3G spectrum row: Sibal talks tough, but will meet telcos

Communications Minister Kapil Sibal will meet all stakeholders to diffuse the growing controversy over the issue of three leading incumbent operators, Bharti Airtel, Vodafone and Idea Cellular, offering 3G services without having spectrum in the circles, thus violating licence conditions.

Sibal told Business Standard: "We are moving towards a new policy of one nation, one licence. We are now in transition and there is a legacy issue. We want to take the opinion of all stakeholders. I am planning to discuss these issues and will call every stake holder".

He, however, dismissed the request made by the three operators, to Prime Minister Manmohan Singh through a letter that in case they are not allowed roaming services, the government should refund their spectrum auction payment with interest along with compensation for all the capital investments made by them to build the network.

Responding to this demand, Sibal said: "These companies want that we should take back the spectrum, why would we?"

The joint letter to Manmohan Singh was written by Sunil Mittal, chairman of Bharti Airtel, Kumar Mangalam Birla, chairman of the Aditya Birla group which has promoted Idea Cellular, and Vittoria Colao, chairman of Vodafone Group Plc.

The three players, which had entered into roaming agreements, are offering 3G services where they don't even hold 3G spectrum.

While Vodafone has spectrum in only nine circles, it offers 3G services to its customers in 20 circles.

Bharti Airtel has 3G spectrum in 13 circles but offers 3G services in 20 circles. Idea Cellular has 3G spectrum in 11 circles but offers 3G services in 19 circles.

The country already has about 10-15 million 3G customers.

Apart from the internal wings of the department of telecommunications, the Telecom Regulatory Authority of India and the law ministry have given a strong opinion that the three companies cannot offer such services and they are against the terms of the licence.

Sibal also admitted opinions have also not supported the incumbent operators.

"Trai has said this is completely wrong, we sought the opinion of the

law ministry which also said the companies were at fault," added Sibal.

Giving an example, Sibal said Airtel wanted it should be allowed to offer roaming in Kochi, but they don't have a licence there.

But other companies operating in Kochi have paid money to own spectrum, so how could they allow an outside company, which has not bought spectrum,  to operate.

State-run telecom firm BSNL has strongly objected to the 3G roaming agreement saying such agreements will make BSNL's 3G business case unviable and further add to its financial losses. Many other 3G operators -- who have not got into roaming agreements until there is clarity from the government on the contentious issue -- also say they are losing out on business.

"Their interpretation means if I have a broadband wireless licence, I can also do 2G and 3G services without paying to the government by entering into a roaming agreement.

"Or if I am a 2G player in one circle, I can become a pan-India player by again entering into roaming agreements with others.

"That is ridiculous," said a top executive of a leading telecom company.

Earlier, various wings of the DoT unit had said a unified access service licence licencee cannot offer 3G services and declare a tariff plan or acquire customers in a circle where they have not been allocated 3G spectrum.

It had said the 3G roaming agreements entered between these three companies tantamount to becoming mobile virtual network operators, which is not allowed under the current policy.

A MVNO firm offers mobile services on other operator's network and does not have its own licenced spectrum and infrastructure/network.

The MVNO policy is currently under consideration by DoT.

Even Trai clearly stated that after studying the issue (3G roaming between private operators) on legal, economic and technical grounds, it had prima facie come to the conclusion that such as arrangement is a "violation of the terms and conditions of the licence."

Trai also opined the action of the operators could have serious financial implications for the government.

That is because operators could provide 3G services in circles where they have not paid for spectrum, auctioned by the government.