This is the first of my two part blogpost’s on the proposed ban on blackberry services in India. These series discusses the demand for establishing a blackberry server in India for the interception of communications. I argue that this an indicia of a gradual increase in national security regulation since the Mumbai terror attacks. This post also seeks to examine the privacy concerns and whether the actions and the seemingly inflexible demands of the Indian government are justified. The first blog post does not discuss the blackberry ban specifically but introduces the reader to the causes as well as the gradual trend towards the heightened security climate in India, with regards to telecommunication regulations. It also broadly introduces the legal limits placed on the right of personal privacy. The second part will discuss the technological structure of the blackberry device, the device specific concerns and the developments on this controversy which is developing daily.

For all the unsavory things Henry Kissinger has said to Nixon about Indians and Indhira Gandhi in the past, his 1994 book, “Diplomacy” has its highs of eloquence and levels of reason. He uses concepts such as realpolitic and raison d’ etat to explore international relations of countries through the ages and posits his realist analysis on them. The recent controversy of a, “blackberry ban” brings to focus the concept of raison d’ etat. The concept evolved in 17th century France which can be roughly translated to, “for reasons of state” and in Kissinger’s words, it asserts, “that the well-being of the state justified whatever means were employed to further it; national interest supplanted the medieval notion of a universal morality”.

I cannot agree with this completely, for a crude application of this principle, would reduce many a country to a totalitarian regime (remember the perpetual state of war maintained by Oceania in 1984). However, at the same time there is much sense in the “national interest” argument. What makes the concept more relevant to the present discussion is the increased use of technology by terrorists. Recent terrorist attacks in India have revealed an increased dependence by terrorists on emails, mobile and satellite phones to plan, coordinate and execute terrorist attacks.

Parallel to this there is also a growing sense of privacy in India. With higher disposable income and ownership of more material possessions there is growing sense of “my property” from our traditional views of “our property”. There is also a growing penetration of broadband and blogs which highlight these issues increasingly. Whatever be the sources, it is undeniable that modern middle class Indians have a sense of personal privacy. In this background the blackberry issue symbolizes more than just a mere “security issue”, it represents the tension between the competing interests of the state and the individual. First lets examine what has been the trigger of this controversy.

Apprehension and actual harm

Security concerns over blackberry devices were first aired in the corridors of power in 2008. In April I even wrote a short post on the wrangling between the government and the makers of blackberry devices due to the inability of security agencies to intercept some types of traffic data on the device. This is because of the triple DES level encryption employed by blackberry devices. I suggested a key escrow as a way out. My suggestion was more in the domain of a legal solution to any privacy concerns which could be there for Blackberry users. In retrospect it would seem, (if we go by blackberry’s description of its technology) technically impossible (discussion on the technological architecture in part 2).

Then the Mumbai Terror Attacks happened. These were one of the most horrific terror attacks on Indian soil. What differentiated these attacks from previous ones was the level of coordination and damage wrought by 10 terrorists and their handlers. There were news reports that these attacks were planned, coordinated and executed by a reliance on consumer technologies. A post by security expert, Noah Shachtman who writes the popular, “Danger Room” column at wired.com stated that,

“As they approached Mumbai by boat, the terrorists “steered the vessel using GPS equipment,” according to the Daily Mail. A satellite phone was later found aboard. Once the coordinated attacks began, the terrorists were on their cell phones constantly. They used BlackBerries “to monitor international reaction to the atrocities, and to check on the police response via the internet,” the Courier Mail reports. The gunmen were able to trawl the internet for information after cable television feeds to the two luxury hotels and office block were cut by the authorities. The men looked beyond the instant updates of the Indian media to find worldwide reaction to the events in Mumbai, and to keep abreast of the movements of the soldiers sent to stop them. Outside of Leopold’s Cafe, “one of the gunmen seemed to be talking on a mobile phone even as he used his other hand to fire off rounds,” an eyewitness told The New York Times.”

The attacks changed our lax attitude towards national security. I have commented before how the attacks were termed “India’s 9/11”. The comparison was not totally misplaced.  After the attacks both countries discovered their appalling lack of clear command and control structures, information gathering and sharing. Something needed to be done. Our Lok Sabha responded like the US Senate did, rushing through enactments to “strengthen” national security. For reasons of state, new laws were created, old ones were amended, the ones which remained were enforced.

Security regulatory overhaul

This legal upheaval was most visible with regards to telecommunications and internet regulations. The Information Technology Act, 2000 was finally amended and the amended act was notified in late 2009. Along with the amendments came regulations on interception of online communications. I have written on these topics at length in my article balancing online privacy in India which can be accessed at the following link.

Alongwith these amendments there also came regulations on authentication of the identity of the person availing the telecommunication or the internet services. First came regulations on the secure use of WiFi access points. These were issued by the Department of Telecommunications (DoT), on February 23, 2009. The regulations applied to all ISPs serving leased line subscribers, home users, and WiFi hotspots in public places. The objective of the regulation was to prevent misuse of WiFi Internet access and to be able to track the perpetrator in case of abuse. This made it necessary for any internet access provider to enforce a centralized authentication using LoginID and a password for each user. After this, on September 3, 2009 came the regulations on the authenticity of IMEI numbers. The IMEI number which is unique to each cellular handset is paired with a network on activation. This IMEI number is also matched against each handset in an international database. When combined with a local register maintained by the telecom company containing the details of its subscribers, the cellphone was irretrievably linked to a person.

More recently there were regulations made on the sourcing of telecom equipment. These regulations were made due concerns that the equipment which was usually sourced from abroad could have embedded backdoors which could be used for counter intelligence by foreign countries. These regulations established a approval based process where a security clearance would have to be obtained by a telecommunications service provider. Here a pro-forma with details of the name, source and country of the manufacture of the equipment would have to be submitted to the DoT for approval before it could be sourced. A New York Times article examined this issue from the perspective of telecommunication companies which were unhappy with the regulations citing that it would cause delays as well as increase costs (as Chinese telecommunication equipment constitutes the bulk of the sourcing due to the low costs and it would be the most natural suspect class hit by delays in approvals and even rejections). Another story also highlighted a, “memo posted on its Web site on March 18, the Telecommunications Department clarified its security clearance rules, stating that the “operation and maintenance of telecom networks should be entirely by Indian engineers” and adding that the “dependence on foreign engineers should be minimal” within two years from a purchase.” The recent blackberry controversy is only the latest in the  continuous regulatory efforts by the Indian government to strengthen national security. Its not the first and definitely not the last. However, the blackberry controversy in my view is serving an extremely important function.  The privacy argument which has always been generally latent, discussed by academics and staunch civil libertarians, is now ripe for widespread  national discussion.  In the end I see this debate as defining a lot of ground rules on privacy, security policy as well as encryption technologies.

To kick of the next part I discuss why there is such an inexorable demand by the Indian government on blackberries specifically. What makes the technical architecture of the blackberry so difficult to crack? And is there truth to RIM’s (research in motion, the makers of the handset) defenses of “we would (comply), if only we could”!

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The Indian Journal of Law and Technology (IJLT), arguably the one of the best journals on law and technology published in India in its latest issue has published my article on Balancing Online Privacy in India.  Leaving aside my visible bias for the journal, the article examines how courts have responded in cases of state intrusion. To make sense of the law of privacy in India I utilize Daniel Solove’s taxonomy of privacy. One of the points argued, is that courts have molded a procedure for privacy interference rather than a substantive right to privacy itself.  These procedures contain safeguards which seek to protect privacy. However, as it is demonstrated there is a lack of incentive for obeying these procedural safeguards.  In the end I make a case that for all the noise around privacy, a state instrumentality for a privacy breach, rarely faces the music. The complete article may be found on the following link.

The recommendations begin with the Authority claiming the scarcity of spectrum required to be used for the next four years. The authority suggests that the spectrum be refarmed and the Government should draw a spectrum management plan while reviewing the usage of existing spectrum allocated. The authority proposes to undertake spectrum audit on a regular basis to oversee efficient utilization of spectrum by the service providers.

 Next the TRAI recommended the capping of the amount of spectrum up to 6.2 MHz for GSM and 5 MHz for CDMA. For any additional spectrum the service providers have to pay an additional amount equivalent to the current price of 3 G determined through auction. TRAI justified this measure by stating that the existing players have enjoyed benefit of excess spectrum for 10 years. Now they have to pay or return spectrum.

 On infrastructure front TRAI recommended that the Telephone Tower companies which currently have IP I (Infrastructure Provider) registration to be brought within the preview of license. At present these companies which are often part of big telecom companies are under obligation to register only. Apart from the proposed IP I license holders even ISP holders who at present are charged license fee of only Rs 1 should be charged license fee according to the Authority at the rate 4% for 2010-2011 & at 6 % in the year 2012—2013. The authority also proposed to have uniform license fee and urged the Government to delink license with the spectrum.

The Authority in its recommendations also stressed the importance of rural telecommunications while assigning obligation on service providers to reach out rural areas in the form of roll-out obligations. Any failure on the part of the service provider to full fill these obligations would entail penalty in the form of additional spectrum usage charges. Authorities concerns regarding the reach of telecommunications in rural areas seem to be genuine as the authority further stipulated a condition in its recommendations. The authority has made the assignment of additional spectrum depended on the fulfilment of roll-out obligations by the service providers. Assignment is subject to the condition that the service provider will complete the roll-out obligations for 2 years, within a period of six months from the date of assignment of additional spectrum. The authority maintained the present license renewal mechanism with the only change it proposed is in the form renewal license fee which is equivalent to the entry fee.

Regarding Mergers and Acquisitions the authority prescribed that minimum 6 service providers are required even after M& A activities. It further laid few guidelines like the resultant company after M&A shall not have 30% of the entire subscriber base of the licensed area. It further suggested that the resultant company shall not hold more than 14.4 MHz/10 MHz (GSM/CDMA). The companies can use only one tranche of spectrum and for addition spectrum t has to pay. The authority allowed spectrum sharing as long as both of the companies does not hold more than 4.4 MHZ/2.5 MHz (GSM/CDMA). Though spectrum trading has been referred but authority’s position is not provide specifically.

The authority has prescribed a specific manner for allocating additional spectrum.

 a) First to the operators who have the startup 4.4 MHz and are eligible for 6.2 MHz

b) Then to the operators who have 6.2 MHz and need additional spectrum

 c) Last in the queue are the operators who don’t have 4.4 MHz startup spectrum also.

The authorities have also suggested to impose higher spectrum usage fee from the operator having additional spectrum. These are the basic features of the TRAI recommendations on spectrum management.

Few companies like Reliance have gained while for companies Bharti (Airtel) it has been a loss. But these recommendations have created a distinct path for developing plan on spectrum management a crucial part which the Government has to cover post 3 G auction. Now it depends on DoT and the government either to accept or to reject these recommendations. As per the TRAI act these recommendation are not binding in nature, though they have to be given due weight age by DoT.

 Here are certain responses from various Industry observers.

TRAI’s recos to discourage new operators.. click here

R-Comm Favours TRAI’s views on spectrum allocation.. click here

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I am quite fond of the quote, “for this accursed string strangles us all”. It is the cry by an Indian Mutineer who when lead to the gallows pointed to the telegraph line which would carry his execution orders and yelled it to the morbid amusement of our former colonial masters. The cry becomes relevant in light of recent news of illegal telephone tapping of leading politicians. This is not a novel controversy, quite recently Mr. Amar Singh, a former leader of the Samajwadi Party approached the Supreme Court complaining of the same privacy breaches. Mr. L.K. Advani, has called for a whole-scale repudiation of the Telegraph Act in a blog post. I am in partial agreement with his view, while I would not call for the complete abrogation of the statute the immediate remedy would be abrogating the present system of “the privacy through procedure argument”. I have highlighted the inherent design defects in an article presently under peer review. I am quoting some portions of the article which may be relevant to reforming the law on telephone tapping.

______________________________________

4. The Limitations of the Present Privacy Regime

A.  Design defects in the present surveillance regime

1. lack of incentive, a lack of procedure

There several problems inherently in the application of the present legal regime. A review of court decisions has demonstrated that even though Courts apply due process, they have heavily relied upon first framing strict procedures and demanded an adherence to them to gauge the legality of telephone tapping.[i] In all probability the same approach will be adopted towards online surveillance.

The most obvious criticism which may be leveled against, “the privacy through procedure argument” advanced will be that such procedure will simply be not complied with. Such a counter will wallow that bureaucrats and police officials put in charge of the safeguards[ii] will hardly be sticklers for procedures. Their primary job will be policing and not securing the privacy of citizens. Hence, they will bring an institutional bias to their function.[iii] The counter completes its logical end by making a lack of incentive argument.  It states that the authorities will bring to the job an unabated enthusiasm to secure a conviction and will view the safeguards provided in the statute as hurdles to their goals. A review of the decisions will show that courts have without hesitance convicted offenders on evidence gathered by improper procedure when such procedure is often held not to be mandatory.[iv] The deficiency in observing the safeguards for telephone tapping been held by the Supreme Court to not affect the admissibility of the evidence.[v] The court held that,

In regard to the first aspect, two infirmities are pointed out in the relevant orders authorizing and confirming the interception of specified telephone numbers. It is not shown by the prosecution that the Joint Director, Intelligence Bureau who authorized the interception, holds the rank of Joint Secretary to the Government of India. Secondly, the confirmation orders passed by the Home Secretary (contained in volume 7 of lower Court record, Page 447 etc.,) would indicate that the confirmation was prospective. We are distressed to note that the confirmation orders should be passed by a senior officer of the Government of India in such a careless manner, that too, in an important case of this nature. However, these deficiencies or inadequacies do not, in our view, preclude the admission of intercepted telephonic communication in evidence. It is to be noted that unlike the proviso to Section 45 of POTA, Section 5 of the Telegraph Act or Rule 419A does not deal with any rule of evidence. The non-compliance or inadequate compliance with the provisions of the Telegraph Act does not per se affect the admissibility.[vi]

Hence, when the function is exercised with a bias towards conviction and there is a lack of incentive, these procedures will be routinely flouted. It cannot be said that the mere vesting of this discretion will lead to a presumption that it will be exercised with an evil eye and an unequal hand.[vii] However, the regulations are designed in manner where there is a deep seated bias towards securing conviction with or without an adherence to procedure.

2. absence of an effective injury discovery and redressal system

The problem of the non-adherence to procedure is compounded by the absence of an effective legal measure to discover the privacy harm, until the information is publicly distributed making the subject aware of the infraction. This seems necessary as a notification may cause the concealment of the information which is sought to be gathered. However, this problem is acute. I anticipate that the paucity of precedent challenging unwarranted intrusion can be contributed due to the non-disclosure. The limited precedent at hand is in cases where an offence is alleged against a person and the information gathered through surveillance is presented in court. The limited empirical evidence suggests that unwarranted surveillance is common occurrence. The PUCL case itself arose out of statistics of a study presented by the Central Bureau of Investigation in which stated the high degree of warrantless eavesdropping on conversations of polticians.[viii] A more recent case which touched media headlines was when the leader of a major political party complained that his phone was being tapped illegally.[ix]

Even in the unlikely event that an ordinary person suspects that he is under electronic surveillance his remedies are onerous to enforce. Though, the Courts in their magnanimity may entertain, (1) a writ proceeding under Article 226 or 32 of the Constitution of India for judicial review of the police action and for appropriate relief; (2) criminal action against the officers responsible for criminal trespass subject to other provisions of Code of Criminal Procedure, 1973; (3) damages in tort by filing a civil suit; and (4) appropriate compensation in a public law jurisdiction from the Court of judicial review under Article 226 or 32 of the Constitution.[x] These remedies may look attractive however; they take substantial time, effort, money and lawyering to enforce.[xi] Hence, relying on probable litigation to cure the privacy breaches will be ineffective.

[i] Infra Sec. ______ [link to the section on PUCL]

[ii] Provisions of the Regulations under which they are appointed

[iii] M.P. Jain & S.N. Jain, Principles of Administrative Law 225-234 (2002). See Bhomesh Sharma v. State of J and K and Ors., 2007 (1) JKJ 84 (Per., Y.P. Nargotra, J.) (the court appreciated arguments as to the institutional bias against the vigilance organisation of the state police, where the evidence which had been gathered by the vigilance organisation from the accussed petitioner on a case was stolen. Thereafter another criminal investigation was commenced by the vigilance organisation. The petitioner fearing his false implication in the case of the theft alleged institutional bias and the court ordered that the investigation of the theft be transsfered to an independent third entity.) See also South Indian Cashew Factories Workers’ Union v. The Managing Director  (2006) 5 SCC 201 (Per., Arijit Pasayat and Tarun Chatterjee, JJ.) (it was held that the inquiry had been conducted by the Assistant Personnel Manager of the Corporation and the Union raised an industrial dispute in which Labour Court set aside the inquiry on the ground of institutional bias as the Enquiry Officer was part of the same institution and had also made certain uncorroborated remarks against the employee).

[iv] R.M. Malkani v. State of Maharashtra 1973 CriLJ 228 SC (the court deciding on the admissibility of evidence under section 7 of the evidence act, 1972 held that, “…There is warrant for the proposition that even if evidence is illegally obtained it is admissible. Over a century ago it was said in an English case where a constable searched the appellant illegally and found a quantity of offending article in his pocket that it would be a dangerous obstacle to the administration of justice if it were held, because evidence was obtained by illegal means, it could not be used against a party charged with an offence. See Jones v. Owen (1870) 34 JP 759….”). See also Saiyad Mohd. Saiyad Umar Saiyad and Ors. v. State of Gujarat 1995 (3) SCC 610; C. Ali v. State of Kerala 1999 (7) SCC 88; State of Punjab v. Baldev Singh 1999 (6) SCC 172 ; Beckodan Abdul Rahinan v. State of Kerala 2002 (4) SCC 229) (these cases concern the admissibility of evidence gathered in non-compliance with the procedural safeguards set out in Sec. 50 of the Narcotic and Physocotropic Substances Act. The courts have held that only if the safeguards are mandatory non-compliance will render the evidence inadmissible.).

[v] State (N.C.T. of Delhi) v. Navjot Sandhu AIR 2005 SC 3820 (Per., P. Venkatarama Reddi and P.P. Naolekar, JJ.).

[vi] Id at Para 16 (it is to be noted that even though IT Act does not contain a section analogous to Sec. 45 of the Prevention of Terrorism Act, 2002 which contained language to make evidence admissible even in cases of procedural impropriety for which the decision was given, the general approach of law enforcement is to flout procedural safeguards). See also K.L.D. Nagasree v. Government of India, MANU/AP/0819/2006 (Per., G. Rohini, J.) (The writ petition challenged the order of the respondent under Section 5(2) of the Indian telegraph Act, 1885 directing the interception of messages from the mobile phone of the petitioner. The court discussed the procedural propriety in the order of interception of communications framed under Rule 419-A of the telegraph Rules, 1951 framed pursuant to the safeguards given by the court in the PUCL case. The court examining the order of examination discovered that it was lacking in recording of reasons for the interception. The court also discovered that the review committee constituted under Rule 419-A(8) merely postponed the review of the orders of interception. Ultimately the court held that these infirmities rendered the evidence admissible. Even here the approach of the law enforcement not to observe procedure is to be noted.)

[vii] Gulf of Colarado v. W.H. Ellis, (1987) 165 US 150.

[viii] PUCL insert cite

[ix] Amar Singh v. Union of India 2006 (2) SCALE 698 at Para 2 (Per., Y.K. Sabharwal, C.J.) (“we have asked certain questions from learned Solicitor General regarding the tapping of telephones under the authority of the Central Government for which too time is sought to file further affidavits.”).

[x] Sunkara Satyanarayana v. State of Andhra Pradesh, Home Department and Ors., MANU/AP/1027/1999  at Para 65 (Per., V.V.S. Rao, J.) (The court listed the different types of remedies available to a petitioner aggrieved by the police maintaining a history sheet for him on grounds of infringement of his right to privacy).

[xi] 1 Arun Mohan, Justice, Courts and Delay 1-42 (2009) (a modern classic on the causes and solutions to delays clogging Indian Courts). See also Marc Galanter, Fifty Years On 59 in Supreme but not infallible (B.N. Kirpal et al, eds. 2004) (describing litigation in India as plagued by delays and as a game of a ‘sunken cost auction’).

On 25^th February the Department of telecom (DoT) issued the notice inviting applications (NIA) for bids on third-generation (3G) spectrum and the Broadband Wireless Access (BWA, which will be auctioned on April 9 . The Broadband Wireless Access (BWA) or Wimax spectrum auction would start two days after the close of 3G auctions.  To read more click here.

The government did not receive any applications from private telecom players to participate in the 3G and BWA auction on the first and the second after it opened doors for bids.  Despite the concerns the government officials remained optimistic to receive an appropriate response from the industry as most of the bidders tend to put in their bids on the last day. The bidders had to submit their applications between March 15 and March 19.

Airtel submits bid for 3G spectrum on 18^th being the first one in major telecom companies. To read more click here.

The DoT dismissed the complaint from the Central Vigilance Commission (CVC), which had warned that the third generation (3G) spectrum auction policy was ‘biased’ towards incumbent Indian telecoms firms and existing mobile licence holders. Since it created barriers for foreign players to enter into the market. But DoT refuted this claim….to read more click here.

Delhi High Court decline to stay 3 G auction process. There was a petition filed by a someone called Umesh Jhoshi alleging that sufficient time was not given for submitting application. But the court while refusing to accept his plea..click here

Nine companies have filed application for 3 G auction while 11 companies for BWA. While Augere Mauritius is the only foreign company to have submitted its application for broadband. While Telenor’s Indian unit Uninor, which had earlier expressed its interest to bid for select 3G circles, confirmed not to bid now as it was yet to receive the 2G spectrum it had paid for. To read more click here..

It can observed from the facts, that despite repeated pleas from various stakeholders the policy framework has remained biased towards the incumbent players and it deterred the foreign players from participating.

On 25^th February DoT published its Notice Inviting Application for 3 G Spectrum and BWA Auction (click here).  While going through the Notice it can be observered that DoT deliberately sought to ignore few issues which have been the part of public discussion regarding allocation of 3 G spectrum.  After being forced by the PMO (Economic Times Click here), an attitude of hurriedness in conducting the auction can be observered through the manner in which the Notice has been drafted, also the existing framework  fails to address the purpose of allocating spectrum through auction. Since the auction might remain a desirable and transparent method of allocation, but the immediate steps after the allocation tends to raise questions regarding bias towards the incumbent licensee.

Though DoT has assured to introduce certain changes in its policies based on TRAI‘s recommendations on ““Overall Spectrum Management and review of license terms and conditions” ( at present TRAI is carrying out a consultation with the stakeholders on this). But despite such assurances DoT through its notice has failed to address the issue adding to the woes of new entrants. Due to the backhaul in granting licenses and start-up spectrum there is already a Delhi HC decision directing DoT to award UAS licenses to the applicants who have applied for licenses before October, 1, 2007 who have not yet been awarded licenses, prior to any potential new entrants. Though DoT is contesting this decision at Sc but despite any such assurances it would expose the new entrants to the risk of running losses. As it will not be feasible for any successful bidder who is also a newly entrant to acquire UASL within specific time period and a condition of compulsory requirement of UASL licenses in the Notice.

Despite such a serious implication on the subsequent allocation of 3 G spectrum due to mismanagement and backhaul of spectrum allocation during 2 G allocation, DoT failed to impose an obligation upon itself to allocate 3 G spectrum by the proposed deadline September 20, 2010.  As reported earlier there was a clause which obliged the Government will refund the bid amount in case the auctioned spectrum was not allocated by the deadline but due to the uncertainty in availability of spectrum from Defense forces and subsequent litigation seeking compensation (Click here) . DoT removed this clause from NIA based on Law Ministry’s recommendation. But removal of this clause might hamper the investor sentiments and many of foreign have decided to opt out owing to this uncertainty.

In a previous post about  TDSAT’s decision where the approach adopted by DoT and TRAI in allocating ISPs 2.5 GHz to 2.69 GHz bandwidth exclusively for ISP usage has been  critiqued as the it differs from the ITU prescribed bandwidth. In NIA similar approach has been adopted where clause 2.4 of the notice “ The Successful Bidder shall provide details of the technology proposed to be deployed for operation of its services prior to launch of commercial operations. The technology should be based on standards approved by ITU/ TEC or any other International Standards Organization/ Body/ Industry”. But despite mentioning the ITU prescribed standard the DoT has ignored a the ITU’s standard, as the prescribe bandwidth of auction ranges from 2.3GHz band.

Also the DoT website has provided a separate page where DoT has tried to address important queries raised by the stakeholders during various discussions with DoT ( Click here). While going through those queries and its answers it seemed that government is biased towards state owned MTNL/BSNL i.e.

In query number 32 a query was raised that worldwide, spectrum in 2.5GHz band has gained larger acceptance and has more evolved ecosystem compared with 2.3Ghz, though both are well suited for BWA services. But given that current auction is limited to 2.3Ghz only, it is unlikely that a fair value would be derived for 2.5 GHz in this auction. What rationale is being used for payment of BWA spectrum by MTNL and BSNL,who happen to already own spectrum in 2.5Ghz by comparing with what may be derived for spectrum in 2.3 GHz? Ideally they should pay more for spectrum obtained in 2.5GHz!

But given that current auction is limited to 2.3 GHz only, it is unlikely that a fair value would be derived for 2.5 GHz in this auction. What rationale is being used for payment of BWA spectrum by MTNL and BSNL, who happen to already own spectrum in 2.5Ghz by comparing with what may be derived for spectrum in 2.3 GHz? Ideally they should pay more for spectrum obtained in 2.5GHz!

The Government instead justifying its decision or explaining rationale behind such decision, described the determination price issue as its sole discretion. Now the purpose of allocation is meant for discriminating between private and Public sector companies and even if there are certain kind of benefits accrued to BSNL/MTNL in pursuance of their objective of serving rural population there should be certain justification associated with it.

In another query, number 244 DoT was asked to confirm that the amount paid by BSNL/MTNL for 3G & BWA spectrum will not be funded from the USO fund? In reply to this DoT emphasized that this decision is within the purview of BSNL/MTNL. Now USO ( Universal Service Obligation) is a fund dedicated to devlop infrastructure for rural communications therefore it is unjustified on the part of BSNL/MTNL to use those for profit purpose. The DoT cannot determine the mode of funding for BSNL/MTNLS but at least it has a role to play and dissuade BSNL/MTNL from any such attempts.

A few months ago, with the ink still not dry on the notification enforcing the Competition Act, 2002, I drafted a moot court problem for the students of my alma matter on the statute. The problem essentially concerned the jurisdictional hurdles which the Competition Commission of India will have to pass. The factual matrix of the problem was one which I noted will indubitably arise as we enter the age of the regulatory state. The basis of this were the teething problems of the statute establishing the tribunal or the regulator when it tries to balance the core interests it serves (eg. in the case of DRT the recovery of debts, TRAI/TDSAT consumer welfare in telecoms and broadcasting services) with the well developed norms of judicial accountability and natural justice.

One sees this pattern emerge, with the TRAI / TDSAT litigation where  persons aggrieved with the regulator/ adjudicator first challenged its jurisdictional powers. The pattern seems be repeating with the CCI with parties, to whom notices have been issued, rather than getting into the merits of their specific case, through intelligent gameplay are challenging the powers of the CCI itself. The Bar and Bench Blog cites two such viz.  Aamir Khan and Kingfisher.

Treading on a similar thread, another issue which is likely to arise in future is  the jurisdictional tension amongst the regulators themselves to establish their supremacy in their domains. As I noted before, “Regulatory functionaries hungry for more bounty will battle in court to draw and conquer jurisdictional boundaries.” What is likely to make the case of the CCI more curious, is the language of Secs. 60 and 62 of the Competition Act, 2000. As noted by Prof. Rahul Singh, in his article “the teeter-totter of regulation and competition: why indian competition authority must trump sectoral regulators ”, the two sections are clearly illogical as one provides for mandatory supremacy whereas the other mandatorily derogates that exclusivity by stating the powers will not be in derogation of other enactments.

When this is mixed with an interplay of the Telecom Regulatory Authority of India Act, 1997 which itself provides for exclusive jurisdiction with regards to the subject matter of disputes worded broadly in Sec. 2(K), the result is a jurisdictional quandary. If this sounds too complicated, or unlikely, the moot problem which has been drafted provides for a ready hypothetical. Please find it on the following link.

The TRAI on the 10th February, 2010 has invited comments on a pre-consultation paper on 4G Spectrum. By the title itself the project seems tentative and unsure. Most news reports reacted negatively to this pre-consultation attempt. The Times of India has termed it, “creating confusion” jibing at the failure of the TRAI to decide issues of “allocation, pricing, methodology, transfer and sale of 2G spectrum”. Others are focused on the delays of the proposed allocation of 3G spectrum.

The counter to these arguments is contained in the letter by the a letter from the Association of Unified Telecom Service Providers of India (AUSPI) stating that India is lagging behind in the implementation the next wave of cellular technology. Hence, starting a consultation process for 4G services which are presently deployed in Sweden and Norway cannot be termed as speculative and tentative.

As with most things the truth lies somewhere in the middle. Whereas it is true that several issues remain outstanding with respect to 2G spectrum and the auction of 3G spectrum itself has yet to be conducted, we should not burry our heads in the sand. A pre-consultation paper on 4G Spectrum is certainly a move which is to be supported. By identifying issues which are outstanding with regard to 2G and 3G spectrum as well as whether they can be linked to 4G spectrum, the eventual rollout of 4G services may be accelerated. By issuing a pre-consultation paper the TRAI is certainly not merely gazing into a crystal ball. It hopes that even though there may not be an absolute level of determinacy, we may get a forecast as to the problems which are to be faced in the future. The weather may change, however it will help if we are packing an umbrella to begin with.