2008 (4) TMI 723 - SC - Indian Laws

Court upholds BSNL's claim for Access Deficit Charges for 'Walky' service, citing TRAI directive.

The court dismissed the civil appeals, holding the appellant liable to pay Access Deficit Charges (ADC) to BSNL for the 'Walky' service during the ... Whether appellant is liable to pay Access Deficit Charges ('ADC') to BSNL for the period commencing from 14.11.2004 to 26.8.2005 in respect of its service provided under its brand name 'WALKY'? Issues Involved:1. Liability of Appellant to Pay Access Deficit Charges (ADC) to BSNL.2. Classification of 'Walky' as Fixed Wireless Service or WLL(M) Service.3. Authority of BSNL to Classify/Reclassify Services.4. Applicability of TRAI's Directive Dated 4.3.2005.5. Unilateral Imposition of ADC by BSNL.6. Technological and Regulatory Framework for ADC.7. Compliance with Licensing Conditions and Regulatory Directives.Detailed Analysis:1. Liability of Appellant to Pay Access Deficit Charges (ADC) to BSNL:The core issue was whether the appellant was liable to pay ADC to BSNL for services provided under the 'Walky' brand from 14.11.2004 to 26.8.2005. ADC is a levy imposed by TRAI to support the rollout of telephones in rural areas, primarily benefiting BSNL, which owns 99% of rural phones. ADC has two components: domestic and international long-distance service providers. The ADC regime was introduced in 2004 to make basic telecom services affordable and promote universal access.2. Classification of 'Walky' as Fixed Wireless Service or WLL(M) Service:The appellant contended that 'Walky' was a fixed wireless phone with portability, not mobility, and thus should be classified as WLL(F). BSNL reclassified 'Walky' as WLL(M), attracting ADC. The court examined the technological aspects of WLL, distinguishing between fixed wireless access (FWA) and mobile wireless access (MWA). FWA is intended as a cable replacement without mobility, whereas WLL(M) allows limited mobility within a designated area. The court concluded that 'Walky' provided limited mobility and thus fell under WLL(M).3. Authority of BSNL to Classify/Reclassify Services:The appellant argued that BSNL, being a competitor and service provider, had no authority to classify services, which should be determined by TRAI. The court noted that TRAI had issued a directive on 4.3.2005 clarifying the classification of services, and BSNL's actions were in compliance with this directive. The court held that the classification of services was a regulatory function under TRAI's purview, and BSNL's demand for ADC was based on TRAI's directive and subsequent clarifications by DoT.4. Applicability of TRAI's Directive Dated 4.3.2005:The appellant argued that TRAI's directive dated 4.3.2005 was amendatory and could not operate retrospectively. The court found that the directive was clarificatory, not amendatory, as it reiterated existing principles of wireless access and premises-specific restrictions. The directive aimed to ensure compliance with the classification of services under the UAS licence, which had been in place since 2003. Therefore, the directive applied to the period in question, and the appellant was liable to pay ADC.5. Unilateral Imposition of ADC by BSNL:The appellant contended that BSNL's unilateral imposition of ADC was improper, especially when the classification of 'Walky' was pending before TRAI. The court held that BSNL's demand was based on TRAI's directive and DoT's clarifications, which were issued after due process. The court found no merit in the argument of unilateralism, as the regulatory framework and directives provided a basis for BSNL's actions.6. Technological and Regulatory Framework for ADC:The court extensively discussed the technological aspects of wireless communication, including the differences between fixed and mobile wireless systems. It emphasized that ADC is a levy based on the classification of services, which is determined by the regulatory framework. The court noted that the classification of services under the UAS licence and the IUC Regulation, 2003, provided the basis for ADC. The court concluded that 'Walky' provided limited mobility, falling under WLL(M), and thus attracted ADC.7. Compliance with Licensing Conditions and Regulatory Directives:The court examined the compliance of the appellant with licensing conditions and regulatory directives. It found that the appellant's 'Walky' service did not conform to the scope and character of fixed services and provided limited mobility, contrary to the licence conditions. The court held that the appellant's service fell under WLL(M), and the demand for ADC was justified. The court also noted that BSNL's compliance with similar directives would be addressed in future quantification proceedings.Conclusion:The court dismissed the civil appeals, holding that the appellant was liable to pay ADC for the 'Walky' service during the period in question. The court found no merit in the arguments of unilateralism and improper classification, concluding that the regulatory framework and directives provided a valid basis for BSNL's actions. The court emphasized the importance of compliance with licensing conditions and regulatory directives in determining the liability for ADC.