CAG dresses down DoT for inaction and providing ‘undue benefit’ to operators

11 May 2015

Indian government oversight body the Comptroller Auditor General (CAG) has criticised the Department of Telecommunications (DoT) for failing to take action against a number of operators for various violations, the Economic Times reports. In a report to parliament, CAG unveiled a laundry list of errors, including alleging that the DoT’s decisions had given ‘undue benefits’ to several operators and that the regulator’s Telecom Enforcement, Resource and Monitoring (TERM) branch had not taken timely action against companies that had not complied with regulations.

According to the CAG, the DoT’s decision not to implement the Telecom Regulatory Authority of India’s (TRAI’s) recommendation that spectrum usage charges should be applied to an operator’s combined total of spectrum, allocated across multiple technology-specific frequency bands, benefited Reliance Communications (RCOM) to the tune of INR4.17 billion (USD65.29 million) and Tata Teleservices Limited (TTSL) INR4.65 billion. Elsewhere, the CAG claimed that the DoT’s handling of the merger of the Chennai and Tamil Nadu circles was ‘hasty’ and ‘without proper cost-benefit analysis.’ Following the merger, the DoT extended Bharti Airtel’s permit by seven years from November 2021 at no extra cost – ostensibly to compensate the cellco for the elimination of one of its permits through the merger – a measure which the CAG criticised, claiming that it had saved the operator INR4.99 billion (the estimated cost of the spectrum in the now-defunct circle from the licence’s original expiry date of November 2014). In a similar vein, the comptroller said that the regulator had provided undue benefit of INR33.67 billion to Reliance Jio Infocomm (RJIL) by allowing the operator to migrate from an internet service provider (ISP) licence to a Unified Licence in 2013, allowing the operator to launch voice services. The CAG suggested that the migration was allowed at a price established in 2001 and was well below the cost of entry at the time of the migration.

Meanwhile, the CAG’s attack on the TERM division listed failures to act against the following: RCOM, for launching GSM services before demonstrating the lawful interception and monitoring (LIM) capabilities of its network; Bharti Airtel, for providing leased lines to a service provider – Alfa Flight – that was not registered with the DoT; Seghal Infotech for operating an unauthorised international call centre; and, Spanco BPO Services (SBSL) for operating after the expiry of its registration.

The DoT has come under greater scrutiny since the 2012 discovery of corruption in the regulator’s ranks, relating in that case to the allocation of 2G spectrum licences. The oversight, whilst arguably reducing graft has had a negative impact on the sector by increasing the severity of penalties applied to operators for minor offences. TeleGeography’s GlobalComms Database notes that since 2012, government officials have consistently implemented the maximum level of penalty for any infraction made by telcos, lest they might be accused of corruption for showing any sign of leniency. The excessive severity of these penalties – such as fines of INR500 million for minor misdemeanours like incomplete paperwork – has only served to further damage the already tainted reputation of the sector. Although the current telecoms minister, Ravi Shankar Prasad has called for a more measured approach to regulation, the severity of the CAG’s recent criticism is likely to ensure that the DoT remains ‘unnecessarily strict.’