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Telecom Tribunal Gives Split Verdict On 3G Roaming

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The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) on Thursday gave a split verdict on mobile telecom operators providing third generation (3G) services outside out of their licence areas. Therefore, telecom service providers can continue to offer 3G services to their subscribers outside their licensed circles.

The two-member bench comprising of TDSAT chairman Justice SB Sinha and member PK Rastogi differed in their findings. While Justice Sinha ruled that telecom operators should be given fresh notices by the Department of Telecommunications (DoT), Rastogi said that roaming pacts should be terminated immediately.

The split verdict happened because the third member of the tribunal has since retired.

The roaming problem arose because none of the telecom operators has 3G spectrum across the country. As a result, three large telecom operators Bharti Airtel, Vodafone and IDEA Cellular formed roaming agreements to offer 3G services outside of their circles. Last December, the telecom ministry told them that it was illegal to offer 3G services beyond their allotted zones through mutual pacts and wanted them to stop the services immediately.

In the same month, the carriers, including Tata Teleservices and Aircel, challenged the government order before the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), which told the government not to take any "coercive" action until it issues a verdict.

The operators are now expected to appeal in higher courts.

Agencies Add: The tribunal's decision was keenly watched by investors in Bharti Airtel, Vodafone's Indian unit and Idea Cellular - the country's top three carriers by revenue - which have effectively extended their 3G services to most parts of the country because of mutual roaming agreements.

The government will take a legal view before deciding on its next move, Telecoms Secretary R. Chandrashekhar said.

Bharti, Vodafone's Indian unit and Idea did not immediately comment. The companies previously said their roaming pacts complied with telecoms licensing rules.

The carriers are allowed to continue their services until the government dispatches a new order, a lawyer on the case said on Tuesday.

Shares in Bharti, India's top mobile phone operator, rose as much as 4 per cent, while those in Idea gained up to 5.5 per cent.

India raised more than $12 billion from a 3G auction in 2010. No company managed to win airwaves in all of the country's 22 service zones as the bid prices were much higher than expected.

Bharti paid $2.2 billion for 3G bandwidth in 13 service areas, while Vodafone India spent $2.1 billion for permits in nine and Idea gained access to 11 areas for about $1 billion. Many of their service areas overlap.

The 3G Market
3G services had been launched just last year in India and the mobile operators are still expanding their networks.

Of the country's more than 900 million mobile subscribers, only about 15 million are estimated to have subscribed for 3G, which facilitates faster Internet browsing on phones and services such as video calls.

Uptake of the premium services has been slower than expected as a majority of the mobile subscribers mostly use their phones to make calls, and also partly due to the high prices of such services.

Fledgling 3G services currently account for a very small portion of mobile operators' revenue.

The services are expected to account for 5 percent of revenue by the fiscal year ending March 2014, said a telecoms analyst at a foreign brokerage in Mumbai.

Even if the roaming pacts were ended, companies' revenues will fall by less than 1 percent, said the analyst, who declined to be identified as he was not authorised to speak to the media.

Also, a recent government plan for so-called liberalisation of airwaves would mean carriers can use their current 2G spectrum for 3G services in the future, making the roaming pacts "redundant," brokerage ICICI Securities said in a note to clients.

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