Two days after the Central Bureau of Investigation (CBI) searched the offices of the country?s top two mobile operators following the filing of a fresh first information report (FIR) in spectrum allocation since 2001, Vodafone, one of the raided companies, hardened its position against the government.
Vodafone said there was no case for the government asking it to pay for spectrum beyond 6.2 MHz, which is seen by the government as excess, and in case the issue is forced on it, the company would have no option but to go to court on the matter.
The company also hardened its position on the issue of intra-circle roaming for 3G services, which the government deems illegal. Vodafone said the roaming pacts between it, Bharti Airtel and Idea Cellular were perfectly legal and if the government categorises it otherwise, they were ready to return the spectrum and the government should refund their money. The three operators have jointly written a letter to the department of telecommunications (DoT) to this effect.
The development assumes significance since the fresh FIR and searches are over the issue of granting spectrum to these companies ? first beyond the start-up 4.4 MHz and subsequently beyond 6.2 MHz. Bharti and Vodafone currently hold 10 MHz spectrum in certain circles.
While the FIR states the decision to grant additional spectrum to the two companies was taken in a hurry bypassing all norms by the then telecom minister Pramod Mahajan, secretary Shyamal Ghosh and DDG JR Gupa, of late the DoT and the Telecom Regulatory Authority of India (Trai) have maintained that the licence agreement provides for allocation of spectrum only up to 6.2 MHz. Accordingly, the regulator and the DoT feel operators holding spectrum beyond the level should pay a one-time fee for it.
In fact, Trai recently worked out a formula to charge these companies for holding excess spectrum, which works out to 136% of 3G rates.
Punching holes in the DoT-Trai reasoning, TV Ramachandran, director (regulatory affairs), Vodafone said: ?The proposal to charge a one-time spectrum fee is legally untenable. In 2002, when DoT had two options before itself of either charging a one-time fee or a higher revenue share, it chose the latter. Since this was reached through an agreement between us and the DoT, we withdrew our court cases in exchange for a spectrum fee which would be capped at 4% of the adjusted gross revenue?.
What this means is that spectrum beyond 6.2 MHz was not given to operators for free but for a higher spectrum usage charge; so any further charge is legally not tenable. In fact, the 2007 Trai report too did not recommend a one-time fee for spectrum held beyond 6.2 MHz.
Interestingly, the DoT came out with an administrative order to grant spectrum up to 15 MHz to GSM operators as late as 2006 when current Trai chairman JS Sarma was telecom secretary.