Supreme Court of India upholds telcos' appeal on call drop compensation

The court strikes down TRAI's consumer-friendly direction saying it is 'unreasonable, arbitrary, and not transparent'.

In a big relief to the telecom service providers in the country, the Indian Supreme Court on Wednesday upheld the contention of Cellular Operators' Association of India (COAI) and other representatives of the industry that they need not compensate consumers for call drops.

Describing the October 16 order of the Telecom Regulatory Authority of India (TRAI) as "unreasonable, arbitrary, and not transparent", the Supreme Court pronounced the verdict and wanted the Indian government to enact a legislation akin to the one in existence in the US.

Though the case was heard by a division bench comprising Justices Rohinton Fali Nariman and Kurian Joseph, the verdict was pronounced only by Justice Nariman.

The Telecom Regulatory Authority of India, in a notification in October last year, directed that the service providers should compulsorily compensate consumers at the rate of 1 rupee per call drop subject to a maximum of three call drops per day from January 1, 2016.

The operators, however, said the order was issued knowing fully well that "laws of physics made it impossible to provide a 100 percent call drop-free network" and challenged the same in Delhi High Court in December.

After hearing the case for more than two months, the Delhi High Court gave a ruling in favour of TRAI in March but the associations filed a review petition in the Supreme Court, which was upheld on Wednesday.

Blaming the poor infrastructure as one of the main reasons for call drops, the associations claimed that the cash-strapped telecom firms would have to pay more than $8.2 billion (54,000 crore rupees) every year. The government and TRAI rejected their contention saying that it will be less than $150 million. "The telecom companies are not investing despite earning as much as 250 crore rupees every day," TRAI's counsel informed the Supreme Court during the hearing.

Speaking to ZDNet, COAI Secretary General Rajan S Mathews said that the service providers were pleased with the Supreme Court's decision as it saw merit in their case, and that it was time for the government and the companies to set aside the past and work towards finding a solution by looking at the root cause of the problem.

"TRAI's regulation, asking the companies to compensate for the call drops, was putting the emphasis at the wrong place and penalising the operators was not the right approach," he said.

Since lack of infrastructure -- such as making land available for setting up more mobile towers and granting permissions from various government agencies -- was posing a major challenge to the companies, Mathews wanted the government to look into the issue. The government already announced last week that it was making efforts to provide "right of way" to the telecom firms for laying infrastructure and a single window system would be set up where all necessary permissions would be issued without delays.

Mathews also wanted the government to make all necessary spectrum available to the telecom companies at affordable prices so that services can be improved further.

"The government has relaxed the terms and conditions for making payments so that the companies can participate in the next round of auction of spectrum. But it did not reduce the reserve price for the same," he pointed out.

There was no response from TRAI on the apex court's ruling.