Court verdict in TRAI could reduce data pricing

A CLS is the place where submarine cables (laid undersea), after carrying internet data from all over the world, pass them on to the domestic market in a country. India is connected to the rest of the world by 12 submarine cable systems which land at different locations including Mumbai, Chennai, Cochin and Thoothukudi.

Nearly 85 per cent of these landing points are owned by two Tata Communications and Bharti Airtel. Many foreign long-distance telephone companies allege high landing fee by both these companies. Sources in the Competition Commission of India (CCI) revealed that a long-distance carrier connecting to a CLS in Changi, Singapore pay less than $3,000 per annum for 10 Ggigabits per second (Gbps) bandwidth, while in India the two operators reportedly charge anywhere between $65,000 and $2,50,000 per annum.

This had resulted in TRAI coming out with three regulations in 2007 and twice in 2012, reducing the access facilitation charges to one-tenth of the existing rates being charged by these CLS’. According to TRAI the high tariff is holding back consumption of bandwidth available in the country. Against a capacity of 33,900 Gbps available on the 12 undersea cables collectively, the total lit capacity in the country is 6,009 Gbps, while the actual bandwidth consumed is only 1,110 Gbps.

Challenging the TRAI regulations, both the companies moved the Madras High Court on the basis that it takes Rs.60 crore to 100 crore to build a CLS and the bandwidth consumption in India is not high enough to drive volume-based pricing. A single judge dismissed their plea. Both the companies preferred an appeal.

Since then, the case is being heard by the first bench comprising Chief Justice Indira Banerjee and Justice M Sundar. Former finance minister P Chidambaram appearing on behalf of Tata Telecommunication argued that CLS is an infrastructure and since Tata Telecommunication is not a service provider, TRAI had no power to regulate it.

However, P Wilson appearing on behalf of TRAI had submitted that the three regulations were subordinate legislations and hence constitutional presumption of validity was in their favour. Also pointing out that when public interest was involved, the commercial interest of the two operators cannot be offered priority, he contended.

But both these telecom majors refusing to comply with the December 2012 TRAI Regulations and duopolising the whole market has reportedly made broadband penetration difficult in the country. But again, everything depends on the outcome of the case which would decide as to whether owners of CLS are ‘service providers’ as defined by TRAI Act 1997. The case is scheduled to be heard on September 4, when TRAI is set to put forth its set of arguments.