Indian Mobile Operators Fined for Delayed Service Rollout

Some Indian mobile operators have begun paying fines to the Indian government for their delay in rolling out services within the time stipulated in their license agreements.

Unitech Wireless, Telenor's joint venture in India, and Etisalat DB Telecom, the Indian joint venture of Etisalat, both confirmed that they have paid fines, but under protest.

Etisalat DB Telecom said on Wednesday it had paid 99 million Indian rupees (US$ 2.1 million) to the Department of Telecommunications (DOT) in liquidated damages in connection with its rollout obligation for the first year in four telecom service areas.

Unitech Wireless, which goes by the brand Uninor in India, did not specify how much it had paid in penalty to the DOT.

However, the company said that its delay in rolling out services was linked to government policy including new procedures for getting equipment cleared for security, and pre-launch testing requirements.

A number of operators have separately complained that their rollout schedules were affected by the government's delay in providing security clearances for deploying equipment, particularly from Chinese vendors like Huawei Technologies.

The Indian government decided in late November to issue notices to defaulting companies after the Telecom Regulatory Authority of India (TRAI) recommended that some licenses for 2G services should be cancelled, as the companies involved met only partially or not at all their service rollout obligations in some service areas.

A report by the country's Comptroller and Auditor General of India (CAG) said that of 122 licenses issued in 2008, 85 licenses were awarded to six new licensees who had not met their service rollout obligations. Unitech Wireless and Etisalat DB Telecom were among the companies named by the CAG for delay in meeting their rollout obligations. Companies typically hold a number of licenses that allow them to operate services in many or all of India's 22 service areas.

The rollout obligation stipulates for example that up to 90 percent of the service area in metropolitan areas should be covered within one year of the award of the license. By their delay, the defaulting companies were hoarding spectrum which is a valuable natural resource required by other operators, besides depriving the DOT of revenue, CAG said.

The CAG report, which led to the resignation last month of the then minister for communications, A. Raja, also separately alleged irregularities in government's allocation of licenses and spectrum to some companies.

In the wake of the report, the new minister for communications, Kapil Sibal, decided among other measures to issue notices to licensees that had not met their rollout obligations. The penalty in this case could be either damages or cancellation of licenses, he said last month.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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