Vodafone Idea plea rejected: TDSAT refuses cheaper rates for backhaul spectrum

In a setback to Vodafone Idea, telecom tribunal TDSAT has ordered against the company’s plea that backhaul spectrum assigned to it be charged at 2002 rates, as against new rates prescribed by the Department of Telecommunications (DoT) in 2006.

However, the tribunal also said the DoT can’t coerce the company and other operators to pay the charges through a forced bilateral agreement by extending the threat of losing the backhaul spectrum if they do not sign on the dotted lines.

The 2006 rates are slightly higher, though the differential between the two rates is less than 1%. The rate at which backhaul spectrum is charged ranges from 0.2% to 2% depending on the number of carriers an operator has. Most of the operators pay between 1% and 2% as charges for using backhaul spectrum.

The DoT changed the guidelines for allotment of backhaul spectrum in 2015 and asked operators in 2017 to submit an undertaking in accordance with the revised guidelines for allocation of backhaul spectrum. The telecom licences of incumbent operators were coming up for renewal in 2015 onwards, and the DoT had conducted a spectrum auction in 2014 for that.

Regarding rates of charging backhaul spectrum, the DoT said operators have to pay according to 2006 rates. The DoT also asked for an undertaking from operators that in future, if backhaul spectrum is auctioned, they had to pay the market determined price with retrospective effect.

While issuing the notice inviting application (NIA) for the spectrum auction in 2014, the DoT had said backhaul spectrum would be subject to separate application. The NIA had said backhaul carriers were not part of the auctions and payment of the successful bid amount did not ensure allotment of backhaul spectrum.

The DoT asked Vodafone, which merged with Idea Cellular last year, to submit an undertaking and enter into the frequency agreement so that its request for reassignment of backhaul carriers may be considered. Vodafone, however, challenged it in the TDSAT saying the DoT was bound to charge the 2002 rates.

Responding to the plea, the TDSAT said, “Petitioner (Vodafone Idea) has failed to show and establish any right either under the NIA or through the questions and answers relating to NIA or from the guidelines…that the respondent (DoT) is under obligation to charge for the backhaul spectrum as per 2002 rates.” The TDSAT further said the main issue is thus answered in favour of the respondent and against the petitioner.

However, the tribunal said it has no hesitation in holding that the respondent has given full assurance and promised the old licensees that on winning spectrum in auction, their existing backhaul resources would be made available to them. “For establishing the right to revise the guidelines or instructions relating to rates, the respondent has been ill-advised to force the telecom service providers to enter into bilateral agreements,” the TDSAT said.

It further said the respondent cannot be permitted to act in an arbitrary manner with respect to the petitioner and similarly situated licensees so as to coerce them to pay the charges through forced bilateral agreements.