Reliance Infocomm Ltd Vs. Bharat Sanchar Nigam Ltd. & Ors [2008] INSC 761 (30
April 2008)
S. H. Kapadia & B. Sudershan Reddy
REPORTABLE CIVIL APPEAL NO. 936 OF 2006 KAPADIA, J.
This civil appeal is filed under Section 18 of Telecom Regulatory Authority
of India Act, 1997 ("1997 Act") by M/s Reliance Infocomm Ltd.
against judgment and order delivered by Telecom Disputes Settlement and
Appellate Tribunal ("TDSAT") dated 17.1.2006 dismissing petition No.
108 of 2005 challenging the directive dated 4.3.2005 by the Telecom Regulatory
Authority of India ("TRAI"), circulars dated 23.3.2005 and 26.8.2005
issued by DoT and demands raised by BSNL for ADC for the period 14.11.2004 to
26.8.2005.
2. The short question which arises for determination in this civil appeal is
whether "Unlimited Cordless" service" ("the impugned
service" for short) of the appellant is covered under the definition of
WLL(M) service as defined in Regulation 2(xxviii) of the Telecommunication
Interconnection Usage Charges Regulation, 2003 which defines WLL(M) as limited
mobility service using WLL technology within Short Distance Charging Area
("SDCA"). According to TRAI and DoT, fixed wireless phones
("FWP")/fixed wireless service ("FWS") which operate beyond
the subscriber's premises is classifiable as WLL(M) service for the purpose of
payment of ADC to BSNL whereas, according to the appellant, FWS is limited to
one base transceiver station ("BTS") within which the service
operates and, consequently, this service is classifiable as WLL(F) and not as
WLL(M).
Facts:
3. On 18.3.1997, appellant was granted licence by DoT for providing basic
services in Gujarat which included fixed wireless services but which preferred
wireless technology for the subscriber local loop. On 20.7.2001 appellant was
granted licence by DoT for providing basic services in different service areas
in the country which included fixed wireline service and limited mobile
service. In November, 2003 appellant was permitted to migrate to the Unified
Access Service Licence ("UASL") which categorized wireless services
into 3 categories, viz., fixed wireless access ("FWA"), limited
mobility [WLL(M)] and fully mobile service(s).
Submissions of Shri K. K. Venugopal, learned senior counsel for the
appellant:
4. According to the appellant, in November, 2003 appellant was permitted to
migrate to UASL under which appellant was permitted to provide following
services: (i) Fixed Wireless (ii) FWA (iii) WLL(M) (iv) Fully Mobile Service.
According to the appellant, ever since its migration to the UASL, it has been
operating fixed services including FWA and full mobile services. The appellant
was not operating WLL(M). According to the appellant, "limited mobile
service" has been defined in UASL granted by DoT and in the IUC Regulation
2003 framed by TRAI under Section 11 of the 1997 Act as a service which enables
operations throughout a SDCA. At this stage, it may be noted that the whole of
Delhi is one single SDCA.
That, appellant was, therefore, operating its FWA service within the area of
one Base Transceiver Station (BTS).
5. According to the appellant a BTS is necessary wherever there is a
congested area, like Chandni Chowk where digging for laying an optical fibre
cable is not feasible and, in such a case, a BTS has to be set up where
wireless link has to be established between the telephone exchange and the BTS
which in turn could be accessed by telephone receiver set through Radio
Frequency ("RF") signals. However, according to the appellant, in the
case of full mobile cellular services, several BTSs. are required to be set up
by each service provider in the entire service area for transmitting signals to
the terminals (handsets). That, these handsets are required to be aligned
electronically to a single BTS or the handset could access RF signals from
other base stations BTSs. from any part of the SDCA. According to the
appellant, in case of full mobility, the signals are available in the entire
service area (a telecom circle equivalent to a State). Therefore, according to
the appellant, fixed wireline service being a wireline service alone stood
restricted to the subscriber's premises as is clearly understood even under the
UASL whereas WLL(M) is defined specifically, both in the UASL as well as in the
IUC Regulation 2003, as a service where mobility is restricted to the SDCA.
That, in the IUC Regulation 2003, FWA [WLL(F)] service has been treated as part
of the fixed services. Therefore, according to the appellant, its
"unlimited cordless" service ("impugned service" for short)
stood classified right from the inception as WLL(F). According to the
appellant, FWA service is a wireless service, mobility is inherent in such
services but that mobility is not meant for the entire SDCA as in that event
such mobility would fall in the category of WLL(M) and, therefore, according to
the appellant, FWA service logically stands between a fixed wireline service
restricted to the subscriber premises and WLL(M) where mobility is within the
SDCA.
6. According to the appellant, the said logical concept was known to DoT and
TRAI right from inception, that the technical and statutory authority
understood the said concept with regard to FWA clearly to mean as restricted to
one BTS and that it is in this context that the mobility of the appellant's
phone is available in the restricted area of one BTS and not within the entire
SDCA. That, this is the reason why even the DoT specifically inquired from the
appellant vide letter dated 31.1.2005 (in the context of alleged violation of
licence condition on account of certain advertisements issued by the appellant)
as to whether the mobility of the appellant's phone stood limited to one BTS
area or whether it is available in the area outside one BTS. This letter of DoT
is relied upon by the appellant to show that right from 1997 upto 31.1.2005,
DoT and TRAI understood FWA services as having mobility limited to one BTS area
alone. According to the appellant, it is in the above context that even the
TRAI in its Consultation Paper dated 17.3.2005 categorically stated that its
intention was to permit mobility only within the coverage of RF sector of one
BTS, in the area where the subscriber is registered and not to the areas which
are covered by other base stations. According to the appellant, throughout the
period 2003 till 4.3.2005 its service was accepted as a fixed wireless access
service ("FWA service") and that only because of the advertisement
issued by the appellant in January, 2005 that BSNL complained to the TRAI and
to the DoT. The said advertisement was regarding Unlimited Cordless.
According to the appellant, TRAI called upon the appellant vide letter dated
6.1.2005 not to advertise its impugned FWA service as "unlimited
cordless".
That in the said letter dated 6.1.2005 TRAI did not call upon the appellant
to answer the question as to whether impugned service is available within the
entire SDCA or within one RF sector of BTS. According to the appellant, such a
question was not even raised by DoT in its letter dated 31.1.2005 by which only
a limited clarification on the "numbering scheme" for the impugned
service was asked for. That query was as follows:
"Whether fixed wireless terminal could be authenticated by BTS
terminals other than by BTS serving the location of the subscriber as on
10.1.2005"
7. According to the appellant, the impugned letter of TRAI dated 4.3.2005 is
an aberration for the simple reason that having accepted the impugned service
as FWA as restricted to one BTS, it directs all access providers to strictly
ensure that the terminal used for FWA confined to the subscriber's premises.
That, having said so, TRAI thereafter hastened to refer to a question in the
Consultation Paper of TRAI dated 17.3.2005 in which, after referring to the
complaint of certain operators, TRAI stated that it had asked all service providers
on 4.3.2005 that Fixed Wireless Terminals ("FWTs.") should provide
services to the subscriber at the fixed address only, the intention being that
these phones should not be in a position to offer mobility through other base
stations located in other parts of the city and that the impugned service needs
to be allocated to a particular RF sector of a single base station, otherwise
issues of ADC and comparison with limited or full mobility may take place.
According to the appellant, the above statement of TRAI itself suggests that
FWA services are those which are limited to one BTS. According to the
appellant, therefore, even as late as 4.3.2005 TRAI understood the concept of
FWA service as limited to one base station within the SDCA. Therefore, according
to the appellant, the decision of TRAI dated 4.3.2005 is an aberration. That
the said decision was taken unilaterally and at the behest of BSNL without
examining the merits of the contentions advanced by the access providers like
Reliance Infocomm Ltd. According to the appellant, it was a unilateral decision
to confine FWA services to the premises of the subscriber. According to the
appellant, in any event, when the matter was a part of the Consultation Paper
dated 17.3.2005 it was not open to TRAI to unilaterally issue such a direction
restricting FWA services to the premises of the subscriber.
8. According to the appellant, BSNL could not have made demand on it for
payment of ADC during the period 14.11.2004 to 26.8.2005 as it was admitted by
TRAI and DoT that no ADC is payable on FWA services. In this connection,
according to the appellant, one of the questions posed for consultation in Para
2.7 was "what criteria should be determined with regard to the range and
portability/mobility of WLL(F)'s subscriber terminals". According to the
appellant, the said query itself indicates that the issue as to the range of
portability/mobility of WLL(F) was pending in the consultation process and,
therefore, BSNL could not have raised a demand on the appellant for ADC when
the matter was sub-judice. According to the appellant it is this demand of BSNL
which made the appellant move TDSAT for settlement of dispute.
9. According to the appellant, circumstances mentioned above clearly
indicates that in 2005 upto 4.3.2005 both DoT and TRAI understood FWA services
as limited to one BTS and the decision dated 4.3.2005 given by TRAI is a
unilateral decision imposing Premises Specific Restriction ("PSR")
for the first time at the behest of BSNL. Further, according to the appellant,
in the petition before TDSAT, the appellant has specifically posed a vital
question for consideration, namely, whether the impugned service provided by
the appellant should be restricted within one BTS and if so whether such
service will fall in the category of WLL(F) or WLL(M) service. According to the
appellant, TDSAT has not answered this question.
Apart from the said question, appellant had also raised other questions such
as whether the impugned directive of TRAI dated 4.3.2005 and the clarification
dated 23.3.2005 by DoT for the first time introducing the concept of SPR would
amount to amendment of the licence conditions without following the
consultation process as stipulated under the 1997 Act.
Similarly, one more question was also raised before TDSAT as to whether
directive dated 4.3.2005 was legally valid. According to the appellant, none of
the said important questions have been answered by the impugned decision of the
TDSAT and, therefore, the said decision needs to be set aside. According to the
appellant, the said questions ought to have been decided by a statutory body
consisting of technical members, particularly to analyse the above mentioned
various submissions raised by the appellant.
10. According to the appellant, nowhere in the pleadings of BSNL, the issue
that a WLL(F) is a service where an antenna is fixed at the top of the house
connected by the wire to the handset plugged into the wall has been raised.
That the said technology has not been discussed even by TDSAT in its impugned judgment.
According to the appellant, the literature on this point is confusing. That,
there is no affidavit to support the claim of BSNL that FWA service is one
where an antenna is fixed at the top of the house connected by wire to the
handset plugged into the wall and, therefore, this aspect needs to be
considered by a statutory body of technical members alone. In this connection,
appellant alleges that even today the affidavit of BSNL do not answer the
questions posed by the appellant as to how many of their fixed wireless
terminals were with the roof-top antenna and what numbering plan was followed
by BSNL for their FWT and LL(M).
Appellant alleges that an inference may be drawn of admission on the part of
BSNL that it had 16,00,000 fixed wireless terminals which are similar to the
fixed wireless telephones of the appellant as there is no denial regarding
allegation made in this connection by the appellant.
11. Lastly, it is the case of the appellant that the levy of ADC is a matter
of tax policy and, therefore, any provision relating to a charge has to be
strictly interpreted. According to the appellant different stands taken by the
authorities show that the issue as to what is WLL(F) falls in a grey area and,
therefore, no ADC can be charged from the appellant. That, the said question
has not been decided even by TRAI. That, the IUC Regulation 2003 are statutory
in nature; they have been enacted under Section 36 of the 1997Act; that the
regulations having been tabled before both the Houses of Parliament cannot be
altered or modified by circulars/letters/administrative directions issued by
the Authorities under the 1997 Act including the TRAI.
Contentions of Shri Gopal Subramanium, learned senior counsel for BSNL
12. According to BSNL, the appellant's service under the name
"unlimited cordless" is a WLL(M) (wireless local loop mobile service)
as admittedly the said service is capable of being operated outside the
subscriber's premises and within the SDCA. That the said service is squarely
covered by the definition of WLL(M) as defined under clause 2(xxviii) of the
IUC Regulation 2003. According to BSNL, appellant has attempted to evade its
liability of paying ADC to BSNL despite providing WLL(M) services in the garb
of WLL(F). With regard to payment of IUC charges including ADC by WLL service
which contains a feature of "mobility", the TRAI issued clarification
dated 4.3.2005 based on exclusive definition of WLL(M) in its IUC Regulation
2003. According to BSNL, any WLL service which gives the facility of mobility
beyond the premises of the subscriber and within SDCA has to be treated as
WLL(M) in respect of liability to pay the ADC in accordance with the provisions
of the IUC Regulation 2003.
According to BSNL, subsequent to the Consultation Paper dated 17.3.2005, the
TRAI reiterated vide communications dated 24.3.2005 and 31.5.2005 addressed to
the appellant herein that the WLL service operating beyond the premises of a
subscriber and within the SDCA is to be treated as WLL(M) for all purposes
including payment of IUC/ADC and numbering plan etc.
13. On the technology side, it is the case of BSNL that payment of IUC/ADC
has nothing to do with the nature of the instrument and it is the nature of
service which is relevant for that purpose. That "unlimited cordless"
is the service which is provided through a handheld terminal.
14. On the point of reliance placed by the appellant upon para 2.26 of the
Consultation Paper it is submitted by BSNL that the Consultation Paper was only
a suggestive approach. That, in any case, the question falling in consultation
process was whether ADC is payable to the fixed wireless terminals. What is
WLL(F) and what is WLL(M) was not the question pending in the consultation
process. According to BSNL, in any case the question whether ADC is payable to
the fixed wireless terminals was part of the explanatory memorandum to the IUC
Regulation dated 6.1.2005 itself and, therefore, it is the case of BSNL that
Para 2.26 of the Consultation Paper relied upon by the appellant was merely a
suggestive approach for the future payment of ADC on WLL phones.
15. According to BSNL, there is no merit in the contention of the appellant
that its impugned service is restricted to one BTS/RF centre as the same is not
technologically possible. In this connection, it is submitted on behalf of BSNL
that BTS has only a receiver and a transmitter. It has no Intelligent Network
("IN"). The function of the BTS is different from the functionality
of Mobile Switching Centre ("MSC"). The utility of the BTS is that it
receives the signals and forwards the same to the MSC. The MSC is the
intelligent part of the network. BTS is not the intelligent part of the
network. Registration of the numbers to be served by the service provider is an
element of the intelligent network. Identification of the caller is done by the
intelligent network. Therefore, according to BSNL, it would be incorrect to say
that a BTS has some sort of mechanism to identify the caller and to further
forward the call to the MSC. Therefore, MSC is the IN and BTS is only the
transceiver (i.e. receiver and transmitter). That, the role of a base station
vis-`-vis that of a MSC is, therefore, distinct and separate. According to
BSNL, there is no plea even in the petition that appellant can restrict the
mobility of its service to one RF of a base station and that the services of
the appellant is operable only in 1/3 of one base station zone. According to
BSNL, the mobility of the service impugned cannot be restricted to the premises
of the subscriber and, therefore, it has to be treated as WLL(M).
This is borne out, according to BSNL, from the opinion of the manufacturers
of the equipment of the appellant which clearly imports an admission of the
appellant that to restrict the impugned service to the premises of the subscriber
would be impractical and if it is so restricted it would adversely impact its
quality. That, in any event, the impugned service is actually found to be
operable throughout the SDCA and, therefore, it is a WLL(M).
Therefore, according to BSNL, appellant was liable to pay ADC as per the
rates prescribed by TRAI in its regulations.
16. According to BSNL, the directive/communication dated 4.3.2005 issued by
the TRAI only reemphasises the position mentioned in the IUC Regulation dated
29.10.2003, namely, that a fixed wireless terminal, if not confined to the
premises of the customer, will invite mobility within SDCA which in turn would
attract ADC charges on such services. Further, according to BSNL, under the
terms and conditions of licence issued by DoT, the appellant had agreed to
comply with the relevant International Telecom Union ("ITU")
standards as also the TEC's specifications. That, even according to the generic
requirements issued by TEC, the remote station of the subscriber had to be
"fixed indoor wall mounted". That even as per the recommendations of
the ITU, the FWA has to be a Wireless Access Application in which the location
of end-user termination and the network access point to be connected to the
end-user are fixed. According to BSNL, this technical information is well known
and the appellant is fully aware of the concept of FWA. According to the
appellant, the IUC Regulation 2003 provides for payment of IUC including ADC
for telecommunications services. The definition of WLL(M) is provided for in
clause 2(xxviii) which refers to limited mobility services using wireless in
local loop technology within SDCA. That, Schedule III of IUC Regulation 2003
refers to service and not to instrument and makes ADC applicable for different
types of calls and, therefore, the payability of ADC as per the regulations is
directly related to the nature of the service and not to any kind of
instrument.
17. According to BSNL, there is no merit in the submission of the appellant
that DoT has reclassified the impugned service as WLL(M) as, according to BSNL,
it has been made clear by the DoT on numerous occasions that if the impugned
services cannot be restricted to the premises of the subscriber, it will be
treated as WLL(M) for levy of ADC. That, what is clarified by TRAI and DoT is
that those WLL services which operate beyond the premises of the subscriber and
within the SDCA shall be treated as WLL(M) for all purposes including numbering
plan, payment of IUC, payment of ADC etc. Therefore, according to BSNL, the
"unlimited cordless" service of the appellant is squarely covered by
the definition of WLL(M) in clause 2(xxviii) of the IUC Regulation 2003 which
defines WLL(M) phones as WLL(F) which operates within SDCA. Therefore,
according to BSNL there is no merit in this civil appeal and the same deserves
to be dismissed with costs.
Finding:
18. Regulatory regime includes methodology for calculating access deficit.
Access deficit is to be funded through access deficit charge. Access deficit
has to be calculated according to a formula which provides a reasonable return
on the investment made, i.e., a return on capital employed.
IUC/ADC is part of revenue regime. It is for TRAI to consider the framework
used for calculating IUC/ADC. Costing is one of the important relevant factors
to be kept in mind while calculating IUC/ADC. While doing so, the TRAI has also
to keep in mind changes in technology and reduction in costs both of services
as well as of equipment. ADC is a subsidy. It is given to BSNL to incur
additional capital expenditure for rolling out telecom network in rural areas
equivalent to approximately 10 lacs lines at the relevant time. (see:
Explanatory Memorandum dated 24.1.2003). Access deficit essentially is to
compensate the difference between costs and local calls revenue. In other
words, when costs are more than the revenue, BSNL incurs a loss which needs to
be compensated. It is the additional capital expenditure over local calls
revenue for rolling out telecom network in rural areas which attracts ADC. From
time to time, TRAI has issued IUC Regulations, particularly in the years 2003
and 2005. These regulations are accompanied by Explanatory Memorandums. ADC has
been specified differently in these regulations for fixed, WLL(M) and cellular
mobile calls.
In doing so, the TRAI has kept in mind the fact that standard tariffs have
been fixed for fixed line calls. (see: Table XI in Annexure A which is
Explanatory Memorandum dated 24.1.2003). In the said Memorandum, basic
principles underlying IUC/ADC regime has been laid down. One of the important
principles laid down is that ADC shall be funded from all calls, except fixed
to fixed, local etc. We have different types of calls, i.e., fixed to fixed,
fixed to WLL(M), fixed to cellular, WLL(M) to fixed, WLL(M) to WLL(M) etc.
19. The purpose of the above discussion on ADC regime is to highlight the
fact that ADC regime has evolved over a period of time, notified for the first
time in the TRAI Regulation dated 24.1.2003 and reviewed on 29.10.2003 etc. The
point to be noted is that ADC regime right from January, 2003 is a matter of
policy framework initiated by TRAI to promote lower domestic prices,
competition and to give rise to strong subscribers growth. It involves pricing
of services like mobile service, fixed service, WLL(M) service etc.
20. The above discussion is to highlight the difference between concepts
evolving in the technological field which may be relevant but not conclusive in
pricing and costing or in matters of calculation of ADC which, as stated above,
constitutes return on capital employed for BSNL. Therefore, categorization of
services for levying a charge by way of IUC/ADC is a matter of policy and
revenue recognition, which is the part of regulatory regime. If one examines
the various regulations made by TRAI from time to time, including
Telecommunication Interconnection (Charges and Revenue sharing) Regulation
2001, WLL(M) stood defined as far back as 14.12.2001 to mean limited mobility
telephony service using wireless in local loop technology within a SDCA. In the
matter of levy of ADC, the Explanatory Memorandums indicate that service
providers are well aware of what is WLL(M), what is WLL(F) and what is cellular
mobile service right from 2001. This point is to be emphasized as it has been vehemently
urged on behalf of the appellant repeatedly that vide circular dated 4.3.2005,
for the first time, unilaterally, the TRAI has prescribed PSR, which amounts to
reclassification of WLL(F) service as WLL(M) service, which, according to the
appellant, amounts to an aberration.
21. We do not find merit in this contention advanced on behalf of the
appellant for two reasons. Firstly, as stated above, computation of ADC falls
within policy framework which is a part of the IUC Regulations. Every service
provider knew the difference between fixed wireline and three types of wireless
services, namely, FWA, limited mobility and full mobility.
Further, these three categories of wireless services constitute a condition
of UAS licence. The categorization is done in the UAS Licence dated 20.7.2001.
We find merit in the argument of BSNL that classification has taken place in
the licence and the follow up regarding chargeability of IUC/ADC is under the
Regulations made by TRAI. Therefore, we find no merit in the submission
advanced on behalf of the appellant that by the said circular dated 4.3.2005
TRAI has classified/reclassified the impugned service as WLL(M). Secondly, in
this judgment, we propose to examine several references in technological
domain, which bring out the difference between WLL(F) service and WLL(M)
service.
22. At the outset, in the context of technology, we may point out that
licence does not use the word 'WLL(F)'. The said licence uses the words FWA,
limited mobility and full mobility. Mobility is a service feature. This aspect
needs to be kept in mind. In this case, we are not concerned with the type of
instrument, we are concerned with the nature of the services provided by a
given instrument, be it, a walky or a handset of the appellant.
23. The design of a wireless system does not only aim to optimise
performance for specific applications, but also at reasonable cost. Therefore,
economic factors impact the design for wireless system. When it comes to the
design of wireless systems and services we have to distinguish between two
different categories. "Systems" where the mobility is of value by
itself e.g., in cellular telephony. Such services can charge a premium to the
customers i.e., more expensive than wired systems. In cellular telephony, the
per-minute price was higher than the landline telephony in the past.
However, in the second category, we have "services" in
contradistinction to system. In services, wireless access is intended as a
cheap cable replacement, without additional features. The classic example of
such service is FWA. Such system is cost-effective, as the infrastructure is
cheaper than laying of new wired connection. The point to be emphasized is that
FWA is a service where wireless access is intended as cheaper cable replacement
without additional features. Mobility is an inherent feature of most wireless
systems and has important consequences for system design. It is there in FWA,
but if it exceeds the premises of the subscriber for ADC purpose it becomes
classifiable as WLL(M).
24. In the light of the above discussion and in the context of technology,
we must now understand what is FWA. This concept is mentioned as a service in
the UAS Licence dated 20.7.2001. It is necessary to understand this concept as
one of the main contentions advanced on behalf of the appellant is that FWA is
the service which is restricted to one BTS alone.
Therefore, it is necessary to know what is BTS, Exchange Numbering Plan and
MSC in the context of their functionalities.
25. By way of introduction, it may be stated that in 1990 FWA and wireless
local loop (WLL) came into the market to replace the copper lines to the
premises of the users by wireless links but without the specific benefit of
mobility, the original motivation for WLL was to give access to customers for
alternative providers of phone services bypassing the copper lines. However,
since 2003 several developments led to wireless revival as it gave broader
range of products, data transmission with a higher rate for existing products
and higher user densities.
26. Briefly, we may state that the wireless services consist of broadband,
paging, cellular telephony, cordless telephony, FWA, satellite cellular
communications etc. It may be noted that wireless systems, however, differ in
the amount of mobility that they have to allow for the users. In cellular
telephony, a mobile user communicates with a base station that has a good radio
connection with the user. The base stations, however, are connected to Mobile
Switching Centre ("MSC") which in turn are connected to public
telephone system. In the cellular principle, the area served by a network
provider is divided into cells. In cellular telephony there is unlimited
mobility. The user can be anywhere within the coverage area of the network (i.e.,
is not limited to a specific cell), in order to be able to communicate. He can
move from one cell to the other during one call. The cellular network
interfaces with Public Switched Telephone Network ("PSTN").
27. FWA is also one type of wireless service. It is a derivative of cordless
phone, essentially replacing a cable connection between the user and the public
landline system. In FWA there is no mobility of the user device. The purpose of
FWA lies in providing users with telephone and data connections without having
to lay cables from its central switching office to the office or premises of
the subscriber. (see: page 14 of the book entitled "Wireless
Communications" by Andreas F. Molisch). FWA has its market for covering
rural areas which do not have wired infrastructure.
28. Mobility is an important requirement for wireless service. The ability
to move around while communicating is one of the main attractions of wireless
communications for the user. However, within that requirement of mobility,
different grades exist:
Fixed Devices:
Fixed Devices are placed only once and thereafter they communicate with
their BS or each other from the same location. The main reason for using
wireless transmission is to avoid laying of cables. In the case of fixed
devices, the devices are not mobile. FWA falls in the same category as wired
communications (example, the PSTN) Nomadic Devices:
These are devices that are placed at a certain location for a limited
duration of time and then moved to a different location. Example of nomadic
device is a laptop.
Low Mobility:
Many communication devices like cordless phones as well as cell phones are
operated by walking human users. The effect of low mobility is a channel that
changes rather slowly, and it operates in a system with multiple base stations
handover from one cell to other is the rare event.
High Mobility:
Cell phones operated by people in moving cars are one typical example.
Extremely High Mobility:
Extremely High Mobility is represented by high- speed trains and planes.
29. The above analyses indicates that there is no mobility of the user
devices in FWA. Even as per ITU standards, TEC's specifications and generic
requirements issued by TEC, remote station of the subscriber in FWA has to be
"fixed indoor wall mounted" along with other equipments.
This is the basic TEC guidelines for fixed services. The remote station in
FWA has to be wall mounted and fixed. FWA is Wireless Access Application in
which the location of the end-user termination and the network access point to
be connected to end-user are fixed. Therefore, what is WLL(F) was well known to
the service providers both in terms of technology and also in terms of IUC
Regulations.
30. As stated above, the UAS licence refers to three categories of wireless
services, namely, FWA service, limited mobility service and full mobility
service. The payability of the ADC as per the regulations is directly related
to the nature of the service and not to the instrument. In case of FWA, the
antenna in the instrument and the end-user termination point location-wise
remains fixed. The network access point remains connected to the end-user in
FWA. The test to be applied to distinguish WLL(F) from WLL(M) is that if the
impugned service cannot be restricted to the place of the subscriber then such
service has to be classified as WLL(M) for the purposes of ADC.
In the present case, the impugned service cannot be technically confined to
the premises of the subscriber. The impugned service cannot comply with PSR.
Therefore, it has to be classified as WLL(M) service for ADC purposes.
31. To sum up, in WLL(F) the telephone is the access point if the antenna is
in-built in the telephone. If the impugned service is operable throughout SDCA
it is WLL(M). In WLL(F), location of end-user termination and the network
access point to be connected to the end-user are fixed. If the impugned service
cannot comply with PSR it is classifiable as WLL(M) for IUC, ADC, Numbering
Plan etc. Lastly, the only difference between fixed wireline and WLL(F) is that
WLL(F) is a cheap cable replacement without additional features. WLL(F) is
limited to specific premises of the subscriber or permanent location.
32. One aspect on technology needs to be explained. BTS is different from
MSC in terms of functionality. The function of BTS primarily is confined to
transmission and communication. On the other hand, MSC is an exchange. Two
databanks exist in the MSC, namely, Home Location Register ("HLR")
and Visitor Location Register ("VLR"). HLR is a central data base
that keeps track of the location a user is currently at; the VLR is a data base
associated with a base station that knows all the users that are currently
within the coverage area of a specific base station. If a mobile station moves
across a cell boundary, a different base station becomes the serving BS. In
other words, the MS is handed over from one base station to another without
interrupting the call. This process is known as "Handover".
(see: page 34 of the book entitled "Wireless Communications" by
Andreas F. Molisch under the caption "User Mobility".) The important
thing to be noted in this case is we are basically concerned with the levy of
ADC charge on a given call. The identity of the call and the caller is checked
not by the base station but by the MSC. The Numbering plan is also in MSC and
not in the BTS. In this case, we are not concerned with the communication
linkage between MSC and BTS. In this case, we are essentially concerned with
the existing service in MSC on the basis of which a charge could be levied
depending on the type of the originating call. If a Walky call is to be
classified as FWA service then the integrity of the Numbering plan would stand
infringed. The Numbering plan is co-related to the Database in the MSC. It is
for this reason that we have examined the differences in the services, namely,
cellular, cordless, FWA etc. It is for this reason that we have analysed the
types of devices, namely, fixed device, nomadic device, low mobility, high
mobility etc. In our view, MSC is the intelligent network and BTS is only a
receiver and transmitter. The function of BTS is to receive the signals and
forward the same to the MSC. MSC is the intelligent part of the network. MSC
has the registration of numbers to be served by the service provider, the
mechanism to identify the caller is not with the BTS.
HLR is the primary database for all subscriber information, VLR is a network
entity whose main function is to provide service to subscribers who are served
from a different HLR. The MSC communicates with the VLR to obtain subscriber
information to support call processing. The VLR gets its information about
visiting roamers from HLR. (see: "Wireless Intelligent Networking" by
Gerry Christensen, Paul G. Florack and Robert Duncan at p.
77). According to Wikipedia, Fixed Wireless Terminal ("FWT") units
differ from conventional mobile terminal units operating within cellular
networks - such as GSM - as FWT or desk phone is limited to a permanent
location.
Therefore, all the above literature and reference books indicate that FWA is
a service which is limited to permanent location. The significance of FWA is
that it dispenses with the last mile wireline connectivity and to that extent
it is cost effective. The wireless access point is a device that connects wireless
communication devices together to form a wireless network. Wireless Access
Point ("WAP") usually connects to a wired network.(see: Wikipedia)
33. According to Whatis.com's 'Encyclopedia of Technology Terms' the term
'fixed wireless' refers to the operation of wireless devices or systems in
fixed locations such as home and offices. They derive their electrical power
from the utility mains, unlike mobile wireless or portable wireless which are
battery-powered. Although mobile and portable system can be used in fixed
locations, their efficiency is compromised when compared with fixed systems.
One of the important assets of fixed wireless that subscribers in remote areas
can be brought into a network without the need for new cables or optical fibres
across the country side.
34. The difference in the functionalities of a base station and MSC is
brought out in the book titled Location-Based Services-Fundamentals and
Operations" by Axel Kupper. A network consists of several access networks,
which include the radio equipment that is necessary to interconnect a terminal
to the network. The access networks in turn are interconnected by the core
network. In GSM network, the access network is different from the core network.
In GSM, for example, the excess network consist of two components, namely, BTS
and BSC (base station controller).
Allocation and release of channels is done by BSC. It is BSC which is
responsible for control of handover, a function which is needed to keep a
circuit switched connection, particularly if the subscriber moves between base
stations. Therefore, each BSC controls several BTSs., which are connected to
the BSC via fixed lines or radio link systems. On the other hand, MSC connects
a number of BSCs. to the network. It is responsible for serving a limited
geographic region, which is given by all base stations connected to the MSC
over their BSCs. In other words, MSC is part of the core network. It is not a
part of access network. The intelligent network is in MSC.
35. In the book titled "From WPANs to Personal Networks-Technologies
and Applications" by Ramjee Prasad and Luc Deneire, the main purpose of
FWA is to provide network access to buildings through exterior antennas
communicating with central radio base stations.
36. In our view, the above discussion indicates that both in terms of
technology and in terms of policy framework, in the matter of ADC payability,
the classification of wireless services into three categories, namely, FWA,
limited mobility and full mobility was well known to service providers both
under IUC Regulation, generic requirements, TEC's recommendations and even
under telecommunication technology. Therefore, there is no merit in the
contention advanced on behalf of the appellant that the impugned decision of
TRAI dated 4.3.2005 and the impugned decisions of DoT dated 23.3.2005 and
26.8.2005 respectively are unilateral decisions regarding classification. In
our view, circular dated 4.3.2005 issued by TRAI is clarificatory and not
amendatory. There is no merit in the contention of the appellant that ADC
cannot be charged retrospectively. There is no retrospectivity involved in the
present case. The classification of services was done under the UAS licence and
the chargeability/payability was fixed under the IUC as far back as 2003. The
reasons given hereinabove, both in terms of technology and also policy
framework are in addition to the reasons given by TDSAT in its impugned
judgment. We find no infirmity in the impugned judgment of TDSAT.
37. Before concluding on this topic, we may state that, in the light of our
above discussion we find no merit in the argument of the appellant that
mobility within one BTS is a category by itself. It that argument is to be
accepted we are carving out one more category of service which is
impermissible. In any event, it is technically not possible as it would
deteriorate the quality of service. Under the UAS Licence, the three services
are Fixed Wireless/WLL(F), WLL(M) and Cellular Mobile.
38. One of the contentions raised on behalf of the appellant is that of
abandonment of the theory/test of PSR by TRAI. According to the appellant, the
above test formulated by TRAI in its directive dated 4.3.2005 stood later on
abandoned by TRAI and in that connection appellant has placed reliance on para
2.26 of the Consultation Paper. As stated above, PSR stands for Premises
Specific Restrictions.
39. We find no merit in this argument. For the sake of convenience, we quote
hereinbelow para 2.26 of the Consultation Paper on Interconnection Usage Charge
Review, which reads as follows:
"C. Whether ADC should be Admissible for Wireless Access? 2.26 For ADC
purpose, presently calls to/ from WLL(F) are being treated similar to calls
to/from fixed lines. TRAI received complaint from a certain Operator Association
which stated that 'Fixed wireless services being provided by the FSPs./UASL's
are classified as fixed services and thus entitled to ADC. However these
services are for all intents and purposes tantamount to full cellular services
and can be offered seamlessly throughout the service area. This creates a
non-level playing field and competitively disadvantages the cellular operator
vis-`-vis the fixed wireless service provider.' The Authority has very recently
asked all Service Providers that FWTs should provide services to the subscriber
at the fixed address only, the intention being that these phones should not be
in a position to offer mobility through other Base Stations located in other
parts of the city. Service needs to be locked to a particular RF Sector of a
base station, otherwise issues of ADC and comparison with Limited or full
mobility takes places."
The said para 2.26 is in two parts. Firstly, it refers to a complaint from
certain cellular Operator Association, which stated that, in many cases fixed
wireless services are being provided by fixed service phones (operators) which
services for all practical purposes tantamount to full cellular services and
thereby they create a non-level playing field vis-`-vis the cellular operators.
This was the complaint from the cellular operators against fixed wireless
service providers. Under the consultation process, whenever such complaints are
received by TRAI they are required to be addressed to.
Therefore, a response was sought by TRAI from fixed wireless service
providers to the above complaint. The Consultation Paper is dated 17.3.2005. By
that time, the impugned directive dated 4.3.2005 had been issued by TRAI.
Referring to the said directive, in para 2.26, the TRAI had stated, in the
first instance, that all fixed wireless service providers have been informed by
the said directive that fixed wireless terminals should provide services to the
subscribers at the fixed address only so that the said fixed wireless
terminals/phones should not be in a position to offer mobility through other
base stations located in other parts of the city. This underlined portion is
emphasized by the appellant to support its contention that TRAI has in its
consultation paper dated 17.3.2005 accepted the stand of the appellant that FWA
services should be restricted to one base station and not to the subscriber's
premises. The appellant has placed heavy reliance on this underlined portion in
support of its contention that vide Consultation Paper dated 17.3.2005, the
TRAI has abandoned the premises theory mentioned in directive dated 4.3.2005.
According to the appellant, the next sentence in para 2.26 is equally
important. That sentence reads as follows:
"Service needs to be locked to a particular RF Sector of a base
station, otherwise issues of ADC and comparison with limited or full mobility
takes place."
40. According to the appellant, reading the above two sentences in para 2.26
of the Consultation Paper, it is clear that TRAI gave up the premises theory on
17.3.2005 and has accepted the contention of the appellant that FWA services
stand restricted to one base station and not to the premises of subscriber.
41. As stated above, we find no merit in these arguments on abandonment.
Firstly, in our view, para 2.26, quoted above, has a headnote.
That headnote, quoted above, indicates the question raised before TRAI
during the consultation process. The question was whether ADC was admissible
for wireless access? In this connection it may be stated that at one point of
time, the idea mooted was that all fixed service providers, including BSNL,
were entitled to ADC. This was one of the items on the Agenda on TRAI. It is in
this context that para 2.26 has to be read. If ADC was to be made admissible
for Fixed Wireless services provided by all fixed service phones then the
pricing of the product would become an item of dispute not only between
cellular/mobile operators and fixed service providers but also inter se amongst
fixed service providers, i.e., between those who complied with PSR and those
who did not. In fact, but for PSR, the difference between WLL(F) and WLL(M)
would stand obliterated. Therefore, TRAI thereafter referring to its directive dated 4.3.2005 invited
response from service providers to the suggestion of the appellant that services
need to be located to a particular RF Sector of a base station. Inviting such response cannot be construed as abandonment. Moreover, the
later correspondence indicates that even foreign experts nominated by the
appellant have certified that linkage to a particular RF Sector of the base
station would result in deterioration in the quality of the services provided
by the appellant. In our view, the true test to differentiate between WLL(F)
and WLL(M) services is: whether the impugned service of the appellant is
capable of being confined as far as its mobility is concerned to the
subscriber's premises. If not, the impugned service is WLL(M) for levy of ADC.
There is no dispute that the impugned service, as far as its mobility is
concerned, cannot be confined to the premises of the subscriber. In other
words, since the impugned service is not capable of complying with PSR test it
is WLL(M).
42. We reiterate that we have examined the policy framework and the
technology to demonstrate that right from inception and, particularly after
migration to UAS licence, the appellant as a service provider knew the
distinction between WLL(F) and WLL(M) and, therefore, the impugned directive
dated 4.3.2005 issued by TRAI was clarificatory in nature and, therefore, that decision
cannot be termed as unilateral decision, as submitted on behalf of the
appellant.
43. One more fact needs to be mentioned that the impugned directive dated
4.3.2005 came to be issued by TRAI after giving show cause notice to the
appellant as far back as 15.1.2005. It is true that the show cause notice was
given in the context of certain advertisements given in the newspaper by Tata
Teleservices Ltd. and by Reliance Infocomm Ltd.. However, vide the said show
cause notice(s) the appellant was called upon to explain why the impugned
service is not WLL(M). In fact, a reply was given to the show cause notice by
the appellant on 24.1.2005 which indicates that the appellant clearly
understood the show cause notice and, therefore, gave its explanation as to why
the impugned service should be treated as WLL(F) and why the impugned service
should not be categorized as WLL(M). We may mention that, keeping in mind the
technology, the policy framework and the thrust of the entire correspondence
between TRAI, DoT and the appellant herein, it is very clear that the concept
of FWA was well known in the market and in the business right from 2003 and in
that light we hold that the impugned circular dated 4.3.2005 of TRAI was
clarificatory in nature and, therefore, the demand made by BSNL for the period
14.11.2004 to 26.8.2005 is valid in law and justified in terms of the UAS
licence.
44. As stated in our judgment pronounced earlier in Civil Appeal No. 5850 of 2005 etc. in the case of Tata Teleservices Ltd. v. BSNL & Ors.,
we are not required to decide in this case quantification of the amount in
question as the claim and counterclaim made by the appellant herein against
BSNL and vice-versa is not the subject matter of this appeal. Those questions
are left open to be decided in accordance with law at the appropriate stage by
the competent authority under the 1997 Act. Suffice it to state that, the
impugned circular dated 4.3.2005 issued by TRAI falls under Section 13 of the
1997 Act as clarification. The reasons given hereinabove are in addition to the
reasons given by TDSAT in its impugned order dated 17.1.2006. We find no
infirmity in the reasons given by TDSAT in its impugned order.
45. Accordingly, the civil appeal is dismissed with no order as to costs.
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