A "cartel" of 4-5 telecom firms having a billion subscribers are making Rs 250 crore a day but not making investments on their network to improve services to check call drops, government told the Supreme Court on Thursday.
"There is a cartel of four-five telecom companies having billion subscribers, who are making Rs 250 crore a day from outgoing calls. They have stupendous growth but they are making minimum investment on their network to improve the quality of service on their network to curb call drops," Attorney General Mukul Rohatgi said.
Rohatgi, appearing for TRAI before a bench of justices Kurian Joseph and R F Nariman, also defended the penalty imposed by the regulator on the telecom firms, saying it will be around Rs 280 crore and not thousands of crore as was being claimed by the service providers.
"They are making around Rs one lakh crore a year from calls and the impact of penalty will be Rs 270-280 crore and not thousands of crore as claimed by them," he said.
The Attorney General further said there was growth of 61 per cent in the subscriber base for telecom companies from 2009 to 2015 and they were diverting part of the spectrum to data for making more money.
"Data service cost more than the calls. None of these telecom companies are here for charity. They are here with billion subscribers for profit. They charge for everything," Rohatgi said.
COAI, a body of Unified Telecom Service Providers of India and 21 telecom operators, including Vodafone, Bharti Airtel and Reliance, have challenged the Delhi High Court order upholding TRAI's decision making it mandatory for them to compensate subscribers for call drops from this January.
The Attorney General said the telcos often cite shortage of spectrum as a reason for call drops but the radiowave remained unsold during the recent auction in 700 Mhz band.
"Whether you (telcos) get the spectrum or less spectrum, that is not the problem of TRAI. If you have less spectrum, then you have to either restrict your subscription or you will have to invest on technology. No one has come forward to say my hands are full and I can't have more subscribers," he said.
The Attorney General said that in India, the investment by telcos during the past five years has been Rs five billion, while it was Rs 50 billion in China during the same period.
"They (telcos) say my investment should be minimum but growth should be maximum because we are only four-five in number to have billion subscribers. These companies don't want to invest in technology. Rate of investment in China is ten times more than us," he said.
The bench then asked the Attorney General, that why the regulator or the government cannot ask the telecom companies to make investments on their networks.
"That approach of asking the telcos to invest will be invasive. What is currently being done is a polite way of asking them to pull up their socks, as, if the conditions don't improve, more things can follow," he said, adding regulation was brought to protect the consumers' interests.
Contending that the allegation of telecom companies that they are not allowed to put up cell towers on buildings, Rohatgi said in New York and Iceland, there are no mobile towers but they still have quality cellular service due to investment in technology.
He said the percentage of reasons not attributable to the telcos for call drops was much less than the percentage of reasons attributable to them.
Rohatgi also said there was no substance in the telcos' claim that no technology could ascertain the reasons for call drops and said it can indeed be done through equipments where reasons for every call drop is recorded.
He further alleged that telcos make money through call drops as more number of times you call, more you are charged irrespective of per second pulse.
The day-long hearing in the matter remained inconclusive and will continue on April 26.
On March 31, the Cellular Operators Association of India (COAI) had told the apex court that TRAI cannot levy penalty through regulations as they have never exceeded the two per cent threshold limit set by the telecom regulator.
The Delhi High Court had last month 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.
The court had said the regulation was made by TRAI "keeping in mind the paramount interest of the consumer".
The telecom firms had moved the high court seeking quashing of TRAI's regulation, terming it as a "knee-jerk reaction" which penalised them without proving any wrongdoing.
The telcos had termed the regulation as "arbitrary and whimsical", contending that providing compensation to consumers amounted to interfering with their tariff structure which could be done only by order and not regulation.
Earlier, TRAI had told the high court that consumers have a right to get compensated for call drops and this was different from the quality of service guidelines that cellular service providers have to follow under the licence conditions.
TRAI had on December 22 last year told the court that no coercive steps would be taken against telecom firms till January 6 for not complying with the call drop compensation norms.