetitive envir onmen t in both urban and rural areas providingeqtlal opportunities and level playin g field tot a/l players, therecommen dation s of TRAI that there should be no cap on thenumber of access provide r in any setvk area has been consideredby th e G overnm ent and has been accepted." A true copy of th e


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i " "press release dated 19.10 .2007 Is annexed hereto as Annexure 'R'!.16.

59. In a further I~ tter dated 26 . .05.2008 , the TRA I I~gain informed DoTt h a t k e e p i n g In v i e w t h e o b J e l lc t lv e o f growth, a f fo l' dab il lt y, pene tra ti onof wlr, 'ess serv ices In sem i-urban and rura l arflss and principle oflevel playing fie ld and opportunity for equal com petition betw een th e. ,Incumbents and new entrants , the TRA I rseemmended the sameentry r e e as w as take '''! from the fourth , c e l l u l a r operator for grant of

" ,CMSP f UAS license In the year 200 t. A true copy of the said letterd ate d 2 6.0 5.2 00 81 5 a nn ex ed h ere to a s Annexure'R117,

G . Summary o f S u bm ls ilo ns '",60. In l ight of th e a bo ve ~ th e i\n sw e rin g ~ es po nd en t re sp ec tfu lly submits

a s u nd er:

(a ) The decis ion .to 'not auction 2G spectrum w as taken on th ebasis of N TP 1999, 10 lh " a n d 1 1 th F ive Y ear P lans and therecommendations of TRA ', under which a conscious policydecision was taken that the overrid ing objectives were toI nc rease t el edens lt y r a t h e r than max lr nl slnq revenue,

(b) R eceipt of applications on 'a continuous b as is a nd a llo tmen t ofspectrum on a flrst-com e-flre t-serve basis w as happening ever

Isince th e introduction of the U ASL regim e' in 2003 .

! i I

(c). TRAJ specifica lly recommended that the entry fe ; for thesubsequent operator should ' be kept the same as what thefourth operator! paid" in 2001 ,in order to maintain a levelp la y ing f ie ld ,

30


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-- " --'_ " '---.- ... _ '- ._ -_ ._ .._ ..._ . _ . . .. . - , . . . .. .~ . . - . " . . .. ." '~ .. . . .. . .. . . ,,~ - ,- . . , . . .. ' . - - . ., _ . , " -= . .1

,"

I f' 31(d) As a res,ultof a llow i119 free competition and a le ve l p la yin g

fie ld , teledensl ty Inc reased to a' huge extent. C all charqescame dC!wn drastica ll y an d India today has perhaps the low est

. call charges 'in the whole world. G overnment revenue alsoI nc reased because o f th e re venue sharing regime,

61 . It may be noted that certaln service providers had increased thera tes, o f certa ln ca lls , arid SMSs .In year 2006 -07 . A ggrieved by thesltu;:Uon, a consumer g roup" vlz . Telecom U sers G roup of In dia h asfiled Petitio n n o. 206 of 2006 before th e Hon'ble -~ L)S A T an d the'p etitip n w as finally disposed off on 15.07 .2008 ' (after grant o f new.U AS licences In year ' 2008) , where TOSAT had cbserved that" The .g rie va nc e o f th e p etitio ne r In th is p etitio n w as that certain serv icep ro vid ers ! re sp on de nts h ad In cre as ed th e ra te s o f ce rta in ca lls [ lnciSMSs . rode V , th e 'a etu el p os itio n is tha t s ue !" ra te s a n"l rates ofo th er tl~ /e com seri ices have ' d ras ti ca lly comE' c lown. 'rh us , th ispetit ion ha s become i nf ruc tuous and is acco rd ing ly d is po sed of." A~ .true copy 6(the said Order Is annexed hereto a s Annexure R1-18.

62 . T he Answering Respondent therefore subm its that the contention ofth e Pe titio ne rs re ga rd in g non-auction of 2G spectrum has n o meri twhatsoever,

III. ALLEGED REVENUE LOSS TO THE GOVERNMENT"

63 . T he P etitio ne rs h av e contended tha t there has b -ee n a h uge re ve nu eloss to the G overnment as a result of th e non-auction of 2Gspectrum. Various figures ranging from 70 , 000 crore to140 ,000 crore have been suggested and it is 'being ca lleo the


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. . . . . _

1;, 32

biggest scam of the country. It is re spec tfu lly submitte d that thise n t i r e a rg u m e n t I s misconceived.

64 . There are different theories on which th is ails led revenue loss isbei ng cal eu ia te d :

(a) The amount allegedly received, by some opera tors after,"seiling spectrum " w hich they 'obtained frcrn th e Go v ernme nt;and

(b ) T he am ount rece ived by the Government In th e auction for 3Gspectrum.

A ll th ese th eo rie s a re d ea lt w !th b elow .

A . . "Sale of spectrum"65. M is Swan Telecom Pvt. Ltd. and M Is Unitech W ireless w ere

awaraed L icenses for U nified Access Services for 13 and 2 2 s erv ic eareas respectively In February-M arch 2008 : The a llegation of thePetitio ne rs is that t he p romoters c .f these compan ies then sold theirstake to other Jore ign companies fo r huge amounts. whichrepresents the real value pf the spectrum , and consequently theamount that the G overnm ent cou ld have garnerej by an auction.

66. It is respectfully subm itted that th e said ,argum ent is entire lym isconceived. A fter news reports o f such sale began to circulate,the D oT sought cla rifications from the said com panies, They have inturn clarified that no sale o'f promoters' equ ity has taken p lace in 8~Yof the companies.


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.r: "

.:....

3367 . W hat has in fact happ~ned: Is that the companies' have inducted

strateg ic partners as I nves to rs in th e compan ie s I, y issuing additionalequit y shares 'to them as pe r the provisions of the C om panies A ct1956 and other a 'ppllcab le laws. 'T hus, E tisalat and Telenorrespectlve~y, picked up equity' shares In SWM and Unltech byin fu sio n o f eC iu ity cap ita l in t~ the c ompa ny fo r ro llin g out the telecornne two rk I n the licens ed service areas. B oth ' the se companies havecategorically m enthned that the Investm ent brought In by theirstrategic foreIgn partn ers w ould be us ed for ro ilin g o ut th e s erv ic esand this could enhance their capital base keeping the absolutesha reho ld ln g o f th e p romote rs I nta ct.

6a. It Is respectfully submittes:! that It Is e vid en t th at te le com ope ra tio nsrequire a huge upfront inv~str;nent t~ establish the physicalInfrastructure, to emplo y personnel a r i , d other lnltla! costs. In o rder to

, Ifund these costs', op~rators. res.~rt to either debt or equity or som ecomb lnatlo n o f both.

, ,69. A s per Fo re ig n D ir ec t ; In ve stment ( FD I ) p olic y a pp lic ab le in T ele comsec tor, F D I' (both direct' and' Indirect) ,allowed fo r Unifie d Acc es s.Service L icense Is 74% . FD I up to 49 % is under the autom aticroute. FD I In the licensee company/Indian promoters/investmentcompan ie s in clu din g th eir h old in g cornpan le s sh all re qu ire a pp ro va lo f th e Fore ig n ln ve stmen t P romo tto n S oa rd (F iP f3 ) if it h as a b earingon th e o verall ce ilin g of 7 4 p ercen t.

70. M Is Swan Telecom Pv t. L td ., M Is U nitech W ire le ss C ompan ies a ndM Is S Tel were - awa rd ed Licenses for U nifie d A cce ss Services for'


34/48

.~ _ .,

_-_. - . --_ ._ . - -- . .~~. -"'~--~"--~". ".~~., - . ". ." ., ." ' . .. . ,~~.- '" ". >:~' ,u. ., . .. .. .. .

3413, 22 and 5 service areas respectively In F eoruary.M arch 20 08,These compan les ha ve m ade strateg ic p artne rsh ip (or investment in

. the company as per the Company Act and have entered intoagreement with f o r e i g n companies namely, E tisala~ Maurit iusL im ited, Te leno r A sia P riv ate limited, S ingapore and 8M IC L im ited,M aurl~ ius respective ly for Infuslon 'of~qulty capita l In to the com panyby issu ing fresh equity for rolling out the Telecom network in th elic en se d s erv ic e a re as ,

71 . The valuation of a com pany Is a comp le x exercise and depends on anumber of fac tors Inc lud lng th e busin ess ca se - over the period oflicense and th ls is evident from valuation of shares of M Is Tata. , ,Teleservices and M Is. Unlte'ch W ireless. The Investm ent brought in, 'by s tra tegic fo re ign partners o f t:,e se companle s would be u tilis ed f orroiling out the services and even this would enhance their capitalbase keeping the absolute sha~e holding 01 the prom oters Intact. Ina ll th(' above cases, the licensee com panies have Issued additionaleq~ity for bringing 'In foreign Investment and as they have nottra ns fe rre d p romote rs ' e qu ity shares, p romo te rs ' e qu ity ha s n ot b eendiluted. F oreign lnvesm ent brings in capital as well a s te ch no lo gy _ It. .is a normal practice ln the corporate world to bring investm ent in to. .the com pany for rolling out ori expansion of business, O n earlieroccaslons also, FD I has besn.lnfused in licensee com panies as perFD I policy of the G overnm ent. G overnm ent has been encouragingFO ! i n th e c ount ry s ince begltmlngand an y narrow view w ill re sult inGovernment oble cnve to be lo sCA tabu la r statem ent of F DI inducted


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35

in the telecom s e r v i c e providing companies from tim e to tim e is, Ienclosed as Annex ure R 1.1 9,72 , 'The Foreign, D ir ec t. I nves tmen,t I n Mis S istema Shyam and Tala

Te le se rv ices upto 74% has been app ro ved b y F IF 'S . The FD I in MIs .U nltech W ire less has been ecnsldered by C abine t Commit tee on

, E conom ic A ffa irs in the ir m eeting dated ,19 th O ctober 2009 anda pp ro ve d s ub je ct to l icense a nd s ec urity c on ditio n as wel l as lock Inperiod guidelines of th is departm ent. In the case of MIs S wa n, s incethe tota l' FD I was less than 49% , It was p erm itte d u nde r a utomaticro~te an d no F IPB a pp ro va l w as n eces~a ry .

, "I73. V irtua lly m os t of th e t~ lecom operators ( for Instance M I s B h artl, MIs',.. .. . .Tata " re leserv ices, M Is I dea gellu la r" s te .) has some am ount of F D I.

t ,T hat is sam e thlngt~at hashapperied i n th e case of M Is S wan andM Is u nlte ch . T h~ s~ comp anie s could h av e, fo r in sta nc e, c ho se n th eIP O r o u t e and raised m o n e y : from the' general public. M erelybecause th ey ch cee -to g et the funds, through the FD I route does notchanqe the essentia l character of the 'transaction, w hich is equityInfusion Into th e c ompan y. It Is re sp e'c t.fu lly s ubm itte d that treatingthis a s "sa le o f s pe ctrum" is s im ply ab surd :

S. Auction of 3G spectrum74 , The second th eo ry ~ as b ee n to com pare the process by 'which 3 G

spectrum w as auctioned anti US~ It to determ ine the value of 2Gspectrum . It Is milleadl,ng to do such a comparison, Thecom parison W ould not be a comparison of equal commodities but ac C F n p a ri s o n o f u n e q u a 's ,


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, ..~~.-..~-.-.-.. .--- ..--,.f. 36

75. While 2G services a r e a bas ic necessity mobile telephone service forth e general public. 3


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- ... _ --..... _ . , _ . _ .. - . _ - . . . . . . . . .

spectrum at different times of tllelr license l1nd th e c mount ofspectrum w ith them varies ttom 2X4 .4 ' M H z to :?X10 M H2 for GSMtechnology and 2X2.~ MHz to 2XS MHz In CDMA technology,ThfJ r8 fo~ j to decIde th e cu t off after wh i ch the ~pe( ;tr um Is auc tio nedw ill be difficu lt and m Ight 'ra is e the Is sue of. level p lay ing fie ld,"T he re fo re , th e a uc tio nin g o f 2G sp ec tr um was n ot re so rte d to ..'

77 . R ecen tly , a lso , T R AI. in its recom mendations da ted 11 .05.2 0 10 on"S peotrum M anagem ent and Licensing Frame\Alor~" hasrecom mended tha t S pectrum In the 8 00 ,90 0 ard 1800 M Hz bands(presently u sed as 2 G; sp ecnum ) shou ld not be : sllbject to a u ctio n .Spectrum in 8 00 and 900 M H z b a n a s may however be sub jec] toauction as and V Y hen . J t Is ' re fra~~d fo r 3 ( ; ; and 'o ther fu tu ret ec hno log ie s . '

7 8 . A th Ird theo ry has ~ Iso been attem pted to compute th e a lle ge drevenue lo ss on the basls of an a lleged o ff er made by M Is S Tel Ltd, '. ITh is com pany had vide Its letter dated 27 .1 2 .2 0 07 m ade an o ffe r o f

R s. 1 3,7 52 c ro re p ay ab le over te n yea rs , after allotment of 6 ,2 MH zof GSM spectrum in 900 M Ht band in all 22 telecom circ les ands ha rin g 9 f a ctiv e networks a nd In fra stru ctu re , T his o ffe r ex fac ie.could n ot e ve n b e consid ered for a sim ple reason: no such spectrumwas . ,! V aila b le ! and S Tel was in fact aware o f th at situation, In anyeven t, subsequeF1 t ly in th e proceedings befo re th is Hon 'b le Court ST el L td . file d a n a ffid av it th ~t the y had al ready withdrawn th eir s aidoffe r qu rlng the pleading before the D ivis io n B ench o f the H on'bleHigh Cour t of D elhi. H ence, this the ory to com pu te rev en ue lo ss isalso who lly incorrec t and misleading.

, I

37


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.5b

79, rhus, the contentions regarding alleged loss ofrevenue to I;he G overnm ent are based on conjecturesand surm ises and are bereft of m erit .

..IV . . G R AN T O F UAS L IC ENSES IN 2008PR EP .O NEMENT O FCUT ..O FF DAT,E:

AL LEGED

80 . A s sta ted earlie r, app lica tions for gra~t of UASlicenses. were beIng rece ived and granted on acontinuous bas is. B etween 2003 and . Apr i l 2007. .t e lecom IIc~nce~ w ere granted o n a regu lar basiswltho'ut any cap.rill 2007 when a reference was m adeto th e TR AIt 51 new UAS l icenses had been iss ue d fo r

'. . .provld, ing Acc e s s services In th e country since itslntroductton in 2 00 3. A s sta ted earl ier , these had beenprocessec on a firs t, come , first serve basis. A list ofth e ' UASL lic en ses g ran ted tll! 2 00 7 is annex ed heretoI as Annexure;fll-20.

81 . A fte r the rece lp t o f recom mendations from the TRA I. on 28 .08 .2007 (extracted above) it was observed thata large number o f UAS appllcatlons w ere beinq. . -received by ce r, Therefore, on 24 .09 .2007 , a P ressre lease w as issued .stating tha t the new a ipllcatlons


39/48

~--- -.- - - - - - . - "--... .,...,.,~.. . -..-_

for U AS L i.cences w lH not b e accepted by DOT after01 .10 .2007 tfll fu rther orders . T he P ress re lease

- -appeareq in N ew spapers on 2 5.0 9.20 07 . A true copyof th e said press re lease Is annexed hereto a sAnnexure Rl-21.

82. There were 232 eppllcetlcns pendi.1g till 25.09.2007and 343 n ew a pp lic atio ns wer.;! received after25.09.2007 and up to 0-1.10.2007. Thus DOT receiveoa -total of 57:5 UASL eppltcettons, spread over 22,Iservice areas- tI lL01 .10 . ; 20p7 . A date-wlse break-up ofth e 57 5 applt93tlons received are as follows:

. .Up tc re fe re nc e t o T .~ I ( l.e , 13.0(2007) 53. iBe fo re TRA I 's re commendadon

(I.e. 14.04.2007 t . q 2? .08.2007)After TRAI's recommendat ion to date of pressrelease (l.e, 28.08.2007 to 25.09.2007) -130After publication of press release(t.e, 26.09.2007 to 01.10.2007)To ta l

343575

83 In th e backg round of the large number of applicationsand the l imited- -availability of spectrum, the issue of


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, _...t '\

\,

40

. I ,

granting licence to a ll th e e lig ib le 5 75 ,a pp lic atio ns was"dtscussed m the Department. It was found that If DOT

grantsUASL t o alJ the applicants' and 1 f all apptlcants,requested for GSM spe'ctrum, then' It would require

,t , . ':

more spectrum for new entrants alone than what was"

, o f "available with Government. The total GSM spectrum. , ,. , . , i :', .earmarked In the coun~ry Is 100 MHz out of which. . .about 30-35 MHz was- ,already. allotted to existingI .operators till 2007. "" ofremalnfng 65-70 MHz a

large chunk was used ~Y security agencies. Therefore,It ia s not e ve n th eo re tli:a Jly possible to accommoda te, a l l i h e apP i\Ca 'lts If all of them requested for allocatIon.of GSM spectrum after obtaining UAS licence.,. ."Therefore It was felt that It would not ba advisable toi . ' . - .process U AS licence app lica tions for a ll 575 applicantss im ultaneously w ithout adequate amount of spectrum .

84 . In the absence of a PdSs~bjlrty o f lssu lnq a licence andspectrum to all th e app licants, the issue of the numbero f applicants to be gran~ed Lette r o f Inten t (LO I) in firs t, " , Iphase ' w as deliberated and It was felt that It wou ld be, .; ,mos t appropriate to cateqorlse the apphcents in to twolots, j ;e'l those who had been applyhg under' the

I

.. '


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t,,: 41ex tant polley guidelines (continuing since 2005) and those whoapp lie d a fte r th e I ssuance 0 1 the P re ss R eleas e a nno unc ing th e CLiI.off ijate. It. W8$ therefore decided' to Initially grant LO I to th ea pp lic an ts who h ad a pp lie d u p to 2 5.0 9.2 00 7 .

85, It Is submitted that there has not been an y p repone rnent o f t he Cut-O ff d ate o f 0 1..1 0.2 00 7 fo r re ce iv in g. th e a pp lic atio ns fo r g ra nt o f U ASlice nce s. A ll th e appiica ucne , w hic h w ere applie' : l up to 01 .1 0 .2 007,. .were re ce iv ed by DoT. The date 25.09.2007 was fixed for initialprocess ing o f the app lica tlons and not fo r re ce iv in g th e ' a p ) Ii ca t ions .

. The balance 343 applications' have not b ee n re je cte d an d are. .pending w ith the D epartrnent. for consideration . A n expressIs ta temen t to th is e ffe ct w a s a l s ' ! ) made I n th e p ro ceedin g s before the

I ~ . H on 'b le De ih l H ig h CO J ,J rt nd th is H o n'b ls C o urt.. .86 , A ccording ly a press re lease w as Issued in th is respect on 1 0-0 1-

2 00 8. In the P res s R ele as e It w as als o Info rm ed tha t "In the light of1 .~ ,Unif ied Access Se rv ice s Licence (U ASL) gu idelines is s i. s d on 14 th. D e cember 2 00 5 by the departm ent regarding 'number of Licences illa Serv ice Area, a reference was made to TRAI on 13 -4 ..1007 . TheTRAI 'on 28-8-2007 recommended that no ca p be placud on thenumber of access se rv ice p roviders in any service urea. TheGovernment a cc ep te d ~his recommendation of TRAI. Accordingly,DOT ha s decided t o issue LO I to all the eligiblgapplicants on thedate o f app lic at ion w ho app lie d upto 2 5- 9~ 2 007 . / . A true. copy of thesaid press release dated 10 .01 .2008 Is annexed hereto asAnne.ture ~1 22 . T he satd cress re leas e w as iss ued after obtainingle ;s l a dv ic e.


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4287. The Department on 10.12.2007 squghl clarlflcatlon from all the

applicants who applied till 25,9 ' ,2007 e m the ir U AS L applications. A llthe applicants submitted t he ir : c la rif ic a tion li by 1 3 .12 .200 7 .T he re fore, a ll th e applicants who a p'p lle d till 2 5.9.2 00 7 were in know. !that tllelr applications are being p~ocessed fo r UA S lice nce. It is. .therefore clear that a ll the applicants who applied for U AS licence till1.10.2007 'and particularly those w ho applied till 2 5.9.20 07 knew b y10,12.2007 about t he s ta tu~ o f p rocessing of their applications.

8S . I t i s there fo re subrr. l t ted th at th ere was no preponernent o f any cut-o f f . da te . It was ra ther a case of batch-w ise processing orapplications. N o' ~ppncatlon w as rejected because It w as receivedafter 25.09 .2007 -Its processing was m erely postponed.

89. O n 10 .01 .2008, In the .2nd Press Release, th e a pplican t com pa nie swho have subm itted applications to D OT for grant of U AS licences inv ario us s erv ic e areas on or before 25.9.2007 were requested todepute their A utQ orised signatory/Company S E 1 c r e t a r y i authorisedrepresentative w ith authority letter to collect responsets) of D OT .S im ilarly, the companies who' have applied for usage of dualtechnology spectrum 'are also requested to collect the DOT 'sre sp on se ..

90 . .A II were requested to assemble at 3 :30 pm 'on 10:' .2008 atComm ittee Room , 2nd Floor, senchar Shawan, New Dell'i. It was

;JOSt. A ll elig ible LO I holders for U ASL were to subm it com pliance to

also mentioned that the companies which fail to report before 4 .30P .M . on 10.0 '1 .2008, the responses 'of D OT will be dispatched by


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{ ~.~,:,., 43D oT to the term s of LO is within trie p re sc rib ed 'J erio d (1 5 days fromthe date of lssue.of L ei) during the o rf ice hours i,e. 9.00" M . (0 !:i.30P ,M . on working days. I t has 'been wrongly contended by th ePetl t lon~rs that 10 .01 .2008 WAS , th e deadline to deposit Ihe entry feeof R s. 1 658 erore within o n e hour. It Is subm itted th at th ere was no'such deadline . The date or 10 .01 ;200 .8 was only to coltect theresponse of D oT on the -app llcatlo .ns . A pe-rlod of fifteen daysthereafter ~as ava ilab le to m ake the payment .

.'91 . . In any event, even assuml1g ,that th e decision to only. process. '.BR plic atio ns re ce iv ed up to 25,09.2007 was erroneous, its on ly. consequence Is t ha t ~pp llca tlt ;ms : received after tha t date and up to01.1 0 .2007 m ust ,Iso b e processed. It ha s n o consequence to. . . . . . . .e ith er th e first-come, first-serve .pollcy or the poli9Y decis ion to notauction spectrum .. The DoT has ccnslstenuy maintained that theremaining appl icat ions have n ot b ee n re je cte d- an d will be dealt with'In terms 'o f ex tant policy. T hus . Its decision has not prejud iced anyapplicant.

92 . The P etitioners have contended that th e ad~ice of the M inistry ofLaw a nd J us tic e ha s beerr1disregarded. It is SUbmit ted that th eM in istry of law and Justice has' not g iven any advice regardin~ thepolicy in forceon grant of U AS l icenses or the first-come f i rst-serveissue .. The sole qW 1 s t l o n referred to the M inistry was rega;dingpossible options to deal with the large numt sr of app lica tions in afair m anner, l.e., a p urely p rocedu ra l Issue. T hE ! M :n is try o f Law an dJustice had suggested that the matter be reterred to an E m powereciG roup of M i:1 isters. H ow ever, It w as felt that it was not necessary to


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cory st1 tu te a G r oup o f Ministers on such a' procedural Issue. s ince nopollc I Issue w as to b~ examined, ' I n any event, I t is submit ted thatwithin different branches o f Government, some-t imes different viewsa re ex pre sse d and eventually a particular course of action isa dop ted , T his Is pa rt o f th e no rm al fu ~c~ lo nln g of Government andn o, a ctio n Is q ue ~~ lo na ble s. lmply beeause It was not -as per thes ug ge stio n o f a particular department .

93 . The Pe t it ione rs have fu r the r,con tended that th e views o f th e F in an ceS ecretary and M em ber (F lii~nce) have been disr . :>garded, In th isre ga rd , 'ft. 'ls s ubmitte d th at o n 2 7,1 1.2 00 7. th a F in an ce S e cre ta ryhad ra ised certain querles'regardlng th e entry fee. This was repliedto by th e Se cre ta ry . ( Te l~ com ) o n' 2 9.1 1 .2 0 07 . T h ere afte r, n o fu rth erre f( renee or communication was received and there was nodifference o f o pin io n b etWe en th e tw o M in is tria s. It m ay be noted

, .that a note was also sent by th e Member ( Fin an ce ) o n 3 0 .1 1 .2 0 07 ,bu t the , sam e 'Issue "n ed a lre ady be en a nsw ered by th e Secretary(T elecom ) in h is le tte r da ted 2 9.1 1 .2 0 07 a nd hence th e subsequentnote was lrrelevant.. It may further be noted that the M ember(F inance) is a Member of the T ele com com rn lss lon , vhlch hada pp ro ve d th e re commen da tio n o f th e ),R A I reg,1rdfng non- auc tion o f. ..2G spectrum.

94 . It has further been contended that the advice of the H on 'b le P rim eM in is te r h as b ee n d is re ga rd ~d .. T his Is a ga in w ho lly in co rre ct. TheHon'ble Pr ime M in ister on C2 11 2007 sent a letter to Hon 'b leM oC& IT . O n the s ame day ,' th e Hon'b le McCS .IT in hi;; le tte r d a te d02 , . :1 ,2 00 7 reo lled to the H on 'b le P rime M in is te r c la rify in J a ll the


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451 .iss ues ra is ed by the H on'ble P rim e Minis ter , The S ecre tary D oTalso wrote a letter on' 06.11,2007 to Principal S ecre ta ry to theH on'b le P rim e M in ister in tim ating tha t "D ep artm ent T ele com h C 1 Staken decis ions to work out. revised subscriber based spectruma llocation criteria and processing of pend i~g appllcatlons e tc, forgrant of Unified Access Servl::es licenses", A copy of PressRele'ase dated 06.11 ,2007 was enolosed w ith the said letterli ,tlma tlng tha t uPending app lloatlons fo r g rant o( New Unilrad AccessServices L icenses wi l l be processed as per ine ex is t ing po lic } /''.Thus, not only was there no difference of opinion w ith the Hon'nlePrime Minister, his 'office was also fully kapt Informed o r alldecis ions, O n 26,1 2.200 7', Hon~ble; 'MoC'T again wrote a le tter toI .' ..,. iHon'ble PM In fo rm in g th at I , t Is prcposed to imp lemen t the decision. ,w ithou t furthe r delay' and w ithout an y departure from ex istingguld~lInes.

T rue copies o f the. - tw o le tters dated 02.11 .2007 of the Hon'ble! .M oC IT , letter dated' 06 .11 .2007 of the Secretary DoT an d letterdated 26.1~.2007of the Hon 'ble M oC IT are an ne xed he re to asAnnexures R1 2 3 to R1 2 6 respec tiv ely .

95, Insofar as the letter dated 15.09.2010 of the D irector G eneral o fA udit, P ost & T elecom munications is concerneo, it is subm itted thatthe Issue r ega rd ing g ran t o f lic en se s to a lle ge dly ineligible applicantshas been dealt with in this A ffidavit. Insofar as the issue reg< ;1 rdingan alleged "bail out plan" for certain licemees IS concerned, it issl,.i;J,nitted tha t no such declslcn has been tacen by t he Depar tmen t.


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96. T h!refore, it is respectfully subm itted that the allo tm ent process in2 00 70 8 w as correct a!3 per law and In keeping w ith the e.tant policyand procedures.

V. ALLOTMENT TO AL LeGEDLY INELIG IB LE AI . )PL lCANTS97 . The UAS l icences. a re g ran ted In terms of th e L IAS guidelines dated

14 .12 .2005 and based on th e Informatlonl documents /cer t l f lcatessubm itted by th e a pp lic an t c omp an ie s . d uly certif ied by theirC om )any S ecretary as m entioned In the G uidelines! A pplicationF orm . M oreover, as a m atter of abundant precaution, D oT takes anundertakIng from the applicant com pany that "i f at any t ime. any. .

m is rep res en tation by an a pp lic an t c an no t b e co ns true d a s indicativeo f m ala fide on the, p art of D oT . If any m isrepresentation of facts isbrought to no tic e a t B . la ter date necessary action can be taken asp er d ue p ro ce du re u nd er th~ r elevan t r ul es . '

'avennents made or in fo rmation . furnished f or ob ta in in g th e lic en ceW as f oq nd In co rre rt, th en th eir a pp lic atio n a nd th e lic en ce if granted~ .. .thereto on the bas is of s uch application, s hall be cercete. Any

media.

The above stand of DoT was also clarified vide a P ress N ote dated27 .09.2 010 {A nnexure R 1-27 ) claiifying certaln issues ra ised in

h old more th an te n p erce nt e qu ity in more th an o ne aces ss service

98 , Insofar as M Is Swan l i s concerned , th e c on te ntio n a pp ea rs ,to b e th atit w as ineligib le since M Is R ellance C ommunication held someshares In the said com pany. ,It Is s ubm itte d that the allegation is


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licensee company in the same'service area. O n the date of til(:app lic atio n, 'M I s Re lia nce Communications h aid 9,9% a 'llJ ily s ha re sIn M is Swan Telecom. M I s Reliance C omm lJ nlca tions a ls o hG!dcertaln preference sha res. In M Is Swan Telecom : howeverpreference shares are not to be counted towar Js equityshareholdlng. Henes, the shareho l,d lng of M Is RelianceC ommunications was w ith in the pre ;crlbed lim it and hence therewas no Ineligibility of M Is S wan T elecom a nd legal opinion w as alsoobtained on the same.

99 . Inview of the aforesa id circum stances, It is r e! spe ct fu lly subm i tt ed, .tha t tne application of M I s S wan T eleecm P riva te Limited compl iedw ith a ll the terms and condItions of :the said U AS guidelines and. " .~" .there Is no vlo la tio ,.,o f the policy and lo r an y cond ition of the sa id, . .UAS g uid elin es In clu din g th at o f s ub sta ntia l e qu ity c la us e l.e. clause8 of the said UAS ~uldeilnes and all allegations made in th is behalf

, I

a re ln ccrre ct.a nd are m ad e w ith u lte rio r mo tiv e only with a view top re ju dic e a nd m is le aa th is Hon'b le Gourt..

V I. CONC LUS IO N100 . In light of the above, it is re sp ec tfu lly su bm itte d th at th e DoT has

throughout acted in public in terest on the basis of the po licydetermined by th e G o vemmen t o f In dia . There is no case made outby th e Pe titio ner s fo r mon ito ring the In ves tiga tio n by CB I or an S Ii.The spectat Leave Pe titio n shou ld be d ism is sed

Deponen t


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48VER IF ICA T ION

Verifled at N ew D eihl this 1 1" day o f Novembe r 2610 th ,I Ihe Con Ie n Is 01,

my above a ffid av it a re true and correct, no part of It I. f . , and no th in gmate rial I s concealed t h e re f ro m ,

Depcne l1 !

DoT affidavit stating zero loss

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