THE TELECOM REGULATORY AUTHORITY OF INDIA

NEW DELHI

Petition 3 of 98

&

Civil Misc. 1

 

M/s Bharti Cellular Ltd. & Another ……… Petitioners

Versus

Union of India & Another …….. Respondents

 

Present:

Mr. Gopal Subramaniam, Sr Counsel …. For Petitioners

with Mr. Manjul Bajpai, Advocate

 

Mr. K. N. Bhatt, Addl. Solicitor General .. For Respondent No.1

with Mr. Rakesh Tikku, Advocate

 

Mr. Dipankar Gupta, Sr. Counsel, Advocate .. For Respondent No.2

with Mr. Jaideep Gupta, Ms. Meera Singh &

Mr. Ashok Mathur, Advocates

 

Date: February 17, 1998

 

 

ORDER

 

The scope and ambit of the functions of the Telecom Regulatory Authority of India (TRAI) under the provisions of Sub section (1) of the Section 11 of the Telecom Regulatory Authority of India Act, 1997 ( hereinafter referred to as ‘the Act’) , in regard to introduction of new service providers, terms and conditions of licence to service providers and revocation of licences of service providers has arisen for preliminary consideration in this bunch of petitions before us. These questions, as preliminary legal issues, are being dealt with and disposed off by this common order before going into the merits of the respective petitions.

 

2. The issue regarding the introduction of new service providers arises from the move of the Mahanagar Telephone Nigam Ltd. (MTNL) to commence and carry on the business of providing cellular mobile telephone services in Delhi and Mumbai. The petitioners, Bharati Cellular Ltd. and Sterling Cellular Ltd., are two Indian companies licensed to establish, maintain and operate cellular mobile telephone services in the Delhi metro . They seek to question the licence granted by Government to MTNL to commence and carry on this business without any recommendation having been made by TRAI with regard to the need and timing for the introduction of a new service provider.

3. While dealing with the matter pertaining to MTNL it deserves mention that there is also the plea put-forth by the respondents that the provisions of Clause (a) of sub section (1) of Section 11 of the Act, whatever be their interpretation, were not applicable to MTNL as it was not a new service provider. This order will also address this issue.

4. Turning next to the terms and conditions of licence to service providers, under clause (b) of sub section (1) of section 11, the challenge comes from E-mail operators to the recently announced Internet Policy , again on the ground that it had been framed without any recommendation having been made by TRAI with regard to the terms and conditions thereof.

5. Finally, there is the matter concerning the revocation of licences of service providers under clause (f) of sub section (1) of Section 11. This has been raised by the Paging Service Operators who seek to question the legality of revocation or threatened revocation of their licenses on the ground that there could be no revocation of a licence without a recommendation of TRAI.

6. The relevant provisions of the Act concerning the introduction of new service providers, terms and conditions of licence for service providers, and, revocation of licences of service providers are contained in clauses (a), (b), (e) and (f) of sub section (1 ) of Section 11 of the Act. These reads as under:

"Chapter III

Powers and functions of the Authority

11. (1) Notwithstanding anything contained in the Indian Telegraph Act, 1885, the functions of the Authority shall be to -

    1. recommend the need and timing for introduction of new service provider,
    2. recommend the terms and conditions of licence to a service provider;
    1. ensure compliance of terms and conditions of licence;
    2. recommend revocation of licence for non-compliance of terms and

conditions of licence."

7. The crucial point to determine here is the import of the expression "recommend " in these clauses. Is it mandatory for Government to seek recommendation of TRAI before introducing a new service provider, settling terms and conditions of a licence to a service provider, or revoking a licence of a service provider for non-compliance thereof, or, are these provisions merely for enabling TRAI to express its opinion with regard to these matters?

 

  1. According to Mr. Gopal Subramanian , Counsel for the petitioners, the

expression "recommend " in clauses (a), (b) and (f) of sub section (1) of section

11 of the Act cannot be read to detract from the nature of the authority vested in TRAI by suggesting that the power to recommend was merely discretionary. Great stress was laid upon the non-obstante clause in sub section (1) of section 11. It was contended that in the face of this non-obstante clause, the licencing power of Government under section 4 the Indian Telegraph Act, 1885 ( in short "The 1885 Act"), did not remain unaffected in the manner of its exercise. In other words, although the Government continued to be the licencing authority under section 4 of that Act, it was nevertheless obliged to seek recommendation of TRAI for purposes mentioned in clauses (a), (b) and (f) of sub section (1) of Section 11. To argue to the contrary would suggest that the recommendatory jurisdiction of TRAI was to no real purpose. According to the Counsel, the non-obstante clause thus rendered the scope and the ambit of the functions enumerated in the said sub section(1), free from ambiguity. Counsel attributed "calculated significance" to this clause. Counsel for the petitioners added that recommendations under the said clauses (a), (b) and (f) constituted a duty for TRAI to discharge and this function of making recommendation could not , therefore, but be treated as mandatory. From this, he went on to suggest that Government could not, introduce a new service provider, settle terms and conditions of licence to a service provider or revoke licence of a service provider, without the recommendation of TRAI.

9. The Addl. Solicitor General, Mr. K.N. Bhatt, appearing for the Union of India, on the other hand, expressed the view that powers and functions of TRAI were only in respect of matters relating to service providers and that the Act did not envisage any role for TRAI vis-a-vis Government except to make recommendation, or render advice, in certain matters, at its discretion, or that the Government may seek advice from it. Counsel referred in this behalf to Section 13 of the Act which envisages directions being issued by TRAI to service providers in the discharge of its function under Section 11. About dispute settlement, reference was made to clause (n) of sub section 1 of Section 11 and to section 14 concerning TRAI’s adjudicatory dispute settlement powers, both of which refer to resolution of disputes between service providers. Attention was next drawn to the definition of ‘service provider’ as contained in clause (j) of sub section (1) of Section 2. It was sought to be argued that though the definition apparently covered Government too, but seen in its proper context, it was in fact only government in its role as a service provider that came within TRAI’s purview.

 

10. Turning to section 38 of the Act, Counsel contended that provisions of the Act were in addition to those of the 1885 Act, and, more importantly, that section 38 left unaffected the jurisdiction, powers and functions required to be exercised and performed

by Telegraph Authority under that Act. Citing the well-recognised principle of interpretation of statues that full effect has to be given to the provisions of an Act without treating any as mere ‘surplusage’, counsel argued that when a provision was clear and unambiguous it had necessarily to be given its full effect. From this he went on to suggest that, in the exercise of its authority under section 4 of the 1885 Act, Government or Telegraph Authority was not obliged to have before it a recommendation of TRAI or to treat any such recommendation as mandatory as this would amount to disregarding the provisions of section 38.

11. In response to a query, the Addl. Solicitor General conceded that there was no conflict between the provisions of Section 38 and sub section (1) of section 11 of the Act. He, however, maintained that in respect of exercise of some powers, Government/ Telegraph Authority and TRAI could act in parallel . According to him, TRAI was free to make recommendations to Government with regard to introduction of a new service provider, terms and conditions of licence to service providers and generally make recommendations on any matter relating to the development of the telecom service sector, but at the same time Government could exercise its authority under the 1885 Act without waiting for any recommendation from TRAI. To a query about what purpose would TRAI’s recommendation under clauses (a), (b) and (f) of sub section 1 of section 11 serve if Government could, on its own, take whatever action it deems fit, and that too as and when it chose to do so, counsel had no answer to give except to say that Government would give due weight and consideration to the recommendations of TRAI.

 

12. A somewhat different proposition was sought to be canvassed by Mr. Dipankar Gupta appearing for MTNL. According to him there was a conflict between clause (a) of sub section (1) of section 11 of the Act and section 4 of the 1885 Act inasmuch as inherent in the grant of a licence was a determination by Government of the "need and timing" for introduction of a new service provider. In other words he sought to read into the provisions of section 4 of the 1885 Act, prior determination by Government/ Telegraph Authority of the need and timing of introduction of new service providers before issuing a licence, and this is where counsel argued the conflict between the two provisions arose. From this, he went on to suggest that by virtue of the provisions of section 38 of the Act, those of section 4 of the 1885 Act would prevail. This is, indeed, a proposition too far fetched to be accepted and has thus to be noticed merely to be repelled. No such words can be read into section 4 of the 1885 Act. It may be mentioned in passing that the issue was irrelevant for the time when that Act was promulgated, and, infact, until very recently.

13. On the issue of TRAI’s jurisdiction being confined only to matters relating to service providers, Counsel for the Petitioners laid stress upon ‘service provider’ being defined to mean "the Government and includes a licensee". It was also pointed out that even in the licence and its terms and conditions, no distinction had been made between Government as a licensor and as a service provider. Counsel asserted that the very purpose of the Act would be defeated if the respondents’ interpretation of TRAI’s jurisdiction being confined to Government as service provider were to be accepted, as in that case TRAI would not be in a position to regulate the telecommunication services, nor would it, in particular, be in a position to facilitate competition and promote efficiency in the operation of telecommunication services so as to facilitate growth in such services as envisaged by the duty cast upon it under clause (h) of sub section (1) of section 11. Counsel added that it would also go counter to the well-established rule of interpretation of statutes that the words of a statute have to be understood and construed in their plain and literal meaning and further that the words and expressions used in a statute were the only ones meant to express the legislative intent. In other words no words could be read into a statute except those actually used.

 

14. Before proceeding further, it deserves mention that, in the course of arguments, both sides had adverted to the non-obstante clause in section 11 of the Act. While counsel for the petitioners had sought to interpret it as rendering the functions enumerated in section 11 of the Act to be free from ambiguity in the context of the 1885 Act, the Addl. Solicitor General had contended that it could not over-ride the clear and unambiguous language of section 38 of the Act that nothing in the Act shall affect any jurisdiction, powers and functions that were required to be exercised or performed by Telegraph Authority under the 1885 Act. The implication of non-obstante clause in this context is of no material consequence as it has been conceded that there was no conflict between the provisions of clauses (a), (b) and (f) of sub section (1) of section 11 of the Act, on one hand, and, section 4 of the 1885 Act, on the other.

 

15. Before dealing with the rival contentions, it needs to be stated that there is no challenge to Government being the licensing authority in respect of telecom services, nor is it suggested that the power vests in, or has been delegated to TRAI.

16. Having given careful thought to the arguments advanced and the material placed before us, we hold that there is no conflict of jurisdiction arising as a result of the co-existence of Sections 38 and sub section (1) of section 11 of the Act. In terms of Section 38, the provisions of the Act are in addition to those of the 1885 Act inasmuch as clauses (a) (b) and (f) of Sub section (1) of Section 11 do not confer any licensing powers upon TRAI. At the same time, it would not be correct to suggest that even the manner of exercise of powers under Section 4 of the 1885 Act have remained unchanged as a result of the provisions of these clauses. It may be noted that the manner of exercise of licensing power by Government has not been prescribed in the 1885 Act. We may add that if the interpretation of the learned Counsel for the respondents were to be accepted, it would amount to suggesting that the provisions of these clauses were indeed meaningless ‘lumbers’. The plain text of these provisions would rule out any such interpretation.

 

17. If one were to look beyond the text to the legislative intent, it is revealed that these two clauses, among several others, were incorporated in the Act on the recommendations of the Standing Committee on Communications, (1996-97) of the 11th Lok Sabha (Report No.4) which scrutinized the Telecom Regulatory Authority of India Bill, 1996. To quote the report of the Committee -

 

"The Committee feel that to make the Authority more meaningful as well as effective, it should be entrusted with certain other functions that (are not) mentioned in the Bill. The Committee are of the view that regulation of operations of service providers; advising Central Govt in grant of licences to determine the need and timing for introduction of new service provider; term and conditions of licence to a service provider; ensuring compliance of terms and conditions of licence, revocation of licence for non-compliance of terms and conditions of licence; approval for equipments used in the network and leaving (levying) of fee and other charges should be included in clause 11. The Committee are of the opinion that in order to ensure that quality service is provided by a service provider, TRAI, should be entrusted with monitoring of such services and should also undertake or commission periodical surveys of quality of service achieved by different service providers and take such action as it deem(s) fit to ensure compliance with the standards of quality service prescribed in the license or which may be prescribed by the Authority from time to time."

 

18. It will be seen that the legislative intent was to make TRAI more meaningful as well as effective and if the interpretation of the respondents were to be accepted, it would render TRAI largely meaningless except in matters of telecom tariff setting. In other words, TRAI would become a mere Telecom Tariff Setting Authority with a meaningless advisory role in all other areas.

 

19. While on the subject, it may not be out of place to mention that the expression "need and timing" in clause (a) of sub section (1) of Section 11 has a specific connotation in economic parlance, particularly in the context of liberlisation and privatisation of public utilities. This would involve conducting a form of an ‘economic needs test’ to determine the extent and pace of liberalization in order to realise an optimal, sustainable growth scenario with due regard to public policy concerns. In a multi-operator environment, particularly when competition is introduced for the first time in the presence of an incumbent monopoly, the issue of further liberalization has a significance all its own, involving reconciliation of competing and sometimes conflicting interests of consumers and operators, including that of the incumbent monopoly. This calls for a detailed examination of the ground conditions in the telecommunication service sector in the context of the policy objective of the growth of the sector as well as general economic development. This is best done by an independent authority like the TRAI (as actually envisaged in the Act) which is statutorily obliged to discharge its functions and exercise its authority in a transparent manner. In the context of the stand being taken by Government, it may be relevant to mention that even in jurisdictions outside India where licensing powers have been retained by the Government, further market opening measures have been taken only on the advice of regulatory authorities which have made such recommendations after detailed investigations involving public hearings. In Canada when Government was vested with licensing power [since practically given up] the power was exercised only after the recommendation of the Canadian regulator (CRTC). In recent times, a very detailed public investigation was carried out by the CRTC for the introduction of competition in the local services. In United Kingdom, where also Government retains the power to grant licences, the power is exercised on the basis of the advice of OFTEL, which carries out open investigations and hearings before making any recommendations. In fact, OFTEL is also authorised to amend a licence granted by the Government. This is for good reason as the changes taking place in the telecom sector are indeed breathtakingly rapid and governmental procedure do not allow timely responses. In a multi-operator environment, an independent evaluation of the economic needs is a condition precedent for, on the one hand, maintaining investors’ confidence, and, on the other, achieving public policy objectives. This is particularly so at this point in India when Government in the Department of Telecommunications (DOT) combines in itself the roles of licensor, policy maker and service provider.

 

20. The contention of the Addl. Solicitor General that a split in Government's role as the licensor of telecom services and as the service provider is a viable proposition and that the two roles can be played out in separate compartments cannot stand scrutiny, beginning with definition of service providers itself. "Service provider" is defined to mean "the Government and also includes a licensee". The issue of context under which Government is taking cover to justify and explain this split, is the licence. The question, therefore, is whether the licence makes any distinction between Government’s role as a licensor and as a service provider. Insofar as a licence is a charter of rights and obligations between the parties, the two parties to a licence stand on an equal footing. Government as the licensor grants the privilege of running a telecom service to the licensee on certain terms and conditions and on payment of licence fee. Any given service can be provided by a licensee only if it has been given the necessary wherewithal to provide that service and this includes, among others, assignment of frequencies (for wireless services), and interconnection with the network of the dominant service provider. Both these obligations have to be discharged by Government. The contention of the respondents that these two roles of the Government, in the context of the licences, should be separately looked at is, on the very face of it, unsustainable. The Government's claim of having a right to receive a licence fee from the licensee without any responsibility for discharging its obligations as a service provider to provide interconnection needs no comments except an outright rejection.

 

21. Under clause (e) of sub section (1) of Section 11, TRAI is bound to "ensure compliance of terms and conditions of licence". The Additional Solicitor General expressed the view that TRAI’s jurisdiction was limited to matters relating to service providers, and therefore the scope of this provision would be limited to only those terms and conditions which have to be observed by the licensee. In addition in his written submission, Additional Solicitor General states :

"Under Section 11 one of the TRAI’s function is to "ensure the observance of condition of licence." It presupposes definite preventive powers. In other words, it is to ensure that a breach does not take place and not adjudicating upon the breach. Whenever TRAI gives direction to prevent a breach by a licencee and no action is taken in furtherance thereof, the TRAI can recommend cancellation or revocation of licence. A dispute between a "service provider" even if it is Central Government and another service provider can be settled under clause (n) of Section 11(1), however, a dispute between the Government acting not as a service provider, but as a Government and a service provider or a licencee cannot be entertained by TRAI. The remedy of the aggrieved service provider is either arbitration as provided in its agreement or a writ petition or if a matter cannot be a subject matter of decision by the TRAI, or ordinary civil suit subject to bar under Section 27. Any action taken by the TRAI contrary to the above position will be liable to be set aside on the ground of lack of jurisdiction."

22. This seem to fly in the face of the plain language of the text. It is also contrary to legislative intent which is clear from the fact that the 1996 Bill, which was scrutinized by the Standing Committee on Communications had the following provisions in this regard, namely, "ensure compliance of licence conditions by all service providers". This was changed at the behest of the Standing Committee , as set out in paragraph 17, to the present provision charging TRAI with the function of "ensuring compliance of terms and conditions of licence". As has been mentioned earlier, a licence is a charter of rights and obligations between the licensor and the licencee and that obligations of one party cannot be enforced without ensuring that the rights of that party, which are the obligations of the other party, are also enforced.

23. When pointedly asked to spell-out the role of TRAI as he perceived it to be in respect of ensuring compliance of terms and conditions of licence as also regarding revocation of licence for non-compliance thereof the Addl. Solicitor General came forth with the extraordinary statement that it arose whenever a breach of terms and conditions of licence was anticipated, but not when a breach had actually taken place. It would, indeed, be straining one’s credibility to accept such a proposition. Revocation of licence for breach of its terms and conditions has penal consequences flowing from it. No such consequences could be warranted on a mere anticipation of such a breach.

24. The stand of the Additional Solicitor General that Government’s function as a licensor, in the abstract, or as manifest through the terms and conditions of a licence, are inviolate is in direct contradiction of TRAI’s responsibility to ensure compliance of terms and conditions of licence. It is thus clear that a licence cannot be revoked unless there is a finding to the effect that a breach of a licensing condition has taken place warranting revocation of that licence and a recommendation to that effect is made to the Government.

 

25. In sum, we are of the opinion that the expression ‘recommend’ in clauses (a), (b) and (f) of sub-section 1 of Section 11 has also to be viewed in the light of the other functions of TRAI enumerated in Section 11, like ensuring technical compatibility and effective interconnection between service providers, the obligation to facilitate competition, which implies ensuring a level playing field between operators and, of course, to protect the interests of consumers. Above all, the expression ‘recommend’ has to be read in the context of the rationale for the enactment of Act itself, namely, to regulate telecom services. Both the text and the context lead to the inescapable conclusion that for Govt.’s exercise of any of its powers under clauses (a), (b) and (f) of sub-Section 1 of Section 11, it must have before it a recommendation of TRAI. It is to be noted that TRAI is mandated under sub-Section 4 of Section 11 for TRAI to ensure transparency in the discharge of its functions which will allow for public participation in decision-making.

26. Before we part with this set of issues, it may be mentioned that in terms of the legislative intent, the purposes of the Act, the definition of service provider, and, indeed, the compelling need for an independent institutional framework to foster the growth of telecom service sector in the country, the manner of exercise of licensing powers by Government as envisaged by the Act and interpreted by this Order is an imperative in the liberalization process of the telecom sector.

27. The other preliminary issue, raised by MTNL and supported by the Government, was that recommendation of need and timing for the introduction of a new service provider was not relevant in its case as MTNL was an existing service provider for the mobile cellular service, the claim being based upon MTNL’s licence of 1986 which includes cordless telephone service. As for the amendments to their licence in October, 1997 to include mobile cellular telephone services it was said that this was merely to clarify the existing situation. In support of this contention MTNL has submitted extracts of Telephone directories of Delhi for the years 1986 and 1994 to show that mobile voice telephony service was being provided by them within a certain radial area in Delhi and that this service was being availed of, for which bills had been raised and payments made by subscribers. In addition, purchase invoices for the said mobile service equipment were filed to indicate that the service had been established.

28. To the query about difference in technical parameters between the mobile service provided by the MTNL and the cellular mobile service being provided by the petitioners on the basis of the tenders issued in 1991-92, Counsel for MTNL opined that conceptually there was no difference between the service MTNL was providing and the cellular mobile service and that the difference was only in terms of better technologies available for mobile wireless service today than those being provided by MTNL. He expressed the view that what MTNL was intending to do now was simply to upgrade the service by introducing new technology.

29. The alternative plea made by the Counsel for MTNL was that the Act does not envisage a new service provider with reference to any particular service as, according to him, an existing service provider for any service would be an existing service provider for any other service for which he may receive a licence.

30. The learned Counsel for the Petitioners, on the other hand, argued that the service being offered by MTNL was quite different and distinct from the mobile cellular service for which Government had invited tenders by a notice in 1991-92. The technical parameters of the service being provided by MTNL were totally different from the technical parameters of the service provided by the

petitioners, the only aspect common between the two being that both were wireless-based. He asserted that GSM 900 technology was quite distinct and that tenders had been invited for the induction of the mobile service based on this technology and the licence given was also for ‘cellular mobile telephone service’, an expression not used before in the earlier licence. Further, in support of his contention he mentioned that the DOT had in response to clarifications on the tender document indicated that, for the purpose of bidding, as a common reference to all bidders, two operators per area may be assumed, and in fact, two licences for mobile telephone cellular service had been issued for each metro. Further corroborative evidence cited in support of this contention was the commitment made by India before the World Trade Organisation in its Schedule of Commitments under the Services Agreement which was filed on February 14, 1997, wherein for the cellular mobile telephone service, the commitment is in respect of digital GSM technology on terrestrial basis alone being permissible. The schedule further indicates presence of two cellular service operators in each service area with the right of DOT/ MTNL to enter into each service area having been reserved.

 

31. It was the contention of the counsel for the petitioners that MTNL had failed to show any basis for its claim of being an existing service provider of mobile cellular telephone service for which tenders had been issued in 1991-92. It was said that there was in fact over-whelming evidence to the contrary i.e. the expression of Government’s intention to induct only two operators in each circle and in reserving its right to induct DOT as a third operator.

 

  1. Attention was also drawn to prospectus issued by MTNL for its GDR

issue where it was said :

" The Company’s operating licence has recently been amended to include the provision of cellular mobile services in the Company’s licence areas in Delhi and Mumbai. The Company is currently planning the development of its proposed cellular network. The Company also plans to apply for additional required approvals, including the grant of spectrum. The terms of MTNL’s interconnection arrangements and licence fees are yet to be determined by the DOT. The COAI has recently filed a complaint with the TRAI seeking to delay the entry of MTNL into the cellular market in Delhi and Mumbai until at least 2001. If the COAI is successful in seeking relief, the Company could be delayed in the planned introduction of cellular services"

33. On the basis of the material placed before us, it appears that it was only in September, 1997, that MTNL moved the Government to amend its licence to include mobile cellular service and paging services. Reportedly this was the time when MTNL and Government started working on floating a GDR issue. Up until then Government had not recognised MTNL as an existing service provider of cellular mobile telephone service. This is also clear from the fact that Schedule ‘A’of MTNL’s licence was amended as recently as on October 10, 1997, to include this service in their licence alongwith paging services. This according to the counsel for the petitioners constitutes clear evidence of MTNL being a new licencee for these services in Delhi and Mumbai. Counsel thus contended that MTNL had failed to substantiate its claim of being an existing service provider for mobile cellular telephone service for which tenders had been issued in 1991-92.

34. An important aspect to note here is that neither the Additional Solicitor General nor Mr. Dipankar Gupta, Counsel for MTNL, could point to any material to suggest, much less establish, that at the time when tenders for mobile cellular telephone services were floated, it was in any manner brought out that MTNL was already a service provider for mobile cellular telephone services in either Delhi or Mumbai, nor for that matter was such a claim made by MTNL itself at that time. Had MTNL actually been an existing service provider and had this fact not been disclosed during the tender process, it would have amounted to deliberate concealment of a material fact putting thereby the entire tender process and the licensing of this service in jeopardy, besides rendering the government liable for other consequences flowing from it. It is, indeed, extra-ordinary that against overwhelming evidence, all of it documentary, and much of it on public record, Government should at all claim that MTNL was an existing service provider for the mobile cellular telephone service.

35. Turning to whether the cellular mobile service provided by the MTNL was the same as the cellular mobile telephone service except for lower technical standards, after going through the technical material placed before us on this issue, there can be no escape from the conclusion that, although both are wireless-based services, but in terms of its technical parameters, its scale and scope, the cellular mobile service is a different service. To quote only one parameter, namely, that of call-hand-over facility while in movement, this is not available in the service provided by the MTNL but is the most prominent and fundamental feature of the cellular mobile service licenced by Government.

 

36. Coming to the argument advanced by the learned counsel for MTNL that the provisions of the Act regarding new service providers are not service-specific and that a service provider for any service is a service provider for all services if licensed, we find this interpretation difficult to accept as it would amount to suggesting that service specificity and territorial division for provision of service had no meaning. This would also render the issue of need and timing of introduction of a new service provider meaningless. For instance, there would be no need to investigate ‘the need and timing of introduction’ of competition in domestic long distance and international long distance services, if a licence were to be given to existing service providers of the local service areas for the operation of these services. This would militate against the specific provisions of the Act, namely the classifications of services and terms and conditions for providing a service.

37. Having analysed and discussed the issues raised, we hold that :

  1. (i) Government is the licensing authority for licensing of all telecom services.
  1. There is no conflict between the provisions of sections 11 and 38 of the Act

With regard to the manner of exercise of licensing power by Government.

  1. The exercise of licensing power by Government has, however, to be in accordance with the provisions of clauses (a), (b) and (f) of sub-Section (1) of Section 11 of the Act and failure to comply with these provisions would vitiate any act done or action taken. In other words, it is mandatory for Government to have before it TRAI’s recommendation with regard to matters covered by these provisions.
  2. The licence of MTNL to commence and carry on the business of providing Mobile Cellular Telephone Services, as also Paging Services, in Delhi and Mumbai granted to it in October, 1997 cannot be held to be valid because of non-compliance of provisions of clause (a) of sub-section (1) of section 11.
  3. MTNL was not an existing service provider of Mobile Cellular Telephone services in Delhi and Mumbai so as to render clause (a) of sub-Section (1) of Section 11 inapplicable to it.
  4. Likewise, the Internet Policy formulated and announced by Government without obtaining TRAI’s recommendation regarding terms and conditions of licences to such service providers as required by the provisions of Clause (b) of Section 11 cannot be held to be valid.
  5. Similarly, the revocation of the licences of Paging Operators or the threat of it without seeking TRAI’s recommendation under clause (f) of sub-section (1) of Section 11 cannot be held valid.

 

38. Nothing said in this Order is to be construed as an expression of TRAI’s opinion about the need and timing for entry of additional service providers for the Cellular Mobile Telephone Service, nor about MTNL’s eligibility to be such as a service provider.

  1. The Preliminary issues raised in this bunch of petitions thus stand disposed off in accordance with this order, which shall be read as the order in them all i.e. Petitions 5, 12, 13, 14, 15, 16, 17 and 18 of 1997 and 2, 3, 4, 7 and 8 of 1998.

 

(Justice S.S. Sodhi) (B. K. Zutshi)

Chairperson Vice Chairperson

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