Waves of difference

22ShahRukhKhan Loud and clear: Reliance Jio promoter Mukesh Ambani and family with actor Shah Rukh Khan at the launch of Jio 4G services for its employees in Mumbai | PTI

Before the big spectrum auction, telcos are entangled in a big fight

  • COAI, the telecom operators' lobby, is hell-bent on making things tough for one of its own members, Mukesh Ambani's Reliance Jio Infocomm

Top on everybody's mind at Sanchar Bhawan, the headquarters of the ministry of communication and information technology, are the upcoming auctions of 4G spectrum across seven frequency bands. The Department of Telecom (DoT) had announced that the auction would be held on September 29. But now, telecom secretary J.S. Deepak feels there is no point in rushing with it. “We have had a preliminary discussion with all stakeholders,” he said. “Some concerns have been raised about the various complexities of the auction and its details like duration and timing.”

Apparently, telecom operators suggested to Deepak that he must consider waiting for the new Hindu financial year, which starts on October 1, to hold the auctions. “We are considering the request of operators to hold the auctions after October 1,” he said.

The auction is expected to garner Rs 52 lakh crore, as premium bands will be brought under the hammer for the first time. While the government says it would increase data usage in the country, technocrats are looking at it as a stepping stone for introducing the internet of things in a billion-strong telecom user market.

The catch is, there is a turf war going on in the industry—between the existing biggies and a deep-pocketed newcomer. Cellular Operators Association of India (COAI), the telecom operators' lobby, is hell-bent on making things tough for one of its own members, Mukesh Ambani's Reliance Jio Infocomm, which is planning a nationwide commercial launch soon.

COAI, on August 8, wrote to the DoT that Jio was flouting norms by providing high-speed mobile data access to its users “in guise of testing”. On the other hand, Jio is seeking stricter implementation of mobile number portability norms and proper redress of issues faced by users while changing networks.

“It is not a crime to ask for a level playing field,” said Rajan Mathew, general secretary, COAI. “The telecom industry has paid more than Rs 5 lakh crore to obtain the spectrum they have in possession so far. We have always maintained that the regulator must not expect the industry to compensate higher volumes from another network. Not now and not after the auction whenever that is held.”

The bone of contention is the interconnect usage charge (IUC), or termination charge, which is paid by an operator on whose network a call is made to the operator on whose network the call is received. It is decided by the Telecom Regulatory Authority of India (TRAI). COAI wants a higher interconnect usage charge, while TRAI wants to reduce it.

So far, Jio has been providing its service based on agreements with other networks that were originally made with Reliance Telecom Limited (RTL), a subsidiary of Reliance Communication, the parent. The company had notified the Securities and Exchange Board of India and stock exchanges of a decision of its board to demerge the telecom assets held by RTL.

“RTL has been demerged of its telecom undertaking consisting of five licence service areas of RTL into the listed entity Reliance Communications. Based on this shift in corporate structure, the existing networks are seeking not just a fresh agreement on IUC charges, but proposing higher charges for compensation from IUC,” said Navin Uppal, a corporate lawyer at Bains and Co. The demerger resulted in transfer of business assets worth Rs 2,075 crore, or 9.56 per cent of Reliance Communications' total turnover, the company said in a statement.

Jio has requested that TRAI take action against operators who are denying it point of interconnectivity (PoI) during its ongoing trials. “It may be pertinent to note that the obligation of a licensee to provide PoIs is absolute and not contingent on any other factors, including any traffic imbalance or the licensee not having announced commercial launch,” Jio said, in a letter on August 12 to TRAI chairman R.S. Sharma. It alleged that COAI had advised all its members not to provide it PoI during the ongoing trial phase. COAI, in reply, told TRAI that the new network was ‘poaching on its existing customers’ in the trial phase.

Jio argued that the requisite PoIs must be unconditionally facilitated between all operators, subject alone to payment of relevant IUC charges. “The current number of PoIs provided or being provided to RJIL are far from adequate and this is more than evident from the fact that the current call failure rate is in excess of 65 per cent, resulting in more than 1.6 crore call failures per day between RJIL and the networks of Bharti Airtel, Vodafone and Idea,” said a statement from Jio.

COAI had maintained that Jio had garnered some 1.5 million consumers, who generate a huge amount of voice and data traffic. It said that existing operators should not be under any obligation to share their networks, unless the company announced its commercial launch. Jio is yet to announce a commercial launch, though vendors in most cities are seen selling its sim cards with 4G data connection.

TRAI is closely observing the situation. “We will do all that is necessary to promote and nurture fair competition during the upcoming telecom spectrum auction,” said Sudhir Gupta, secretary of TRAI. “The consultation on review of IUC will remain open till the declared date of September 19. At which point we can take a call whether to extend it for further consultation before the spectrum auction takes place.”

Operators are reportedly planning to write to Prime Minister Narendra Modi, asking him to put off the spectrum auction till a decision is taken by TRAI on IUC, so that regulatory gaps will not hinder the rollout of 4G networks. The government, however, is not likely to shelve it for too long. And, already feeling the heat, the telcos are busy readying the war chest for the spectrum auction.

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