Regulation; Cellular Operators Vs. Telecom Regulatory Authority [11-05-2016] SC

Telecom Regulatory Authority of India Act, 1997 – Ss. 36 r/w. 11 – Telecom Consumers Protection (Ninth Amendment) Regulation, 2015- A penalty that is imposed without any reason either as to the number of call drops made being three, and only to the calling consumer, far from balancing the interest of consumers and service providers, is manifestly arbitrary, not being based on any factual data or reason.



(Kurian Joseph) and (R.F. Nariman) JJ.

May 11, 2016










R.F. Nariman, J.

1. Leave granted.

2. This group of appeals before us is by various telecom operators who offer telecommunication services to the public generally. Various writ petitions were filed in the Delhi High Court challenging the validity of the Telecom Consumers Protection (Ninth Amendment) Regulations, 2015 (hereinafter referred to as the “Impugned Regulation”), notified on 16.10.2015, (to take effect from 1.1.2016), by the Telecom Regulatory Authority of India. The aforesaid amendment was made purportedly in the exercise of powers conferred by Section 36 read with Section 11 of the Telecom Regulatory Authority of India Act, 1997. By the aforesaid amendment, every originating service provider who provides cellular mobile telephone services is made liable to credit only the calling consumer (and not the receiving consumer) with one rupee for each call drop (as defined), which takes place within its network, upto a maximum of three call drops per day. Further, the service provider is also to provide details of the amount credited to the calling consumer within four hours of the occurrence of a call drop either through SMS/USSD message. In the case of a post paid consumer, such details of amount credited in the account of the calling consumer were to be provided in the next bill.

3. A brief background is necessary in order to appreciate the controversy at hand. Under an Act of ancient vintage, namely, the Indian Telegraph Act, 1885, the Central Government or the Telegraph Authority is the licensing authority by which persons are licenced under Section 4(1) of the said Act for providing specified public telecommunication services. Given the fact that it is the Central Government or the Telegraph Authority who is the licensor in all these cases, the said licensor enters into what are described as licence agreements for the provision of Unified Access Services in the specified service areas. Various standard terms and conditions are laid down in these licences, some of which are described hereinbelow. Vide clause 2.1, such licences are granted to provide telecommunication services, as defined, on a non-exclusive basis in designated service areas. It is mandatory that the licensee provides such services of a good standard, by establishing a state of the art digital network. Licences are usually given for a period of 20 years at a time with a 10 year extension if the licensor so deems expedient. Under clause 5 of the aforesaid licence agreement, the licensor reserves the right to modify, at any time, the terms and conditions of license, if in its opinion it is necessary or expedient so to do in public interest, in the interest of security of the State, or for the proper conduct of telegraphs. Under condition 28, which is of some relevance to determine the question involved in these appeals, the licensee shall ensure that the quality of service standards as prescribed either by the licensor or the Telecom Regulatory Authority of India shall be adhered to. The licensee is made responsible for maintaining performance and quality of service standards and is to keep arecord of the number of faults and rectification reports in respect of a particular service which is to be produced before the licensor/TRAI as and when desired. It is also important that the licensee be responsive to complaints lodged by its subscribers and rectify the same. Under clause 34, which deals with roll-out obligations, the licensee is to ensure that coverage of a district headquarters/town would mean that at least 90% of the area bounded by municipal limits should get the required street and in-building coverage. Interestingly, under clause 35, liquidated damages are also provided for, in case the licensee does not commission the service within 15 days of the expiry of the commissioning date and for certain other delays relatable to commissioning of service.

4. It may also be noted that right from September, 2005, TRAI has been lamenting the shortage and consequent distance of mobile towers from each other and both the Government as well as TRAI have been writing to the Chief Secretaries of variousState Governments to grant timely permissions for establishing telecom towers. In this behalf, we have been shown guidelines issued by DOT to the Chief Secretaries dated 1.8.2013. We have also been shown an amendment to the Quality of Service Regulations dated 21.8.2014 by which TRAI has noticed practical difficulties that are faced due to various reasons by which cable breakdowns and indoor faults take place, with the Authority requiring the striking of a balance between the problems faced by the licensees and the need to ensure quality of service to customers. We were also shown a letter from the Ministry of Communications written to Chief Ministers of all the States to permit installation of towers on Government buildings. This letter is dated 3.8.2015. Further, there is a constant tussle between cell phone operators and municipal authorities, landing cell phone operators in court against municipal authorities, who seek to restrict the setting up of cell phone towers, given theapprehension that radiation from these towers has a direct causal link with cancer in human beings. It is also important to note that by a Quality of Service Regulation dated 20.3.2009, issued under Section 11 read with Section 36 of the TRAI Act, TRAI has provided, insofar as cellular mobile phone services are concerned, for a call drop rate of 2% averaged over a period of one month. It has also provided for financial disincentives in case there is a failure to meet this parameter by enacting a second amendment to the Quality of Service Regulations dated 8.11.2012 by which a service provider is liable to pay, by way of financial disincentive, an amount not exceeding Rs.50,000/- per parameter that is contravened as the Authority may by order direct, and in the case of second or subsequent contravention, to pay an amount not exceeding Rs.1,00,000/- per parameter for each such contravention as the Authority may by order direct. One day before the Impugned Regulation, i.e., on15.10.2015, this financial disincentive was raised from Rs.50,000/- to Rs.1,00,000/-, and Rs.1,00,000/- to Rs.1,50,000/- for the second consecutive contravention, and Rs.2,00,000/- for each subsequent consecutive contravention.

5. It is in this background that the impugned Ninth Amendment to the Telecom Consumers Protection Regulations of 2015 was made, on 16.10.2015. The Impugned Regulation reads as under:-