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Error By Commission

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There is a thin line between a mathematical error and a wilful misdemeanor. That is what the Department of Telecommunications (DoT) is out to unearth having realised that billing and data related errors in India’s hyper-growing telecom industry — it grew 58 per cent to 261 million subscribers in 2007-08, and by 50 per cent to 392 million in 2008-09 — are rising alarmingly. Four major operators have made some error or the other — violating telecom licence conditions — in their monthly reports submitted to Telecom Regulatory Authority of India (Trai) in 2007-08. Albeit the numbers are small and, in most cases, corrective steps have been taken.
The violations relate to non-conformity of tariff as prescribed by the regulator, not preserving all billing and other accounting records for a period of three years from the date of publishing of the companies’ accounts, and not offering a regular itemised billing service to customers.
Vodafone Essar, for example, charged roaming rental of Rs 1.52 lakh from customers in Haryana, Rs 90,000 in Punjab and Rs 86,000 in Uttar Pradesh (East) circles, but reported ‘zero’ roaming rental in its submission to Trai and DoT. Bharti Airtel took Rs 74 lakh from its customers under various heads and didn’t report it to its auditors. Reliance Communications charged about Rs 2.31 lakh as roaming rental from its customers in all circles. And Spice Telecom did not submit accounts of estimates.
When Trai got wind of numbers not adding up after comparing reports submitted to it with reports submitted to DoT and stock exchanges, and after receiving customer complaints through the ombudsman and NGOs, it appointed independent auditors to check the reports. “It has encroached upon the limited regulatory resources of the authority, which was avoidable, but for the misrepresentation made by the operators,” says a Trai official. After the exercise unearthed instances of misrepresentation of facts, Trai Secretary R.K. Arnold shot off two letters to the Department of Telecommunications (DoT) Secretary Siddhartha Behura, asking for action against the operators.

The companies had explanations for the errors. Vodafone told the regulator that it was an error “due to an inadvertent wrong calculation in these circles”. Bharti argued that it should not be penalised since it has refunded the money to those subscribers that it could identify, and deposited the balance in the Telecommunications Consumers and Education Fund. Reliance said it had made pro rata adjustments to subscribers before submitting to Trai. And Spice’s response to the regulator: “Old data restoration was not possible,” hence it could not provide the numbers to its empanelled auditors. Arnold, though, is unmoved. “Misrepresentation is misrepresentation, and it remains so even if there is supposedly certain reason/explanation behind it,” he says in one of the letters to DoT.
Trai also provided documentary evidence of the violations to DoT last month, but no action has been taken so far. Strangely, though, Trai has looked at only 2007-08 numbers. Bharti, Vodafone and Tata Indicom reportings have indicated discrepancies in their revelation of subscriber numbers. This DoT offcials feel could be to save on the 6 per cent mandatory revenue share. The scope and extent of this under-reporting is now being investigated by DoT.
m dot rajendran at abp dot in
(Businessworld Issue Dated 5-11 May 2009)

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