Third generation voice and data service subscriptions are growing fast with the penetration of smartphones increasing by the day in the Indian market. Most of the major telecom operators today provide 3G services across the country, but they might not be able to do so anymore as the Department of Telecommunications (DoT) has directed Bharti Airtel, Vodafone India and Idea Cellular to stop offering 3G voice and data services outside their licensed zones through roaming pacts.

Airtel, Idea and Vodafone have acquired 3G licenses in a few circles in the country and have signed roaming pacts with each other to let their subscribers use data services across the country. Bharti, Vodafone and Idea currently have licences to operate 3G services in 13, 9 and 11 circles, respectively. They won the bids in the auctions for 3G airwaves in 2010. The administration has not permitted any company to operate 3G services in all the 22 circles of the country.

Face a difficult time ahead in recovering investments in 3G

Facing difficulties in recovering investments in 3G

Apparently, the DoT doesn’t approve of this, and as per a report by The Economic Times, these companies have been issued show-cause and advisory notices to stop such operations, telecom secretary R Chandrasekhar said on the sidelines of a Confederation of Indian Industry conference.

It seems the show-cause notices have been served because the three operators have violated Mobile Virtual Network Operators norms. MVNOs, which are not allowed in India, offer telecom services without owning spectrum. The move is an enforcement of the Telecom Department's order in December last year, which directed mobile phone companies to end 3G roaming pacts.

“We have asked them to immediately comply with the directive issued last year and have given them 60 days to explain why action should not be taken against them for breach of rules,” The Economic Times cited Chandrasekhar as saying.

As per the report, Chandrasekhar said the government would issue separate notices to the companies to claim the revenue generated through these pacts. The companies have been given three days to submit compliance reports, he added.

The Economic Times reports that following the department's order last year, the three mobile operators challenged its order before the telecom tribunal, TDSAT, which issued an interim stay order. The subsequent verdict in July was split.

Despite the growth of the number of 3G subscribers, carriers in India have not managed to generate expected returns on investment in 3G services because a large chunk of mobile phone users still prefer the cheaper 2G services.

Under current rules, maximum penalty for licence violation is 50 crore per circle.

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