Digital Commission meets Wednesday, to decide on telcos penalty

The penalty on Airtel, Vodafone and Idea has been imposed for failing to provide adequate interconnection three years ago to new entrant Reliance Jio during its network trial stage causing call drops and poor quality of service for customers.

The sources said the DCC had, in principle, agreed to the penalty but the Telecom Regulatory Authority of India (Trai) was also told to review the penalty amount.

The DCC is unlikely to back Trai's recommendations of a Rs 3,050 crore cumulative penalty on the three telcos and may reduce it to a nominal sum, the sources added.

Airtel and Vodafone were fined Rs 1,050 crore each while Idea was given a Rs 950 crore penalty.  Idea and Vodafone had not merged at that time.

According to the sources, now that the telecom regulator has stuck to its stand on not lowering the amount, the penalty may be reduced to a very nominal figure just to set the precedent of discipline in the market where quality of service for the consumer is a concern.

The sector's current financial health puts it in a weaker position to incur further costs on a penalty.

On June 17, the DCC, while approving the Trai proposal for imposing penalty on Bharti Airtel, Vodafone and Idea, had asked the regulator to consider revising the quantum as the sector is financially stressed.

Officials say a fine of Rs 3,050 crore at this stage would be an additional burden on the telecom industry. In a situation of the DCC accepting Trai's recommendation, the companies could appeal in the courts, adding the cost of prolonged litigation to telecom sector's burdens.

Vodafone Idea and Bharti Airtel have been posting losses at their India businesses due to the lower pricing pressure triggered by the entry of Jio in September 2016.

In February, a seven-member internal committee of the DoT had rejected Trai's recommendation to levy the penalty and left the final decision to the DCC.

Trai had recommended that a fine of Rs 50 crore be levied on Bharti Airtel and Vodafone each in 21 circles, while a similar amount be levied on Idea Cellular in 19 circles.