(p.153) Appendix III Case Study on the Need for Conducive Environment
(p.153) Appendix III Case Study on the Need for Conducive Environment
(p.153) Appendix III
Case Study on the Need for Conducive Environment
The Imperative for Policy and Regulations to Create a Business Environment Conducive to Telecom Growth: A Review of the Landmark TDSAT decision on WLL in the case of Cellular Operators Association of India v. Union of India & Others (TDSAT Decision, 8 August 2003 in Petition 1 of 2001):
The liberalization of the Indian telecommunications regulatory environment occurred in phases. The sub-sector of value-added services, which included cellular mobile services, was opened for competition in July 1992. The competition in the basic service was introduced following the National Telecom Policy, 1994 (NTP-1994). While the implementation of 1994 telecom policy did make a difference, it did not adequately address all issues of competition. The initial phase of licensing was not without controversies and disputes. Most of the projects faced problems due to revenue realization falling short of projections and the inability of operators to raise the required capital for their projects. Additionally, the targets envisaged in the policy were also not fully realized. Even as these deficiencies became apparent, major technological innovations were changing the face of the telecommunications industry globally, including Internet, broadband, convergence of media and telecom, as well as significantly larger than anticipated deployment of wireless networks.
The realization that the deficiencies of the 1994 telecom policy need to be comprehensively addressed within the framework of the new telecom environment led to a New Telecom Policy in 1999 (NTP-1999). The new policy covered a wide ranging telecom issues, and further liberalized the scope of cellular mobile services, fixed services, and cable services, including the terms and conditions of licenses and operational aspects.
These policy initiatives spurred the expansion and efficiency of the telecom industry and also contributed to an increase in the number of cellular mobile (p.154) and basic services operators, thereby, significantly enhancing competition. Companies fiercely vied with each other to preserve their own turf and to gain a greater market share. If that required exploiting loopholes in the licensing terms or using new technologies, so be it.
This lack of clarity in the terms and conditions of license and inadequate appreciation of the need for technological neutrality can vitiate the competitive environment. This case study arises from the 2003 TDSAT decision in the case of Cellular Operators Association of India v. Union of India & Others (TDSAT Decision, 8 August 2003 in Petition 1 of 2001). In this case, multiple issues came to the fore, including level-playing field, clarity of regulatory framework, the need for the regulations to evolve with technological innovations, as well as, harmonization of multiple services through a single licensing regime. More importantly, it raises a fundamental question, whether protracted litigation involving enormous costs to the parties to the dispute could have been avoided by employing alternative methods of dispute resolution like judicial mediation or arbitration.
The immediate provocation for the dispute was the decision of the Government of India on 25 January 2001 to allow the fixed service providers to provide CDMA-based limited mobility service. The regulator’s apparent ambivalence in not enforcing restricted mobility caused further misgivings among the cellular operators. They moved the TDSAT to set aside the decision but did not succeed. The TDSAT dismissed the petition on 15 March 2002 on the ground that granting limited mobility in WLL service was a matter of policy which the tribunal could not go into.
The telecom scene was beginning to get vitiated. Other contributory factors were two other issues which heightened the misgivings of cellular operators. They continued to harbour the grievance that they paid a much higher fee than the WLL companies (which paid a measly sum) for an all India radio spectrum license. They also questioned the validity of payment of access charges to basic service operators for termination of calls in the latter’s network. They even threatened not to interconnect with limited mobility operators unless the issue of access charges being paid by them for calls terminating in the basic operator’s network was resolved. These two factors, the mobile operators contended, had made the cellular service more expensive.
The TRAI intervened in the interconnection issue and directed the cellular operators on 9 January 2003 not to block calls originating from WLL networks as their move was not in conformity with license terms. Finally, this issue got a temporary reprieve with TRAI’s decision of 24 January 2003 to significantly reduce the burden of access charges on cellular operators. The entry of WLL operators in the basic service with a low cost tag had somewhat of an unsettling impact on mobile operators. This was exacerbated by the promise held out to customers at the introductory launch of WLL-Limited Mobility service in December 2002, by one of the WLL service providers (Reliance Infocomm), to provide national roaming rather than restricting the limited mobility service (p.155) within Short Distance Charging Area (SDCA) as originally envisioned by the regulators.
Failure to get relief from the TDSAT prompted the Cellular Mobile Service Providers to file an appeal with the Supreme Court of India against the TDSAT decision of 15 March 2002. The Supreme Court remitted the case back to the TDSAT to reconsider the following seven issues, with special emphasis on the question of a level-playing field.
• The Government of India decision is vitiated because it had not sought the recommendation of the TRAI on WLL-Limited Mobility, which is mandated under law for any new service;
• The NTP-1999 did not envisage WLL with limited mobility, and as such, the decision to provide WLL with limited mobility is beyond the purview of the policy;
• The Government permission to offer WLL with limited mobility is arbitrary, unreasonable, and unjust;
• The Government decision was contrary to the 2001 TRAI recommendation which stipulated two conditions, and may, therefore, be vitiated;
• The decision of the Government does not deal with the question of a level-playing field between fixed operators providing WLL with limited mobility and cellular operators, reflecting a discriminatory regulatory regime;
• The decision allowed fixed operators the ability to offer a cellular-like service (WLL-Limited Mobility) within a limited charging area (or SDCA), which was essentially a substitution for cellular service that should not have been allowed; and
• Under the decision, fixed operators were able to offer WLL-Limited Mobility without any entry fee, spectrum charges, and without even a competitive bidding, which amounted to a violation of the recommendation made by the TRAI pertaining to new cellular licenses.
The Cellular Operators’ Perspective
The cellular operators argued that the NTP-1999 provided for three categories of access providers, fixed, mobile, and cable. The concept of limited mobility service was completely absent. In addition, the provision of a wireless loop in the fixed service provider license was also purely by way of a preferred technology and there was a clear distinction between Wireless Local Loop (WLL) and Wireless Local Loop-Mobile [WLL(M)], particularly, when there was a clear prohibition to mobility in the fixed license.
The Wireless Local Loop, in their view, was permitted for the fixed providers to essentially obviate/alleviate issues regarding connectivity in remote and/or congested areas, and not to provide mobility, limited or otherwise. The wireless, in this context, is nothing more than a conduit for connectivity, which cannot be equated with mobility, which is a service. The difference between fixed and (p.156) cellular operators could not be obliterated or blurred by the fact that fixed operators were permitted from the very beginning to provide last mile linkages through wireless.
The operators stated that the concept of wireless in local loop services without mobility is well known. Otherwise, they questioned, the need to refer the matter to the Group on Telecom (GOT-IT) over a specific question as to whether NTP-1999 allows mobility and, if not, how is the policy to be amended to accommodate such mobility.
As such, the cellular operators argued that WLL(M) was a new service for which the recommendation of the TRAI should have been sought by the Government under law, which was not done. Section 11(1)(a)(i) & (ii) and the 2nd Proviso of TRAI Act, 1997, which is the statute relevant to the issue, reads as follows:
‘1. Notwithstanding anything contained in the Indian Telegraph Act, 1885(13 of 1885), the functions of the Authority shall be to:
(a) make recommendations, either suo moto or on a request from the licensor, on the following matters, namely:
(i) need and timing for introduction of a new service provider
(ii) terms and conditions of license to a service provider.’
Proviso 2—Provided further that the Central Government shall seek the recommendations of the Authority in respect of matters specified in sub-clauses (i) and (ii) of clause (a) of this sub-section in respect of new license to be issued to a service provider and the Authority shall forward its recommendations within a period of sixty days from the date on which Government sought the recommendations.
The emphasis of the NTP-99, according to the cellular operators, is on licensing and level-playing field, both in terms of procedure and non-discriminatory term and conditions. However, this Government decision, they argued, disturbed the level-playing field in various ways in favour of the Basic Service operators. They also raised the issue of the dismal performance of fixed service providers in regard to the provision of village telephony as well as questioned the affordability of WLL(M) service.
Arguments Advanced by The Fixed Service Providers
The basic (or fixed) operators argued that they were allowed under their licenses to provide wireless local loop using Code Division Multiple Access (CDMA) technology. The use of a handset in WLL service was possible only because of technological innovations that shrunk the receiver sizes. In addition, an ITU document specifically recognized WLL with limited mobility with a range of 50 kilometers as part of basic/fixed service. The Telecom Engineering Centre (TEC), which is a Government body and sets technical standards, recognizes WLL in CDMA band as a part of basic service license, and also permits use of handsets by the subscribers.
(p.157) In their view, amendments to the license can be made under the provisions within the license, and that the license agreements with the cellular operators had been amended on a number of occasions without requiring change in the Act or policy. Moreover, their license specifically permitted mobility to a limited extent, with WLL(M) being a part of the basic service license. The fixed operators also suggested that the NTP-1999 is a policy that provides an enabling framework rather than licenses. They held that the Policy does not prohibit wireless service being provided by the basic service operators and recognizes WLL service. The features of the cellular mobile service and the WLL(M) service are, in their view, significantly, distinct.
They also questioned the validity of the data provided by the cellular operators, supporting their contention of disturbance of a level-playing field while furnishing data supporting their view point.
The Point of View of The Government of India
The government averred that basic service operators were allowed to use wireless local loop as one of the preferred technologies. Initially, the view was that the basic service license did not permit mobility as:
1. It would encroach upon the restrictions included in the licenses regarding mobility, and
2. The mobile technology on WLL platform was under trial and evaluation by MTNL.
However, given the technological changes, the government stated that it became imperative to consider this possibility. This culminated in a TRAI recommendation to amend the terms and conditions of basic license, allowing handheld subscriber terminals subject to certain restrictions. The TRAI’s recommendation was accepted and implemented on 25 January 2001, which removed the practical and legal impediments to allowing handheld terminals.
The government also stated that there is nothing in NTP-1994 or NTP-1999 which prohibited the service, and that a broad and purposive construction of the policy envisages WLL(M) service. The NTP-1999 foreshadows convergence, and the general focus of the policy should be the overriding factor.
Even if the proposition regarding inadmissibility of the WLL(M) service is accepted, the Government argued that the NTP-1999 is a non-statutory instrument and does not create legal rights in favor of the cellular service providers.
The TDSAT Findings in The Majority Decision
The NTP-1994 envisaged two categories of services, basic services and value-added services that include cellular mobile service. This policy permitted the cellular operators to provide mobile telephony services, including the ability to carry its own long-distance traffic within their service area without seeking an additional license. They were also allowed to provide all types of mobile services, including voice and non-voice messages, and data. The NTP-1999 observed that (p.158) technological advancements allowed convergence, whereby one group of service providers could offer services that were licensed to another group. The TDSAT observed that if such was the intention, the NTP-1999 could have categorically prohibited this development as unhealthy and undesirable, but it did not do so. On the other hand, it urged a relook into the existing policy framework.
The DoT’s references to TRAI on April 23, 1999 and July 12, 1999 did not seek any recommendation from the TRAI regarding WLL(M) service. However, TRAI’s Consultation Paper of June 12, 2000 on licensing issues relating to fixed service providers flagged certain issues for consideration that included:
1. The scope of the fixed service;
2. Whether there was a need to change the definition of basic services; and
3. Its impact on other licensees such as cellular operators.
Neither the NTP-1999 nor the license agreements of basic service providers mention WLL(M). Under law, any activity not listed categorically in the license of an existing licensee can be viewed as a new activity. However, in such an event, several activities already permitted without a separate licence as value-added and/or supplementary services (like SMS or email, permitted to cellular operators, and voice-mail and audio text, permitted to basic operators) would have to be treated as illegal and void.
The TDSAT further found that WLL is mentioned in the license agreements for the basic telephone services as well as in the NTP-1999, establishing WLL as a part of basic telephone service. In deciding contentious issues, the TDSAT observed that infractions of various extant provisions as well as fast changing developments in the telecom sector are both important considerations. Technological changes enhance value of existing services in both mobile and basic streams. WLL has been recognized as a preferred technology both in NTP-1999 as well as in the license agreements for basic telephone services. This preferred technology, or any other technology for that matter, can acquire various hues and colours to keep pace with technological developments. The basic question is, whether the genesis of a service, in this particular case WLL, lies in the basic or cellular field. The TDSAT concluded that WLL is a part of basic service for the following two reasons—one, WLL has not been questioned as not belonging to basic service stream, either in the arguments put forth from both the sides and material available on record, and two, the fact that ITU document, referred to in the course of arguments, also recognizes WLL service and its growing utility, particularly in developing countries. Hence, WLL(M) has to be seen as value addition to WLL service, provided the nature and features of this service are qualitatively different from that of the cellular mobile service.
WLL(M) has its roots in WLL; however, it cannot be viewed as a new service because limited mobility is now allowed to WLL. The TDSAT observed that viewing the concept of WLL(M) from a developmental approach, rather than a restrictive regulatory approach, can play a positive and promotional role in meeting the needs of the market. The phenomenal rise in the number of (p.159) subscribers, both fixed as well as mobile services in the wake of availability of additional and supplemental value-added services and TRAI’s unambiguous recommendations in favour of limited mobility merited due notice. Cellular providers were already permitted to provide supplementary and/or value-added services as a part of their licensed activity, even though these were not originally a part of their license. This would not have been possible if the terms and conditions of the license precluded any additional activity apart from what was indicated in the original license.
Permitting limited mobility to the fixed operators was implemented only after duly consulting and obtaining the recommendations of TRAI. Thus, the argument that the TRAI was not consulted, as required under law, does not hold water, according to the TDSAT, particularly in a sector like telecom, where the scenario is changing at a very rapid pace. A policy document in the telecom sector cannot be viewed as a rigid and inflexible instrument which has to be amended every time technical and developmental imperatives have to be accommodated and introduced within the system. The NTP-1999 is a non-statutory document, as was its predecessor, the NTP-1994; the objective is to promote development consistent with other broad socio-economic goals.
The TDSAT found that the records produced did not substantiate the contention that the recommendations of the TRAI were either hasty, or based on inadequate materials. In addition, the Government’s competence to amend the license is provided for in both the fixed and cellular operators’ license agreements.
Until August 2000, the Government consistently did not to allow use of handset in WLL mobile service. There was indeed a shift in the approach of the Government when it decided on 25 January 2001 to permit the basic service operators to offer WLL(M) services. The power to amend the terms and conditions of license are available with the licensor (in this case, the Government) and this power has been exercised from time to time to even permit the licensees to offer, within their existing license, services which previously required separate licenses. Hence, so long as this power to modify the terms and conditions of the license is exercised in terms of the stated considerations in the enabling clause, viz., in the interests of the general public, or for the proper conduct of telegraphs, or for security considerations and reasons, there are no restrictions. There was also no hard evidence to show that the Government’s shift in approach with regard to limited mobility is against public interest. The TDSAT also observed that the policy document does not expressly prohibit limited mobility to be provided by basic operators, which required a formal change or amendment to the policy before taking the decision.
It is difficult to estimate and detail in precise terms all the future ramifications of a particular technology. A policy document is envisioned to set forth the objectives and targets to be achieved, as also the general direction of future development. Hence, not allowing WLL with limited mobility purely on the ground that there is no mention of the term limited mobility in the policy (p.160) document or in the license agreements for basic service telephone operators would not be perceived as correct. What has to be seen is whether WLL itself is a part of basic service or cellular service; if it is a part of the basic service as it is in this case, the limited mobility has to be viewed as an offshoot of WLL service. More so, because the features of limited mobile service based on WLL and cellular service have been kept distinct. Additionally, WLL(M) service will subserve the objectives of the Telecom Policy, which stresses on the imperatives of increasing tele-density and protecting consumer interest. Hence, the validity of WLL(M) service, both in terms of license agreements and NTP-1999, as well as with reference to the provisions contained in the TRAI Act, 1997 is well established.
The supporting views, deliberations by the Telecom Commission, the Group on Telecom, and recommendations of TRAI, all show that the Government’s action to permit WLL with limited mobility was not arbitrary, unreasonable and unjust. The Supreme Court also observed:
…when we examine the impugned order of the Tribunal in the anvil of different contentions raised by the eminent counsel appearing on both sides, we find that the Tribunal on consideration of the materials, came to the conclusion that the decision to allow WLL with limited mobility was taken after elaborate discussions and deliberations, which in fact is borne out by records we have already discussed. The Tribunal also further found that the object of NTP-1999 and the purpose behind switching over from duopoly to multipoly is to encourage competition and to increase the teledensity of the country and to provide service to common man on an affordable basis.
According to the Tribunal, allowing WLL with limited mobility will be to render cheaper telephone service to the consumer, both in rural and urban areas. This finding also is borne out from the materials on record and it may not be possible for us to interfere with those findings with the limited power we have under Section 18 of the Act.
The TRAI’s recommendations of 8 January 2001 had stipulated two conditions for permitting WLL with limited mobility. The first condition was a requirement to maintain distinct features of WLL(M) and cellular services. The second condition was to even out disturbances expected to be created in the level-playing field when the basic operators introduce this service via necessary policy changes. The TRAI, however, did not recommend any additional entry fee for this service for the following two reasons:
1. Since WLL with limited mobility would be basically a supplementary or value-added service to be provided by the Basic Service Operators, who had already paid their entry fee at the time of migration, no further fee was necessary; and,
2. The purpose of Entry Fee is basically to deter non-serious entry of service providers.
WLL(M) services are non-functional outside the short distance charging area even though the service area of the basic operator may comprise of several such “areas.” This limitation does not impact cellular operators where their services are available across their entire service area, which could include several of the WLL(M)-equivalent coverage areas.
There are other important differences in terms of scope of service, quality, coverage, frequency band of operation, numbering plan, traffic routing planetc. The roll-out obligations of the two services are also quite different. Cellular operators are required to cover only 50 per cent District Headquarters or any other town, in lieu thereof, while the basic operators are required to cover 80 per cent of SDCAs individually and 20 per cent jointly.
The most crucial difference, however, is that the WLL(M) handset cannot be authenticated except in the SDCA itself. It has been alleged by cellular providers that several basic operators are flouting this restriction on mobility and that it is not possible to police this restriction. If this is indeed so, appropriate action needs to be taken to ensure that this does not happen.
Hence, the two services are not substitutable in view of the substantial differences existing between them. In the ultimate analysis, as foreseen by NTP-1999, such service distinctions may become archaic and obsolete in the context of convergence of market and technologies, and a prudent approach would be to facilitate this process rather than try to put restrictions.
It was clear, however, that the entry of basic operators with WLL(M) service had affected the cellular providers in an area where competition hitherto was limited. The various reliefs granted to the cellular operators by the Government, with a view to levelling the playing field conditions, did not help. The WLL(M) service, while not being an exact substitute to cellular, represented a significantly cheaper alternative and had an unsettling impact on the cellular industry, particularly in the Metro Cellular areas. Increasing competition benefited the consumers via increased price-discounting as well as expanded supplementary and/or value-added service offering. The TDSAT observed that following the Government decision, there was an enormous expansion of the customer bases of both the cellular providers and the basic operators offering WLL(M).
The next issue that the TDSAT discussed was the question of levying additional entry fee. Since both the Government and the TRAI considered limited mobility as a value-added service, within the ambit of the basic operators’ offering, and not as a fully mobile cellular service that the cellular providers offered, the decision not to recommend any additional entry fee for this service was not found convincing. The TDSAT held the view that there was a clear justification for levying additional entry fee and additional spectrum charges for two reasons—one, WLL(M) represented an enormous value addition to fixed services, and two, the imperatives of restoring a level-playing field. The TDSAT further observed that if allocation of additional spectrum becomes a necessity (p.162) for operational reasons, there would be a case for levying additional spectrum charge for WLL(M), over and above what was being paid at that time.
The modality for determining additional entry fee was left to the Telecom Regulator (TRAI) with the direction that it should do so by following a transparent process, and after consultations with all the concerned stakeholders. The same method may be followed in case additional spectrum is made available. The TDSAT also provided relief for the cellular operators with regard to:
1. the points of interconnection; and
2. increasing the percentage of the access charges they could retain to a more reasonable level (from the then current 5 per cent) on the basis of the recommendation of the Telecom Regulator.
The TDSAT noted that the objectives and targets spelt out in NTP-1999 also include making available telephone on demand by the year 2002, and to sustain it thereafter so as to achieve a tele-density of 7 by 2005 and 15 by 2010 as also increasing rural tele-density from the current level of 0.4 to 4 by 2010. As regarding affordability, the NTP-1999 focuses on increasing the development of telecom in rural areas making it more affordable via appropriate tariff structure and making rural communication mandatory for all fixed service providers. It was clear that the coverage in respect of village public telephone, until then, had been far from satisfactory. With regard to achieving policy objectives, the TDSAT observed that WLL(M) held a significant advantage, particularly from the perspective of faster deployment in remote and distant locations, rural areas where the cost of wireline networks could be prohibitive, and congested urban areas, where digging is a problem. There was, however, no denying the fact that there was a need for more stringent provisions and effective monitoring to ensure that the service provider obligations were discharged properly.
In addition, although the price to the consumer for WLL(M) was not as low as it was when the service was initially introduced, it was, nonetheless, still significantly more affordable than cellular and gave an added advantage of a handheld instrument to the consumer. The TDSAT noted that it is the responsibility of the Telecom Regulator to fix appropriate price levels for the services having regard to the appropriate customer segments for the services as well as the cost of providing the services.
The TDSAT did not find any illegality or arbitrariness in either the procedures followed, or the final decision taken by the Government to permit the basic operators to provide Limited Mobility Services as a value-added service within the ambit of their licenses. The Tribunal held that allowing WLL with limited mobility in the basic service stream does not go against the spirit of NTP-1999 and will go a long way in increasing tele-density of the country, making available cheaper and affordable service, and benefits accruing from evolving technology, which are in conformity with the objectives of NTP-1999.
The TDSAT further held that as long as the WLL(M) service is provided as a value-added service under a basic operator license, the existing distinctions between fully mobile cellular service and limited mobility service being provided (p.163) by WLL(M) operators would have to be maintained. The TDSAT concluded that allowing WLL service with limited mobility will cause disturbance in the level-playing field. On this issue, the TDSAT enjoined that a number of steps, as suggested in its order, should be considered and implemented to ensure a level-playing field; the entire exercise, the TDSAT directed, should be completed in a given timeframe, preferably within four months of the order.
Key Lessons from The Case
This case broadly raised the following questions:
1. Should the limited mobility service be treated as distinct from fixed service, warranting a separate license along with separate terms and conditions?
2. Does recognizing the right of the basic service providers to provide the limited mobility service, as part of basic service license amount, to a violation of the contract with the cellular service providers?
3. Was it obligatory on the licensor to clarify the platform of operation for WLL service?
4. Could WLL technology for limited mobility service be treated as a fixed basic service and was the regulator justified in doing so?
5. Would cellular mobile service operators be adequately compensated for revenue losses due to limited mobility services?
6. Would providing limited mobility services under the Basic Service License serve public interests?
The ruling had a wide ranging impact on the Indian telecom scenario. Most importantly, it induced the policy makers and regulator alike to revisit the licensing regime, take a holistic view on interconnection issues and reassure the service providers of the intent to maintain level-playing conditions to ensure orderly growth of the telecom sector. This change in approach was reflected in the rationalization of the tariff regime, as well as taking a closer look at spectrum and technology neutrality related issues.
The ruling had imposed stiff conditions for operation of limited mobility service based on WLL technology. Adherence to these conditions was important to keep the features of the two services distinct from each other and to maintain a level-playing field. The limited mobility service operators were apprehensive about the future growth and profitability of their ventures if these conditions were to be strictly enforced. The WLL case, as it is popularly known, had introduced bitterness in the telecom environment. With this chapter over, there was a heightened awareness among the policy makers, regulator, and service providers to create conditions for a litigation free environment in order to provide stimulus to telecom growth through healthy competition and attracting investments. A natural fall-out of this perception was to move towards a unified access licensing regime (UASL) in November 2003, which allowed service providers to offer both fixed and mobile services under one license. The doors were opened for the cellular operators to provide basic services and for WLL operators to offer (p.164) cellular services. An important fall out of this decision was to enhance the role of market forces in deciding technology options and the number of players. The UASL regime has been able to provide stability in the market place and eliminated the need for different technologies and service. The telecom environment became technologically neutral. Benefits also accrued to customers in terms of lower prices due to economies of scale and increased competition. The WLL decision had also stressed on imposing an additional entry fee on WLL service operators for providing limited mobility service. This was one of the major grievances of cellular mobile service operators who had paid a considerable amount by way of entry fee for their license. Migration to UASL by paying an entry fee was the natural option available to WLL service operators.
Another important fall-out of the decision has been to ensure level-playing conditions for service providers in the basic and cellular mobile segments. This was achieved through the implementation of interconnect user charge (IUC) in October 2003 and rationalization of tariff. In October 2003, the TRAI significantly reduced the IUC as termination charge across networks, which gave relief to cellular service providers who were previously required to pay a much higher access charge to the basic operators for termination of their calls in the latter’s network. The main beneficiary of the revised IUC order was the dominant public sector service provider as the cellular mobile and private basic service providers were obliged to pay these charges to the public sector operator to compensate it to discharge universal service obligation. This further led to two developments, namely, introduction of calling party pays regime, for calls made on cellular, basic, or wireless networks, and imposition of an access charge on cellular and private basic telephone operators, which made it mandatory for a service provider at the caller’s end to share a percentage of revenue earned with the service provider at the receiver’s end in long distance telephony. The TRAI proposes to phase out access charges in order to reduce telecom tariff drastically.
The ruling in the landmark WLL case led to important policy and regulatory decisions that significantly contributed to building up a business environment conducive to growth. This is reflected in exponential growth in subscriber bases for both wireline and wireless services since 2003. In March 2003, the aggregate wireless and wireline subscriber base was 54.63 million. By March 2009, the total subscriber base reached 429.72 million reflecting a tele-density of 36.98 per hundred persons, including 391.76 million wireless subscribers and 37.96 million wireline subscribers. Similarly, internet wireline subscribers grew to 13.54 million while broadband subscribers grew to 6.22 million. The Foreign Direct Investment (FDI) limit in the telecom sector has been raised to 74 per cent. FDI in the telecom sector grew from US$ 116 million in 2003–4 to US$ 920 million (assuming 1 US$ equals Rs 50) during the first ten months of 2007 through to October. Judicious allocation of spectrum on transparent criteria still remains a crucial and contentious issue, and successful induction of 3G and WIMAX in telecom stream will much depend upon a satisfactory resolution of this issue.