The Department of Telecommunications has suggested forfeiture of the performance bank guarantee given by Hutchison-Essar and imposed a penalty of Rs 50 crore (Rs 500 million) on Bharti Airtel [Get Quote] for offering subscriber local dialling services to its customers in violation of the telecom licence norms.

The fresh DoT note for action on the case is yet another example of a file that had been pending action earlier and has been opened up after A Raja took over as the communications minister.

The action against the companies was suggested when Dayanidhi Maran was the minister, but he had returned the file with a remark that the minister of communications could not see the file, according to a fresh DoT note.

The SLD operated is as follows. For example, a mobile subscriber in Delhi on tour to Mumbai could call numbers in Mumbai using a prefix and pay only local call rates. This bypassed the need to route it through national long distance network. The service of course was popular with customers who saved on their bills.  However, NLD (national long-distance) operators lost money.

DoT has said that the case relates to violation of licence conditions by Bharti Airtel in 11 circles including Delhi, UP (west), Haryana, Punjab, Mumbai, Gujarat, Madhya Pradesh, Kerala and Chennai. For Hutchison-Essar, the violation occurred in Mumbai and Delhi service areas.

A Hutch-Essar spokesperson declined to comment on the issue. A Bharti-Airtel spokesperson said that it had not received any communication in this regard by the DoT.

The ministry has stated that on June 20, 2003, the DoT had written a letter asking these companies to stop the local calling services. Despite the order, Hutch-Essar continued to provide local calling services till December 2003 and Bharti Airtel till January 2005.

While pointing out that it has not been possible to estimate the quantum of loss to the government , the Telecom Regulatory Authority of India had also suggested imposition of a penalty for violation of the licence conditions, but had clearly stated that  there was no need for termination of the licence altogether.

Some Members of Parliament had written to the government that bypassing NLD network could have led to substantial loss to the state-owned BSNL and MTNL [Get Quote].