Telecom reforms 2.0: Govt may withdraw Rs 40k-cr spectrum charge case

The charge had been levied by the DoT on the operators for holding excess spectrum – beyond 4.4 MHz – which is referred to as OTSC.

In what can be seen as a continuation of reforms and burying legacy issues, the government on Tuesday indicated that it is likely to withdraw the case relating to one time spectrum charges (OTSC) amounting to Rs 40,000 crore against the telecom operators. If it does so, the biggest beneficiaries would be Bharti Airtel and Vodafone Idea. The matter does not affect Reliance Jio as the case predates its arrival.

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Based on the plea by the department of telecommunications (DoT) that it wanted three weeks’ time to reconsider the matter as the telecom sector was passing through financial hardships, and therefore wanted the matter to be adjourned for a period of four weeks, the SC fixed November 17 as the next date of hearing. However, it said that such decision must “satisfy the court” as it involves a question of “public money”.

“The court is concerned even if the (government) deems pursuing the case unnecessary… We are clear in our mind,” Justice MR Shah told Solicitor General Tushar Mehta.

“It is required to be pointed out that the telecom sector is passing through a financial stress since some time due to various circumstances. It is respectfully submitted that despite certain measures taken by the government in public interest, most of the telecom service providers (TSPs) providing for mobile phones and broadband have been making losses. The Indian Bank Association has also conveyed to the central government in writing those adverse developments in telecommunication sector may lead to failures, vanishing competition, duopoly, unsustainable operations and severe loss for the banking system which has a huge exposure to this sector,” DoT said in an affidavit to the SC.

“The central government is desirous of reviewing and/or reconsidering its decision to proceed with the present proceedings of appeal. It is submitted that considering the nature of the issues involved, this decision will have to be taken after the scrutiny at various levels which may consume some reasonable time,” the DoT’s affidavit stated.

The OTSC case dates back to 2008 and besides the Supreme Court, it is pending before various high courts.

The charge had been levied by the DoT on the operators for holding excess spectrum – beyond 4.4 MHz – which is referred to as OTSC.

The decision to levy OTSC was taken by the UPA government in the aftermath of the 122 2G licences given by the then telecom minister A Raja in January 2008. The licences were cancelled in February 2012 by the Supreme Court but the furore it raised as these were given at 2001 rates of Rs 1,658 crore made the government decide to charge for spectrum given to the operators beyond the contracted amount through administrative orders.

Prior to 2010, operators got 4.4 MHz spectrum bundled with licences and subsequent tranches came on achieving certain subscriber levels. The government had contended that it was contractually bound to give only 4.4 MHz, which came bundled with the licences and is free to charge for additional amount allocated. Around that time most operators held either 6.2 MHz or beyond, even 10 MHz. The operators had opposed the move by the government to charge for excess spectrum stating that since they paid higher spectrum usage charge for spectrum beyond 6.2 MHz so any OTSC was not legitimate. However, this was discarded by the government, which raised the demand.

In July 2019, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) had ruled that the DoT can only charge for administratively allocated spectrum to these firms beyond 6.2 MHz and not 4.4 MHz.

The telecom tribunal had said that this levy cannot be charged from a retrospective basis, that is 1.7.2008, when a decision to this effect was taken by the government but can charge only prospectively, that is 1.1.2013, the date on which the government notified this decision.

Last year, SC had refused to stay the tribunal’s order.