http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 13  

CASE NO.: Appeal (civil)  936 of 2006

PETITIONER: Reliance Infocomm Ltd

RESPONDENT: Bharat Sanchar Nigam Ltd. & Ors

DATE OF JUDGMENT: 30/04/2008

BENCH: S. H. Kapadia & B. Sudershan Reddy

JUDGMENT: J U D G M E N T 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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 13  

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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 13  

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.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 13  

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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 13  

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,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 13  

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.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 13  

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 \026  e.g., in cellular telephony. Such services can charge a premium to the  customers \026 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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 13  

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 \026 it operates in a system with  multiple base stations \026 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.  

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 13  

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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 13  

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.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 13  

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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 13  

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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 13  

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.