Though the government is not bound to accept the Trai recommendations, the move is important in the current context of the CAG report since the government will be under pressure to explain why it has not acted. The Trai recommendations are not based on whether irregularities have been committed in the licensing (this is what the CAG is concentrating upon), but on the rules of the licences. Under the law, the Trais only mandate is to ensure firms meet the various conditions specified in the licence. So if a firm has not rolled out its network (10% in the first year of getting the licence), it has to pay a penalty. Since the DoT has not levied this penalty, Trai is recommending this be done.
Trai chief JS Sarma had told FE on October 28 that he was in the process of finalising his note on the matter and would be sending it off in a few days time. Sarma was not available for comment as to the delay, but sources say the Trai is examining the data afresh since this is now available for even later months. Trai is also trying to independently verify whether the companies have actually started services this is done by getting data on the number of base transmitting stations they have.
We are examining the rollout record of the new operators and going to recommend that penalty be levied as per the licence conditions on those failing to meet the rollout obligations. In cases where the three-year deadline is over, we would even recommend cancellation of the licences, Trai chairman JS Sarma had told FE in October since, he said, one of the important roles of the regulator was to ensure that the terms and conditions of the licence were met by all operators.
As reported by FE earlier, the rollout record of new operators is dismal. Out of the nine applicants who were granted licences in January 2008, only two have rolled out services, that too only in some of the circles for which they received the licence. According to data submitted to Parliament by government as on January 2010, only two operators Uninor and S Tel had launched operations. Norway-based Telenor has a 67.25% stake in Uninor (earlier known as Unitech Wireless), which launched services in 8 out of the 22 circles. S Tel has launched services in three out of six circles. Some companies claim to have made launches after January 10, 2010. Loop Telecom, which holds licences for 21 circles, claims to have launched services in five, Videocon Telecommunications also claims to have launched in five, and the biggest surprise, Etisalat DB (formerly Swan), which till January 2010 is shown as not having started services in any of its 15 circles, claims to have made launches in all.
Trai will be using data till June or even September in its final recommendation.
Under the licence conditions, DoT has the power to impose a fine of Rs 5 lakh a week for the first 13 weeks of delay, Rs 10 lakh for the next 13 weeks, and thereafter at the rate of Rs 20 lakh for delays up to 26 weeks. If any operator fails to fulfill the obligation even after 52 weeks of delay, DoT has the power to cancel the licence.