The Hindu Business Line : CAG critical of inefficacy of telecom rollout obligations

Advertisement

Chennai Feb. 14 Licence agreements between the Government and the telecom service providers specify the rollout obligations and also penalties for non-performance. These have come in for some adverse mention in one of the recent reports from the CAG (Comptroller and Auditor-General of India).

Licence agreements for BTS (basic telephone services) stipulated rollout obligations in terms of POP (point of presence) to be achieved by the licensees at the SDCA (short distance charging area) level, explains the report of the Union Government's non-tax receipts, for the year ended March 2005.

"No Penalty"

POP refers to `the setting up of a switching system of adequate capacity to meet the required quality of service,' and SDCA is `the smallest territorial unit for charging purposes'. Further gyan for novices is that calls within the same SDCA are charged as local calls, and that SDCAs normally coincide with Tehsils or Talukas.

"Establishment of a POP in an SDCA was to be treated as completion of the rollout obligation." But the first inconsistency mentioned in the report, in this regard, is that the percentage of coverage in terms of POP did not consider the percentage of geographical area to be covered within SDCAs.

As a result, "an operator became eligible for refund of PBGs (performance bank guarantees) after setting up POPs in a given number of SDCAs even if adequate service coverage within the SDCAs was not provided."

Also: "There was no penalty for non-fulfilment of rollout obligations up to three years. No provision for penalty existed in the agreements for non-fulfilment of 15 per cent cumulative coverage under Phase-I... "

Surrendering Licences

Among the many instances cited in the report, the first is of Bharti Telenet, which was to provide BTS in Delhi SDCA. "After setting up a single switching system at the Okhla industrial area in February 2002 they obtained full refund of Rs 200 crore of PBGs in spite of not covering the entire city of Delhi. Further, Bharti Telenet (renamed as Bharti Infotel Ltd) surrendered (October 2004) its licence for the Delhi SDCA leaving many parts of the city uncovered."

Another instance reads thus: "Bharti Infotel Ltd, which had been granted a licence in October 2001 for providing BTS in the service areas of Haryana, Karnataka, and Tamil Nadu, gave a formal notice to DoT (Department of Telecommunications) in August 2004, for surrendering their licences for these areas with effect from October 1, 2004.

The rollout achieved by them was short by 15 per cent in Haryana, 23 per cent in Tamil Nadu and 25 per cent in Karnataka. However, despite non-achievement of the complete rollout obligation by Bharti Infotel Ltd, DoT was unable to encash 20 per cent of the PBG of Rs 76 crore, as the three year period for levy of this penalty ended only on October 31, 2004."

Inference in the report, therefore, is: "The condition for forfeiture of PBG which was to act as a deterrent for failure to complete rollout obligations proved ineffective."

More Stories on : Telecommunications | Regulatory Bodies & Rulings

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page