Telecom department to ask for termination of Bharti, Idea, Vodafone and Aircel 3G agreement

NEW DELHI: The telecom department plans to ask mobile phone companies to terminate 3G-roaming agreements, a move that will prevent telcos from providing high-speed data facilities on a pan-India basis and deprive customers from accessing them in areas where their operators don’t have permits.
Operators such as Bharti, Idea, Vodafone and Aircel have signed up 3G customers across the country riding on bilateral roaming agreements that allow these firms to use each other’s airwaves and offer high-end data services even in regions where they do not have third-generation spectrum. This has resulted in, for instance, a Bharti customer in Kolkata being able to access 3G services even though the company does not have a licence for West Bengal. This is different from 2G roaming agreements where a telco cannot offer services in a region for it does not hold a licence.

While telcos say the licensing terms allow for 3G roaming pacts, sector regulator Trai and the telecom department say these alliances violate licence rules. A senior DoT official said his department planned to issue notices terminating these agreements after getting the law ministry’s clearance.

This will restrict Bharti, Vodafone, Idea and Aircel to providing 3G services such as high-speed internet, video calls and interactive gaming in only those circles where they won airwaves in last year’s auctions. But the ban will not impact Tata Teleservices, Reliance Communications and S Tel as they have not entered into roaming pacts.

It will also mean customers currently accessing high-speed internet and other services in areas where their operator does not own 3G spectrum will either have to switch to an operator who has these airwaves or be deprived of accessing these services.

Only customers of Bharti, Vodafone and Reliance Communications will be able to avail 3G services in Delhi and Mumbai circles, once the ban comes into force.

But the proposed ban will not impact customers who are travelling outside their home networks. They will continue to enjoy 3G services as the ban will apply to 'intra-circle' roaming deals and not 'inter-circle' pacts.

At present, India has 10-12 million 3G subscribers but it is not known how many of them are using these services through the roaming pacts.

Last week, the chief executives of four mobile phone companies — Bharti Airtel, Vodafone, Tata Teleservices and Idea Cellular — had come together to defend 3G roaming deals and said the agreements to use each other’s airwaves were ‘legal and permissible’. In their joint letter to Communications Minister Kapil Sibal, Bharti Airtel CEO Sanjay Kapoor, Idea Cellular MD Himanshu Kapania, Vodafone India MD and CEO Marten Pieters, and Tata Teleservices MD Srinath N said prior to the 3G auctions, the industry had a clear understanding with the government that such deals would be permitted.

“Any determination now that this might not be the case would fundamentally alter the legal and economic basis on which the business case of 3G bids was evaluated, inevitably leading to a requirement to either refund the bidders or rerun the auction,” the heads of the four mobile companies warned. They also said ‘assertions that these perfectly legal arrangements have led to revenue loss for the exchequer were baseless’.

DOT WINGS, TRAI SAY 3G ROAMING DEALS VIOLATE LICENCE RULES
A senior telecom department official said termination notices were inevitable as all four internal wings that studied the issue had concluded that 3G roaming deals were ‘illegal’. Last week, the department’s advisor (finance) had asked the ministry to decide if 3G airwaves of operators should be revoked for the alleged violation. “The 3G spectrum assignment may be revoked if the licensor determines the user of spectrum to be in serious breach of any of the allotted spectrum (including adherence of auction rules) and the consequent rollout obligations,” the department’s wireless planning and finance wing had said in an internal note that was reviewed by ET. This wing had also warned that 3G roaming deals would have ‘negative revenue implications for the government’.

“Telcos pay higher spectrum charges in areas where they hold 3G airwaves, which are used to provide high-end data services. This wing of the department, therefore, holds the view that these roaming deals allow telcos to offer data services even in areas where they don’t have 3G spectrum without having to pay the respective spectrum usage charges,” it had added.

ET first reported last month that the access services wing of the DoT, which looks into all operational issues linked with the sector, had ruled that telcos cannot enter into 3G roaming deals with each other in regions where they have not bagged thirdgeneration airwaves. Just prior to that, the Telecom Enforcement, Resource and Monitoring (TERM) Cell of the DoT had also asked the department to initiate action against all mobile phone companies, including issuing showcause notices and imposing financial penalties.

Trai has also written to the government stating it has “prima facie come to a conclusion that (3G roaming) arrangements are a violation of the terms and conditions of the licence”. It also warned that if such arrangements were permitted, “it can lead to a situation where operators, after entering into commercial agreements for use/leasing of spectrum, will launch any type of service on intra-circle roaming, without having the commercial rights to use the spectrum in that particular service area”.