#Debriefed: Airtel, Reliance JIO, the TDSAT and the Delhi High Court

As the battle between Reliance Jio and the incumbent telcos such as Airtel, Vodafone, and Idea intensifies, litigation has now spread across multiple fora. Airtel has moved to the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) against the Telecom Regulatory Authority of India (TRAI), Vodafone has moved against TRAI in the Delhi High Court and, Jio has sought the attention of the Competition Commission of India (CCI) on alleged cartelisation..The ongoing tussle between Reliance Jio and the other telcos has, from the very beginning, been about the promotional services offered by Jio. It has been alleged that Jio’s promotions are ‘bypassing regulations and game inter connection usage charges, predatory pricing and disrupting fair competition’..To get to the heart of the conflict, here is a brief technical understanding of the underlying issue..The Calling Party Network Pays regime.For retail charging, India follows the what is called the Calling-Party-Network-Pays (CPNP) Regime wherein, the originating Telecom Service Provider (TSP) pays termination charge for calls in the networks of the other TSPs. This is known as an interconnection usage charge (IUC)..For example, if a Vodafone subscriber calls an Airtel subscriber, the dialling party will pay call charges to Vodafone and Vodafone will in turn pay Airtel a termination charge for using its network..Jio’s promotional offers, say current telcos, has been ‘allowing’ Jio to bypass payment of the IUC, thereby incurring huge losses for the telcos..TRAI’s time limit on “promotional offerings”.As per TRAI tariff orders and directives any promotional offerings should not exceed a time period of 90 days..And, as was revealed in the TDSAT proceedings, a number of directions have been passed to this effect. More specifically,.‘TRAI’s Directions dated 19.06.2002 and 01.09.2008, as well as Telecommunication Tariff Orders 2003 dated 25.04.2003 and 2004 dated 16.01.2004, as well as TRAI’s Letter dated 20.05.2003 and other relevant letters and TRAI’s Tariff Orders, Directions and Regulations,’.On October 20 last year, TRAI issued a letter stating that Jio was not violating of the 90-day limit since Jio’s promotional offerings expire on December 3..On December 4 Jio announced a new promotional offer, one that would be valid till March 31st this year. This second offer (the first being the “Welcome Offer”) was called the ‘Happy New Year Offer’.Old customers have automatically been transferred to the new offer beginning January 1 this year, and all new subscribers beginning December 4 last year have been enrolled with the new plan..This prompted Airtel to retaliate, in the form of an appeal against TRAI’s October 20 order..Hearings in the TDSAT.The appeal before TSDAT has seen two hearing take place so far, one on December 23 [pdf], and the other on January 7 this year [pdf]..Represented by senior counsel Gopal Jain along with Harsh Kaushik, Airtel raised two broad issues:.1) That by extending its promotional offerings beyond the stipulated 90 day time-period, Jio is in clear violation of TRAI tariff orders and directives and;.2) That the promotional offer is in the nature of predatory pricing, which is not permitted under the TRAI (IUC) Regulations..Airtel chose not to make Reliance Jio a party to the appeal, something that Jio’s counsel objected to. On the first hearing itself, Jio sought to implead itself in the matter, represented by senior counsel CS Vaidyanathan. However, the TDSAT bench of BB Srivastava and AK Bhargava held that an impleadment application has to be filed first..TRAI’s stance in the TDSAT.Kirtiman Singh, TRAI’s counsel, had stated that TRAI had sought documents from Reliance Jio, documents that were to be submitted by December 25..However, during the second hearing held on January 7, ASG Tushar Mehta (appearing for TRAI) said that the regulator would require more time to take a final decision since ‘a large number of similar applications being filed with TRAI’.In the last hearing TDSAT, in its order noted,.“A perusal of the main prayer as well as interim prayer makes it clear that in the first instance, it is the Regulator who has to take a call on the Regulations framed by it and ensure how far they have been complied with or are being complied by the service providers..We fully agree with learned ASG that the Tribunal or the Regulator has to simply balance the equity and the interest of the service providers but at the same time, the prime importance is the consumers’ interest.”.The matter will now be heard on February 1..But the story does end there..TRAI’s multi-billion dollar penalty on Airtel, Vodafone, Idea.On October 21 last year, a day after holding that Jio was not violating TRAI’s orders, the regulator recommended the imposition of penalties of ₹50 crore per circle on Airtel, Vodafone, and Idea..These penalties, totalling ₹3050 crores, were allegedly because the three were for not providing Jio with sufficient interconnection points, as promised..This would translate into a penalty of ₹1,050 crores on Airtel, ₹1,050 crores on Vodafone and ₹950 crores on Idea Cellular..Vodafone has moved the Delhi High Court against the said order, on grounds of it being ‘arbitrary and unconstitutional’, and violation of the principles of natural justice..While the Delhi High Court hearing is listed for 6 February, the Centre has argued that the order is not yet appealable since it is only in the form of a ‘recommendation’ and no penalty has been levied by the Department of Telecommunications (DoT) yet..Latest reports, however, suggest that AG Mukul Rohatgi has given a green signal for imposition of these penalties. The matter will now be evaluated by the DoT..Lastly, it has also been reported that Reliance Jio has filed an application with the CCI against incumbents alleging ‘cartelization’, under section 19(1) of the Competition Act, 2002..Hence, as things stand, there are litigations in the TDSAT, the Delhi High Court, and the Competition Commission of India. And given the stakes involved, it is unlikely that these litigations will end anytime soon.