Two members of the six-member Competition Commission of India have submitted a dissent note against the majority view that the competition watchdog conduct a detailed investigation into the charges of cartelisation made by Reliance Jio against Bharti Airtel, Vodafone and Idea Cellular. The investigation, ordered by the majority ruling, is based on prima facie evidence that the three incumbent operators had colluded among themselves and through their association Cellular Operators Association of India to deny sufficient points of interconnect to Jio, thus trying to block its entry into the mobile services business.
However, it has come to light now that the order was not a unanimous one. Two members — Sudhir Mittal and Justice GP Mittal — in their dissent note have instead blamed Jio for violating the regulatory norms by creating a huge subscriber base before the commercial launch, giving wrong estimates of its subscriber base and average call duration, which were responsible for congestion of its network. The two members have also clearly stated that it is not the job of the CCI to be concerned with sufficiency of PoIs as these are to be dealt with by the Telecom Commission/Telecom Regulatory Authority of India/ Department of Telecommunications/Telecom Disputes Settlement and Appellate Tribunal.
“The fact remains that there is no material from which the Commission at this stage can hold even prima facie that the incumbent telecom operators (ITOs) acted in concert to impede the entry of Jio in the market and to limit supply, technical development and provision of services in the market,” the two have said in their dissent note.
Holding Jio responsible for disrupting the market in violation of the regulations, the two members have cited a DoT circular dated August 29, 2005, which states that an operator making an entry into the market is not expected to create any subscriber base during the test period. The test cards are to be issued to business associates, employees, relations etc only for the purpose of checking quality of service. “However, this does not seem to be the case with RJIL. Thus, the alleged non-provisioning of demanded PoIs by the ITOs or reasonability of demand needs to be seen in this light,” the two members have observed in their dissent note.
According to them, the Jio letter written on 21.06.16 — prior to launch — to the incumbents seeking large number of PoIs was not correct. Jio had sought PoIs stating that it is expecting 100 million subscribers in the first year post launch of services, which combined with the initial pent-up demand for services may result in upward of 25 million subscribers within the first quarter of launch. Accordingly, it had sought PoIs for a base of 22 million users. The two members have found fault with Jio for asking such large number of PoIs when it was conducting test trials and not even given a hint of when it would begin commercial services.
Since the COAI wrote a letter to the DoT on 08.08.16 and 02.09.16 to the finance minister complaining about the large number of subscribers Jio had ramped up in its test trial stage which was leading to asymmetric traffic, it cannot be seen as being anti-competitive or cartel of sorts.
Blaming Jio for the congestion on its networks, the two members have said that it gave a wrong estimate of PoIs to the incumbents. For instance, Jio sought PoIs for 22 million base as it expected to reach a user base of 25 million in the first quarter of launch. It launched services on September 5, 2016. Prior to that on August 31, according to Trai subscription data, it had nil subscribers but on 30.9.2016 it had a subscriber base of 15.98 million, on 31.10.2016, of 35.61million, and 51.88 million on 31.11.2016. “Hence, Reliance was able to gain a subscriber base of 16 million within one month post commercial launch of its services only because it built up a huge subscriber base during its so-called testing phase,” the members have noted. So, where Jio had given estimate of 25 million subscriber by December 4, 2016 it instead had a base of over 51 million by then. Further, it had estimated an average call duration of 54 second but actually it went up to 180 seconds.
Thus, the two members have concluded that it is such under-estimation by Jio which led to congestion on its network and not any concerted action by the incumbents. According to the charts submitted by Jio, the dissent note has observed, the incumbents had provided large number of one-way PoIs to Jio for catering to incoming traffic from Jio to them as Jio was the new entrant in the market and was expected to have more outgoing traffic.
To substantiate their case, the two members have said that things have settled so quickly post-launch of services by Jio so CCI should not intervene in the matter. They have not found any merit in Jio’s allegations that incumbents tried to block customers from porting to Jio.