In a blow to Bharti Airtel, Vodafone and Idea Cellular, the Department of Telecom has decided that 3G roaming pacts between the operators are illegal.
The DoT is sending notices to the companies ordering them to terminate the roaming pact. While the DoT is yet to decide on the penalty for the violation, licence conditions allow the Government to impose a fine of Rs 50 crore on each operator for every circle where the roaming arrangement was put in place.
In addition to the penalty, the decision to disallow the roaming pact will hurt the operators' 3G roll out plans. None of the operators had won 3G spectrum in all the 22 circles and therefore were betting on this intra-circle roaming arrangement to offer a pan Indian footprint.
Tata Teleservices and Aircel had also entered into a similar agreement but the two operators called off the pact soon after the DoT first raised concerns. All the operators, in a joint letter to the Government, had earlier warned that if the 3G roaming arrangement was not permitted, they would return the spectrum with full rights to seek a refund of the money they paid post auction.
But despite the threats, the DoT has decided that the roaming pacts were not consistent with the existing rules. “The straight question is, whether it is permissible under the various terms and conditions of the licences and the auction under which the spectrum was received. The determination is that it is not,” Mr R. Chandrashekhar, Secretary, DoT, said.
The DoT's action was expected because three of its internal units and the telecom regulator had already held the roaming arrangement as illegal. The impact of this on consumers is not clear as there's no data to show the number of subscribers roped in by the operators through such roaming deals.
Though current mobile licence rules allow operators to go in for roaming agreements to enable users to get seamless coverage, in the case of 3G services, operators are selling connections even where they do not have spectrum. The telecom regulator had said that such an arrangement was causing loss to the national exchequer.
But Mr Chandrashekhar said that there was no impact on revenues or on consumers and the decision was based on whether it was permissible or not permissible. The operators did not comment on the development as the DoT decision has not been formally communicated to them. But market experts said that the DoT was on a weak wicket legally.
“Did the DoT give a separate licence for 3G? No. Did DoT allow intra circle roaming before auction? Yes. DoT therefore has no legal standing to ask operators to terminate the roaming agreement,” said Mr B.K. Syngal, former Chairman of VSNL.