Call Drops: SC strikes down compensation order

New Delhi :  In a major reprieve for the telecom companies, the Supreme Court has struck down the Telecom Regulatory Authority of India decision making it mandatory for telecom companies to compensate subscribers for call drops. (A call ‘drops’ when there is a sudden disconnect and you realize there’s nobody listening.)

Striking down the order, a two judge bench comprising justices Kurian Joseph and R F Nariman said: “We have held the impugned regulation to be ultra vires, arbitrary, unreasonable and non-transparent.”

The Delhi High Court had early this year upheld the October 16, 2015, decision of TRAI, making it mandatory for cellular operators to pay consumers one rupee per call drop experienced on their networks, subject to a cap of Rs 3 a day.

Following this, appeals were filed by COAI, a body of Unified Telecom Service Providers of India and 21 telecom operators, including Vodafone, Bharti Airtel and Reliance.

The telecom companies had argued before the apex court that the entire sector is under huge debt and they have to pay big price for spectrum, therefore zero tolerance on call drops should not be imposed on them.

Refuting the allegations of TRAI that the telecom service providers are making huge gains in the sector, the firms had said they have been investing hugely in infrastructure.

SC relief for telcos,  mandatory compensation is struck down

The regulatory body had told the court that it has to safeguard 100 crore telecom subscribers and if companies agree to compensate call drops with equal number of free calls to consumers without pre-conditions then it is open to re-consider its direction imposing penalty on them.

It had also told the court that a “cartel” of 4-5 telecom firms having a billion subscribers are making Rs 250 crore a day but not making investments in their network to improve services to check call drops.

Call drops a fall out of spectrum auction: Sibal

Former union telecom minister Kapil Sibal said that the problem of call drops has emerged out of the high price the companies had paid for the spectrum. “The total debt of the telecom sector stands at Rs.3.80 lakh crores. The average rate of return on investment is just one percent in this sector,” he said.

Sibal said that the crisis had arisen because of the Supreme Court mandated decision to auction spectrum.” Instead of getting spectrum at Rs.1635 crore, the companies paid Rs.45,000 crores and this has rendered the sector unviable,” he said adding that countries like China that offer free spectrum to telecom companies do not face the problem of call drops.

“ Now it is the responsibility of the union telecom minister Ravi Shankar Prasad, a votary of the auction route for spectrum, to make sure that he is not called the call drop minister by his own colleagues,” added Sibal.

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