DoT slaps penalty on Airtel, Tata Comm for bandwidth deal with SingTel

The Department of Telecom has imposed a penalty of Rs 50 crore each on Bharti Airtel and Tata Communications for allegedly violating international long distance telephony licence conditions.

The penalty notice was issued on Friday with the instruction that the companies should pay up within 15 days.

Separate pacts

The issue dates back to 2007 when the two operators entered into separate agreements with Singapore-based telecom company SingTel for offering long distance communication services.

According to the DoT, this agreement was illegal because SingTel did not have licence to offer services in India.

Though international long distance operators are allowed to sell leased line to other companies, in this case SingTel used the leased lines from Airtel and Tata Communications to further resell bandwidth to its enterprise customers in India.

According to the DoT, SingTel even billed and collected revenues from India without having a licence. The DoT has imposed the penalty on the two Indian operators for failing to detect alleged misuse by SingTel.

“As per clause 23.26 of ILD licence, each and every IPLC link provisioned to Indian customers shall be checked by the licencee for its bonafide use and to detect any misuse of it. Bharti had failed to check this,” the DoT notice to Bharti stated.

Similar observation has been made in the penalty notice issued to Tata Communications. The DoT had also raised concerns on a similar deal between Reliance Communications and one of its foreign subsidiaries but no notice has been issued to them so far.

Bharti had earlier told the DoT that the agreement with SingTel did not tantamount to reselling of bandwidth and it had paid licence fee on the revenues earned from providing the service. However, the DoT has taken a view that Bharti should have ensured that SingTel did not raise bills directly to its customers.

The penalty notice comes even as an internal committee of the DoT in 2009 had agreed with the company's view in a similar case involving other international players, including AT&T and BT. Another committee in March 2011, examining the deal between SingTel and Bharti/ Tata Communications had observed that the Indian operators was not to be blamed and the penalty should be imposed on SingTel.

DoT's u-turn

However, the DoT has now taken a complete u-turn and has imposed the penalty on the Indian players without giving any reason as to why it chose to differ with the reports of the earlier committees.

Over the past few months, it has been issuing show cause notices and penalty orders to operators.

“A maximum penalty of Rs 50 crore is levied without any reasoning or personal hearing. In fact levying Rs 50 crore penalty has become more of a norm than an exception,” the Cellular Operators Association of India had recently said after a meeting with the Communication and IT Minister, Mr Kapil Sibal.

In August, Mr Sibal had asked the DoT to evolve guidelines to reduce the element of its discretion while deciding penalty for violation of licence conditions and make the process as scientific as possible.

COMMENT NOW