Case: Centre for Public Interest Litigation Vs. Union of India &amp; Others

were a lot of deliberations in the Department, consultations were held with other Ministries i.e., Department of Economic Affairs, Department of Industrial Promotion and Policy on the various issues relating of auction of 3G and BWA Spectrum. The submission is that all aspects, relevant to the issue were thoroughly examined and deliberated upon. It was noted that since BWA spectrum will be used for rural development, the SUC is kept at 1% of AGR. Further, it was also noted that since spectrum is being auctioned and the price discovery is through a market mechanism, the bidders will factor in the annual charges in their bids. Therefore, keeping BWA annual spectrum charge at 1% will have no adverse revenue implications. The aforesaid is the rationale given for fixation of 1% of AGR as SUC. 48. On going through the records, we find that the decision, namely, SUC be fixed at 1% AGR was based on relevant considerations. Not only TRAI had recommended the aforesaid charge to be fixed, there was an in depth examination of this recommendation of the TRAI by Government before accepting the same. Furthermore, it is also pertinent to note that on the basis of aforesaid decision, specific provisions were incorporated in the NIA for SUC for BWA spectrum. Clause 3.5 of the NIA, in this behalf, is as under: "3.5 Spectrum usage chargesLicensees using BWA Spectrum need to pay 1% of AGR from services using this spectrum as annual spectrum charge irrespective of the licence held by them. Such revenue would be required to be reported separately." 49. The aforesaid discussion, thus, demonstrates that the main consideration that prevailed with the Government in keeping the SUC at 1% of AGR was that BWA spectrum was to be used for rural development. It also needs to be highlighted that in line with the objective of rural development, more rural oriented roll out obligations for BWA spectrum in category A, B and C service areas, were prescribed, as can seen from the following clauses: "3.4.2 Roll-out obligations for BWA SpectrumCategory A, B and C service areasThe licensee to whom the spectrum is assigned shall ensure that at least 50% of the rural SDCAs are covered within five years of the Effective Date using the BWA Spectrum. Coverage of a rural SDCA would mean that at least 90% of the area bounded by the municipal/local body limits should get the required street level coverage.The Effective Date shall be the later of the date when the right to use awarded spectrum commercially commences and the date when the UAS licence or the ISP category A licence, if and as applicable, is granted to the operator ... ..." 50. Mr. Ranjit Kumar Learned Solicitor General further demonstrated that the country has been divided into 3 metro service areas, namely Delhi, Mumbai and Kolkata and 18 Service areas which have been further designated as category A, B and C. SDCA stands for Short Distance Charging Area which comprises typically of one to two tehsils. The country has 2647 SDCAs out of which 2470 SDCAs has been designated as rural SDCAs. All operators including M/s Reliance Jio Infocomm Ltd who were awarded BWA Spectrum in 2010 and whose time period of 5 years for roll-out obligation was completed in 2015, have submitted proof of compliance of roll out obligations by registering with Telecom Enforcement and Resource Monitoring (TERM) Cell of Department of Telecom before the due date in all the 22 service areas. The date of registering the TERM Cell is taken as the date of completion of roll out obligation on successful testing. In this case, testing is in progress and is likely to be completed in next few months. It was, thus, pointed out that less rural coverage is stipulated for 3G spectrum which factor influenced the policy makers to fix SUC at 1% of AGR. 51. Apart from the above, there is one more reason not to interfere with the aforesaid stipulation of SUC. The Government has taken the position that the conditions in the license granted to respondent No. 2 empower the licenser/Government to change the terms of license and, therefore, whenever it is felt necessary and expedient in pubic interest, the percentage of SUC can be increased. However, the matter, for increase of SUC, was even examined after the recommendation of TRAI in the year 2013 that SUC be charged at an average rate instead of slab rate for various spectrum holdings as given in NIA of 2010 and subsequent NIAs of 2012 and January, 2013. The Telecom Commission considered this aspect and debated three options which could be considered for holders of BWA auction in the year 2010, namely: (i)SUC be raised to 3%;(ii)SUC be kept at 1% and reported separately; or(iii)SUC for standalone BWA be kept at 1%, but if combined with spectrum bought in fresh auctions then the charge be the weighted average of acquired spectrum at 3% and BWA at 1%. 52. Before taking a final decision as to which option be resorted to, the Telecom Commission recommended that a legal opinion be sought from the learned Attorney General. Matter was referred to the then Attorney General who opined that SUC charge be retained at 1% for BWA operators and on that basis, final decision in this behalf was taken. It is further pointed out that on the issue of revenue segregation, a committee had been formed which has submitted its report. The report is under consideration and decision on the report is likely in two months. After considering the report of the committee on the revenue segregation, appropriate action will be taken whether separate revenue reporting to continue or not or an increase in SUC is required for the proper conduct of telegraph as provided in the License Agreement. The decision on the report is expected in two months. In view of the aforesaid developments, for the time being, we leave the matter to the Government to take an appropriate decision in this behalf.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]28. This submission lacks substance. During the course of arguments, the learned Solicitor General successfully demonstrated that what was auctioned in 2010 was spectrum, namely, 3G spectrum and BWA spectrum. Insofar as 3G spectrum auction is concerned, it was in blocks of 5 MHz i.e. each block of 2 x 5 MHz whereas BWA auction was in blocks of 20 MHz. The spectrum, therefore, was of different forms and thus, issuance of license would be different from spectrum. Moreover, NIA dated 25.02.2010 itself provided the eligibility conditions for an entity who could bid for BWA spectrum and further stipulation in this behalf was specifically stated aswe have already dealt with this aspect of the argument, we are addressing the issue now in the context of frontal attack made on the fixation of fee of Rs.1,658 crores which is charged from respondent no. 2 while allowing the migration from UAS to UL.In the first instances, we may observe that once the policy decision of the Government allowing migration from BWA spectrum to UL is found to be justified in the circumstances already noted above, the argument of the petitioner predicated on the judgment of this Court in 2G2 case does not hold good. Even otherwise the decision in the said case is based on altogether different backdrop. Judgment in the said case would reveal that in 2001, in order to increase competition from then existing two private players plus one PSU player per telecom circle, the Government introduced the 4th telecom operator in each circle. At this time, there was an auction conducted for grant of licenses and this license carried with it 4.4 + 4.4 MHz to start up spectrum and an assurance that further spectrum availability would be given to the licenses subject to availability (by 2010 the TRAI had suggested the grant of a minimum spectrum of 6.2 MHZ to each licensee as contracted spectrum). The Government had decided in 2001 when bids were invited for the 4th license that all future grants should be on market price. However, in a departure from this even in year 2007-08 the then Telecom Minister (following certain processes which was found to be flawed) invited applications for license based on a pre-determined license fee. This license fees was the same as the fee that was paid in 2001 by those who applied for the 4th telecom license. This Court found that the manner in which this decision had been arrived at was flawed and smacked of arbitrariness. It was also held that this spectrum is an extremely valuable natural resource and must only be made available at market price. The Court found that the license itself had no value, in that the real value was that of the spectrum.On the other hand, insofar as present case is concerned, auction of 3G spectrum as well as BWL spectrum held in 2010 was not challenged by anybody and no fault has even been found in the same. It is the spectrum which a vital resource and that was duly auctioned. The decision now taken, which is the subject matter of controversy in the present case, pertains to license, namely, switching over from UASL to UL, validity whereof has already beenBidders in the BWA Auction that currently hold an ISP-category B licence shall be required to migrate to an ISP-category A licence, by paying the applicable fees/charges for migration, before they are awarded the BWA Spectrum. The DoT guidelines stipulate that a UAS license or an ISP licence can only be awarded to an Indian Company. Hence, any foreign applicants will need to form, or acquire, an Indian company, to obtain a UAS licence or an ISP-category A licence. However, they are allowed to participate in the Auctions directly and apply for or acquire a licence subsequently through an Indian company, where they hold at least 26% equitycan only be offered subject to the terms and conditions of the licence obtained by the operator. Award of spectrum does not confer a right to provide any telecom services, and these are governed by the terms and conditions of the licence obtained by the operator.It becomes apparent from the above that the spectrum was different from license inasmuch as award of spectrum did not confer a right to provide any telecom services. Insofar as providing of telecom services are concerned, these were to be governed by the terms and conditions of the license obtained by the operator. The learned Solicitor General also handed over a comparative chart of varying points of view of the different Departments when the matter regarding migration from UASL to UL regime was being discussed and contemplated. A perusal thereof would show that there was a threadbare discussion on the issue wherein pros and cons of migration of telecom licenses to UL regime were discussed; various apprehensions expressed were considered; and ultimately consensus emerged for switching over to this regime. The discussion reveals that the Committee of the DoT in its comments proceeded on the premise that the BWA spectrum could not be used for any other purpose other than providing internet services. The other departments did not share this view. It was ultimately found that the view of the Committee was contrary to the plain language of the Notice Inviting Applications and specifically Q&R which was published by the DoT itself for the purpose of the auction. Difference of point of view of different departments shows the process of institutional decision making.The aforesaid discussion leads us to irresistible conclusion that decision of the Government permitting migration of telecom licenses to UL regime is valid, legal and without any blemish.Much is said on the veracity of CAG draft report by respondent no. 1 as well as respondent no. 2 in their attempt to show that the very basis of making calculation of alleged undue advantage of Rs.22,842 crores (in the draft report) or Rs.3,367.29 crores (in the final report). However, having regard to the aforesaid discussion, it may not be necessary to delve into this aspect in much greater details. It would be suffice to point out that the basic error committed by CAG was to compare 3G and BWA (4G) spectrum which mistake was realised in preparing the final report. It appears that these calculations are made by taking migration fee of Rs.1,658 crores which were prevalent in the year 2001 and on that basis it arrived at a figure of Rs.5025.29 crores which, according to CAG, should have been fixed. As respondent no. 2 paid a fee of Rs.1,658.57 crores, according to the CAG it has resulted in the loss of Rs.3,367.29 crores. However, the aforesaid assumption loses sight of the fundamental aspect, namely, in 2001 spectrum and license were unified which was not the position in the year 2010 when the two were segregated. It is stated at the cost of repetition that insofar as auction of BWA spectrum is concerned the same was auctioned at a price of Rs.12847.77 crores which is the most material aspect and has been totally glossed over. We, thus, do not find any error in the action of the Government in allowing the migration from UASL to UL by making respondent no. 2 to pay a sum of Rs.1,658 crores in this behalf.On going through the records, we find that the decision, namely, SUC be fixed at 1% AGR was based on relevant considerations. Not only TRAI had recommended the aforesaid charge to be fixed, there was an in depth examination of this recommendation of the TRAI by Government before accepting the same. Furthermore, it is also pertinent to note that on the basis of aforesaid decision, specific provisions were incorporated in the NIA for SUC for BWA spectrum.Apart from the above, there is one more reason not to interfere with the aforesaid stipulation of SUC. The Government has taken the position that the conditions in the license granted to respondent No. 2 empower the licenser/Government to change the terms of license and, therefore, whenever it is felt necessary and expedient in pubic interest, the percentage of SUC can be increased. However, the matter, for increase of SUC, was even examined after the recommendation of TRAI in the year 2013 that SUC be charged at an average rate instead of slab rate for various spectrum holdings as given in NIA of 2010 and subsequent NIAs of 2012 and January, 2013. The Telecom Commission considered this aspect and debated three options which could be considered for holders of BWA auction in the year 2010,be raised tobe kept at 1% and reported separately;for standalone BWA be kept at 1%, but if combined with spectrum bought in fresh auctions then the charge be the weighted average of acquired spectrum at 3% and BWA at 1%.Before taking a final decision as to which option be resorted to, the Telecom Commission recommended that a legal opinion be sought from the learned Attorney General. Matter was referred to the then Attorney General who opined that SUC charge be retained at 1% for BWA operators and on that basis, final decision in this behalf was taken. It is further pointed out that on the issue of revenue segregation, a committee had been formed which has submitted its report. The report is under consideration and decision on the report is likely in two months. After considering the report of the committee on the revenue segregation, appropriate action will be taken whether separate revenue reporting to continue or not or an increase in SUC is required for the proper conduct of telegraph as provided in the License Agreement. The decision on the report is expected in two months. In view of the aforesaid developments, for the time being, we leave the matter to the Government to take an appropriate decision in this