Graded penalty system for telecom firms soon

New Delhi: The telecom commission, the country’s highest decision-making body on communications policies, will soon decide on a new graded financial penalty system for telecom operators as was promised by communications minister Kapil Sibal more than two years ago. 

 

 

The penalties will range from Rs1 lakh as a warning to Rs50 crore for a severe infraction, according to an internal memo of the department of telecommunications (DoT), reviewed by Mint.

There will be three grades in between: Rs1 crore for a minor violation; Rs5 crore for a moderate violation and Rs20 crore for a major violation. The move comes after telcos complained that even the smallest infractions of rules attracted the highest penalty of Rs50 crore.

The new norms are a consequence of the telecom commission’s decision on 29 April 2011, on the recommendations of a April 2008 committee headed by the then DoT additional secretary, who had also suggested a number of major changes including a uniform licence fee.

Sibal had said the penalties should be based on the gravity of the violations. “If mindlessly the maximum penalty is imposed in each particular case, it would send a wrong message to the industry,” Sibal had said.

The Telecom Regulatory Authority of India (Trai) in its recommendations on the guidelines for the unified licence and migration to the new licence, in April 2012, had suggested that the maximum penalty be reduced to Rs10 crore.

As part of the new penalty system, factors such as the gravity of the violation and its impact on the industry, the policy environment, the government exchequer, customers and national security will also be taken into account when deciding the quantum of the penalty.

The DoT panel has also put in place a streamlined process for handing out the penalty, where a show cause notice would be issued first after which a penalty order would be issued.

The DoT secretary would serve as an appelate authority and the minister would serve as the reviewing authority, the internal memo of the presentation to the telecom commission said. DoT has so far served around Rs7,000 crore in penalty notices to telcos, much of which is under litigation.

“The penalty issue is a big issue. Things like the 3G intra-circle roaming issue would have sorted itself out a long time ago if it had not been for the huge penalty that the telcos will have to pay. They (telcos and DoT) would have found a middle path rather than paying the thousands of crores of penalties for a few hundred crores in revenues from the services,” a Mumbai-based analyst with a multinational
securities firm said, requesting anonymity.

 

VIKASH CHANDRA MISHRA

PGDM 1ST YEAR

SOURCE: MINT