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CASE NO.: Appeal (civil)  5850 of 2005

PETITIONER: Tata Teleservices 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. 5850 OF 2005 with Civil Appeal No. 5871 of 2005

KAPADIA, J.

       The controversy in these civil appeals is: whether appellant is liable to  pay Access Deficit Charges ("ADC") to BSNL for the period commencing  from 14.11.2004 to 26.8.2005 in respect of its service provided under its  brand name "WALKY". Introduction: 2.      ADC is a levy imposed by TRAI (Regulator) on the operators (service  providers) to support roll out of telephones in rural areas. Since BSNL owns  99% of the rural phones, ADC constitutes a levy for the appellant and a  subsidy for BSNL. The said ADC has two parts: (i) the component of the  payment to be made by the domestic service provider, and (ii) the  component of the payment to be made by international long-distance service  providers. The ADC regime was introduced in 2004.

3.      In March, 1997, Telecom Regulatory Authority of India ("TRAI") Act  stood enacted. The Government introduced New Telecommunication Policy  ("NTP") in 1999 and proceeded to implement the said policy. By TRAI  (Amendment) Act, 2000 a key change came to be effected as a result of  NTP, 1999. The said amendment segregated the Regulatory and Dispute  Settlement norms of the original TRAI. Under the new regime, all disputes  involving consumer and service provider(s) had to go to TDSAT. The said  regime excluded civil courts from ruling on disputes arising out of TRAI  decisions. TDSAT was conferred with original and appellate jurisdictions.  The TRAI (Amendment) Act, 2000 defines precisely the regulatory powers  of the TRAI. The said Regulator became responsible for introduction of new  service providers, technical improvements, quality standards and fixing the  terms and conditions of licences. One more event needs to be mentioned. In  order to separate policy making and service provision roles of the DoT, the  Government created Department of Telecom Services ("DTS"), which was  later turned into the corporate entity known as BSNL on 1.10.2000.

4.      Under the NTP, 1999, all new cellular mobile service providers had to  pay a fixed fees upon entry, and then pay a portion of their revenues to the  Government. However, after August, 1999 the revenue-sharing arrangement  came into effect.  

5.      Given an ambitious target to achieve a tele-density of 7%, the NTP  1999 sought to bring private players into basic service which is the

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minimum facility and in which mobility as feature of a telecom service was  not a part of basic service. The permissibility to provide a service is  determined by the terms and conditions of a licence granted by DoT whereas  obligation to pay interconnection usage charges/ADC is determined by  TRAI through its regulations framed under section 36 of the 1997 Act in  conformity with the licence conditions.

6.      By a policy decision of Government of India in 2001, basic service  operators having the licence for providing fixed service were allowed to  provide Wireless Local Loop Mobile [WLL(M))] service within the purview  of their basic service licence.

7.      During 1997 \026 April, 2003, there was no liability to pay ADC ( a  concept introduced by TRAI in 2003).

8.      On 1.11.2003, DoT introduced a Unified Access Service ("UAS")  licence which allowed its holder to provide wire-line as well as wireless  services in a service area. However, wireless services included full mobile,  limited mobile and fixed wireless services under the UAS licence. The  existing service providers were given the option to stay on their original  licence or change to the UAS licence to facilitate communications  convergence by allowing value-added services on the same licence.  However, all telecom operators had to pay IUC including ADC in  accordance with IUC Regulations framed by TRAI.

WLL Technology: 9.      Before considering the contentions advanced on behalf of the  appellants and BSNL (respondent no. 1), it would be necessary to consider  certain terms used in the WLL technology.

i)      Cellular Telephony Cellular telephone is a type of short-wave analog or digital  transmission in which a subscriber has a wireless connection from a mobile  (terminal) to a nearby transmitter. The transmitter’s area of coverage is  called as a cell. In wireless telephony, a cell is the geographical area covered  by a cellular telephone transmitter. The transmitter facility is called the cell  site. When a subscriber enters into an agreement with a cellular telephone  service provider, he is given access to the cell system of that provider, which  is local. When travelling out of the range of the said cell system, the cell  system can enable him to be transferred to a neighbouring company’s cell  system without the subscriber being aware of it. This is called roaming  service. A cellular telephone is not to be confused with a cordless telephone,  which is simply a phone with a very short wireless connection to a local  phone outlet. High mobility of the users is one of the important properties of  cellular telephone. The location of a user can change significantly during a  call which can originate from the user or from the network. In cellular  telephony a mobile user communicates with a base station. The base stations  are connected to MSC, which is connected to the public telephone system.  The most important aspect of cellular telephony is the unlimited mobility.  The user can be anywhere within the coverage area of the network (i.e., it  is not limited to a specific cell). The user can move from one cell to another  even during one call.

Cellular telephony is different from cordless telephone. In cordless  telephone, there is a wireless link between a handset and a base station  which in turn is directly connected to the public telephone system.

It is important to note that economic factors impact the design of  wireless communication systems and services. Those systems where the  mobility is of value per se \026 e.g., in cellular telephony, the same is more  expensive than wired system. For example, the per minute price in the case  of cellular telephony system is higher than the landline telephone. It is  competition which may bring down the price per unit. Since 1990 many  consumers and even companies have opted for cellular telephony alone

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cancelling in some cases wired services. On the other hand, services where  wireless access is only intended as a cheap cable replacement, without  additional features \026 e.g., Fixed Wireless Access, the systems have to be cost  effective, as the infrastructure is comparatively cheaper as compared to the  infrastructure needed for wired connections.

ii)     Examples of Wireless Equipments:         Wireless is a term used to describe telecommunications in which  electromagnetic waves carry the signal over the communication path. The  first wireless transmitter went on the air in the early 20th Century using  Morse code. Later, as technology improved it became possible to transmit  voices and music via wireless, the medium came to be called "radio". With  the advent of television, fax, data communication and the effective use of the  spectrum, the term "wireless" has been revived. The common examples of  wireless equipments in use today include cellular phones, pagers, global  positioning system ("GPS"), cordless telephone sets, satellite television,  wireless LANs (Local Area Networks), global system for mobile  communication ("GSM"), fixed wireless application, mobile wireless and  portable wireless. Correspondingly, services are broadcasting, paging, fixed  wireless access (FWA), limited mobility and full mobility etc.         In the case of fixed wireless, the operation of wireless systems is  confined to homes and offices, in particular, fixed wireless refers to  equipment connected to the internet via specialized modems. In FWA, the  location of the end-user terminal and network access point to be connected  to end-user are fixed.         In the case of mobile wireless, there is the use of wireless systems or  devices aboard motorized, moving vehicles like, PCS. It also includes  automotive cell phones. Unlike FWAs, in the case of mobiles the instrument  is not fixed, it can be moved. As regards portable wireless, it is battery-powered wireless device or  system which operates outside the office, home or vehicle. Its operation is  autonomous.  The examples of portable wireless are handheld cell phones  and PCS units.         All the above examples are common examples of wireless equipments  in use today. iii)    Wireless Mobile Communication:         There are a variety of wireless communication systems for  transmitting voice, video and data in local or wide areas. Mobile wireless  technologies provide voice and data communication services to mobile users  to use cell phones, internet terminals and related computing devices.  

iv)     Wireless Communications Service (WCS):         WCS is radio communications that may provide fixed, mobile, radio  location or satellite communication services to individuals and businesses  within their assigned spectrum block and geographical areas. WCS is today  capable of providing more advanced Wireless Phone Services that would be  able to pinpoint a subscriber in a given locality. WCS is today used to  provide a wide variety of mobile services, including an entire family of new  communication devices utilizing small, light weight; multifunctional  Portable Phones and advanced devices with two-way data capabilities. It  may be noted that every mobile is portable but every portable phone need  not be a mobile. It may also be noted that we are concerned with "service" to  the individual business and not with the nature of the instrument. v)      Wireless Broadband Access Technologies (WBAT):         Wireless access systems are owned by service providers that operate  within a metro areas.         The cellular telephone system, as covered under "wireless mobile  communications" allows users to move about, not only within the range of  the Local Base Station but to other cells within the same system and even to  systems of other service providers.         The "Fixed" wireless systems do not support the extended roaming  features of Mobile Cellular Systems.         The advantage of wireless systems are: no need to install cable or rely  on copper infrastructure.

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vi)     Wireless Communications (WC):         It involves transmitting signals through air and space using radio  waves. Examples blue tooth, CDMA.

vii)    Wireless Technologies (WT):         A wireless network is a radio, microwave, infrared network. Most  wireless networks have multiple BTSs. (base stations). viii)   Cellular Systems and Topology:         A cell in a cellular system is a circular area with a central  transmitter/receiver base station. BTS is raised up on a tower or top of a  building. BTS has a 360-degree antenna which is tuned to create a cellular  area. When a user turns a phone on, its phone number and serial number are  broadcast within the local cell. The BTS picks up the signals and informs the  Switching Office that a particular device is located within its area. This  information is recorded in the switching office for reference. An actual call  takes place when the user enters a phone number and hits the Send button.  The cellular system selects a channel for the user to use during the duration  of the call. As users travel, they may move from one cell to another,  necessitating a handoff and the selection of a new channel. While in the  vicinity of a cell, mobile phone users are under the control of the  transmitter/receiver in that cell. A handoff takes place when the base station  in one cell transfers control for a user’s call to a base station in another cell.  When a base station begins to lose a user’s signal, it notifies base stations in   all the surrounding cells that the user may be moving into their cells. As the  user moves into a new cell, the base station in that cell takes over the call.  The frequency of the call is changed to a frequency used in the new cell  during the transition. This is because adjoining cells cannot use the same  frequencies. ix)     Wireless Local Loop (WLL):

       Today, technologies provide WLL services, i.e., wireless access for  home and business users to carriers and service provider network.  

       According to Encyclopedia of Networking & Telecommunications by  Tom Sheldon, wireless local loop ("WLL") refers  to a variety of  technologies for connecting subscribers to the public-switched telephone  network ("PSTN") using wireless links, rather than copper wire. WLL is a  practical solution for connecting subscribers in countries/areas that do not  have the wired infrastructure. It is also practical in rural areas as an  alternative to laying cable. WLL is primarily a fixed wireless service (the  subscriber generally stays in one place), while cellular systems offer  mobile communication and roaming among different systems.  x)      Basics of Wireless Communications:

                Today’s wireless communications would not be possible without radio  signals which are generated and emitted from a sender. They propagate  through the atmosphere, and are received and interpreted by a receiver.  There are two applications for radio signals. First, they are needed for  wireless communication between a mobile terminal and a fixed network,  which is achieved by manipulating the parameters of the signal which  process is known as modulation. Secondly, radio signals provide the basis  for positioning, that is to say for locating the target.

       In wired network, the transmission media are copper twisted pair,  copper cable and optical fibre whereas the transmission medium for wireless  communication is always the atmosphere, the space or water. Some wired  systems like Ethernet make use of voltage pulses to transmit data. Signals  in wireless communications are electromagnetic waves which are analog.

       Electromagnetic waves are produced and received by antennas. The  receiving antenna converts radio signals from the surrounding environment  into alternating current and delivers it to electronic equipment connected to  the antenna, known as the receiver. Conversely, the transmitting antenna,

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on the other hand, radiates alternating current delivered by a transmitter into  the surrounding environment in the form of radio or micro wave signals.

       The point to be noted is that there is a dichotomy between receiving  antenna and transmitting antenna. The antenna inside the instrument is the  receiving antenna whereas the antenna on the BTS is the transmitting  antenna.

       In short, there exists major differences between wired and wireless  media. In wired communications, signals pass through a solid or guided  medium whereas in wireless communications the technology is based on  unguided media like atmosphere, space or water and, therefore, in wireless  communications signals are exposed to several sources of interference on  their way from the transmitting to the receiving antenna. Broadly, we may  call this process of transmission to the receiving antenna as "transmission  technology" which is a part of what is called as access network in  contradistinction to what is called as core network of which the numbering  plan is one of the important components. This dichotomy needs to be kept in  mind for deciding the present matter. In other words, the receiving antenna  in the subscriber’s premises and the transmitting antenna located in the  BTS are aligned and they constitute access network whereas MSC is the  exchange in which there is core network consisting of BSC, numbering plan,  softwares etc. which are essential to identify the source from which the call  originates, the movement of the subscriber from one cell to the other and the  identification of the call for billing purposes. The Intelligent Network is in  MSC.         Generally, radio signals are emitted from an antenna omni- directionally and they can pass several hundreds of kilometers without being  affected by obstacles (what is known as seamless), which makes radio  signals very attractive for radio and television broadcast.

       In wireless communications, different types of antennas are used  which differ from each other in respect of directivity of signals propagation.  When signals travel away from a transmitting antenna in a BTS, they are  exposed to a reduction in their strength. The degree of attenuation depends  upon the distance between the transmitting antenna and the receiving  antenna, the wavelength of the signals and the surrounding environment  (e.g., indoor, outdoor, rural, urban etc.).

       In wireless communications, the air interface (medium) must be  shared between different applications (e.g., radio, T.V., mobile, cellular  systems etc.) and within a certain application between different users (radio  and T.V. stations, subscribers). This is in contrast to wired infrastructures. In  wireless communications, the resources of the air interface are given by   space, frequency, time and code and thus classified as space, frequency, time  and Code Division. The point to be noted is that all channels transmit  simultaneously in the same frequency range and in the same space, thereby  interfering with each other to a large extent. This means that the signals of  different channels are summed up during transmission and, therefore, must  be separated after reception at the receiver. One of the methods to do so is  called as CDMA (Code Division Multiple Access). Under this method,  different channels are separated by a code. During transmission, the  signals from different senders arrived in the form of a composed signal  at the receiver. In order to reconstruct the data of different senders, the  receiver has to apply the chipping sequence of the respective sender.  Accordingly, the resulting signal reaches the receiver. In the present case,  "Walky" is based on CDMA technology. So also the "Handset" of Reliance  Infocomm Ltd. is based on the same technology. It may be stressed that  CDMA is the very complex technique requiring sophisticated hardwares  both in the centres and the receivers. As all senders transmit in the same  frequency range simultaneously, the radiating power must be carefully  aligned between them in order to guarantee that all senders can be heard at  the receiver.

       The fundamentals explained hereinabove are relevant to the

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transmissioning of data for each kind of mobile service as well as for  positioning. Transmissioning of data as a concept is different from  positioning. Transmissioning relies on manipulation of radio signals whereas  positioning is based on measurement of radio signals especially their  travelling time or their attenuation

xi)     Principles of Cellular Networks:

       Mobile communications reached the market in 1980. Even at that time  the major challenge was to implement advanced mobility features such as  handover, roaming and localization of subscribers which required  additional control channels between terminal and serving base station.

       A cellular network consists of a number of radio cells where the term  "cell" refers to geographic coverage area of a BTS. The size of the coverage  area depends on the signal strength of the base station and the degree of  attenuation. Each BTS is assigned a certain number of channels for  transmitting and receiving data which is called as cell allocation ("CA"). To  avoid interference between cells, it needs to be guaranteed that the  neighbouring base stations are also assigned cell allocations of different  channels. There are no sharp borders between neighbouring cells. Most of  the time they overlap. In urban areas, a mobile device can hear a set of  around 10 base stations simultaneously, and then it selects from this set of  base station within the strongest signal. The number of cells a network is  made up of is basically a function of the size of area to be covered and the  user penetration. When building up a new network, operators first  concentrate on establishing a coverage in congested urban areas before  establishing base stations in rural areas. If a network runs the risk of  becoming overloaded in a certain region, the operators can increase the  capacity by increasing the base stations density.

       A cellular network not only consists of base stations but also  comprises a network infrastructure for interconnecting base stations,  mobility support, service provisioning and connection to other networks  like internet. Therefore, a cellular network consists of several access  networks, which include the radio equipment which is necessary to  interconnect a terminal to the network. The access networks are  interconnected by the core network. For example, in GSM, the access  network is referred to as Base Station Subsystem ("BSS") whereas the core  network is denoted as Mobile Switching and Management Subsystem  ("SMSS"). BSS is responsible for monitoring and controlling the air  interface.  BSS consists of two different components, namely Base  Transceiver Station ("BTS") and Base Station Controller ("BSC"). BTS  stands for "base station". It contains transmitter and receiver equipment as  well as an antenna. The base station is equipped with very limited  capabilities for signalling a protocol processing. The bulk of the work, for  example, allocation and release of channels is done by the BSC. The BSC is  mainly responsible for control and execution of handover, a function which  is needed to keep a circuit-switched connection if the subscriber moves  between base stations. Therefore, each BSC controls several base stations,  which are connected to the BSC via fixed lines or radio link systems. On the  other hand, mobile Switching and Management System is a fixed network of  switching nods and databases for establishing connections from and to the  mobile subscriber. HLR and VLR are two important databases which are the  foundation of the Numbering Plan in MSC. The switching components are  the Mobile Switching Centre ("MSC") and the Gateway MSC ("GMSC").  The MSC connects a number of BSCs. to the network for the purposes of  localization and handover. Thus, it is the MSC which is responsible for  serving a limited geographic region governed by all base stations connected  to the MSC over their BSCs. In a mobile network, when a connection is to  be established it is the MSC which determines another switch depending on  the current location of the mobile subscriber. For this purpose, MSC is also  connected to local network for each subscriber so as to implement the  numbering plan.  The area from which the call emanates, the identification  of the nature of the call whether from mobile or fixed wireline is all done by

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the computer having the requisite software in MSC.

xii)    Fixed Wireless Access WLL(F):

       Fixed wireless access ("FWA") also known as WLL(F) has coverage  between Wireless Local Area Networks ("WLANs") and cellular  communication systems. The main purpose of FWA is to provide  network access to buildings through exterior antennas communicating with  central radio base stations. In this way, users in a building are allowed to  connect to the network with conventional in-building networks.

       FWA is a service in which wireless access is intended as a cheap  cable replacement without additional features.  

       FWA replaces copper lines to the homes of the users by wireless  links, but without the specific benefit of mobility. The original intent was to  give access to customers for basic phone services bypassing the copper lines.          Fixed wireless access system is one type of service. FWA system can  also be considered as a derivative of cordless phones or wireless local area  networks. FWA system essentially replaces a  dedicated cable connection  between the user and the public landline system. The important difference to  be noted is that FWA system is not the same as cordless phones. The main  difference from cordless system is that in FWA system there is no  mobility of the user devices. There is a difference between mobility and  portability. A mobile device can be portable but every portable device is not  mobile. The purpose of FWA lies in providing users with telephone and data  connections without having to lay cables from a central switching office to  the premises of the user. It is, therefore, cost effective as compared to  wireline basic phone.

xiii)   Identification of a Mobile Subscriber:

       In analog wireless network every mobile station ("MS") is identified  by a single number that is permanently associated with it. All connections  that are established from this MS are billed to its registered owner. However,  in the case of GSM, the subscriber is identified by a SIM, which is a plug-in  chip card. In the case of GSM, MS can only make and receive calls when  such a SIM is plugged in and active. All calls that are made from the MS are  billed to the subscriber whose SIM is plugged in. Furthermore, the MS only  receives calls going to the number of the SIM owner. Therefore, SIM is a  fundamental importance for billing procedure. It may be noted that even in  "Walky" there is plug-in chip card which is inbuilt in the instrument.

       Mobility is an inherent feature of most wireless systems. If there is an  incoming call from MS (user), the network has to know in which cell the  user is located. The first requirement is that a MS emits a signal at regular  intervals, informing nearby base stations  in the neighbourhood. Two  databanks then employ this information: the Home Location Register  ("HLR") and the Visitor Location Register ("VLR"). The HLR is the central  data base that keeps track of the location a user is currently at; the VLR is a  data base associated with a certain base station that notes all the users that  are currently within the coverage area of a specific base station. If a MS  moves across a cell boundary, a different base station becomes the serving  base station. In other words, the MS is handed over from one BS to another.  Such a handover has to be performed without interrupting the call.

       The HLR contains all the numbers of the mobile subscribers  associated with one MSC and information about the location of each of these  subscribers. In the event of an incoming call, the location of the desired  subscriber is checked in the HLR and only thereafter the call is forwarded to  the location. The call is forwarded to the BSC in whose area the subscriber is  routing to and selection of one BTS is the responsibility of the BSC.  Therefore, one can conclude that from time to time a controlling MS (user)  has to send updates of its location to its HLR. At the same time, the VLR  and the MSC contains all the information about mobile subscribers from

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other networks that are in the area of this MSC and are allowed to roam in  the network of this MSC.  The Authentication Centre verifies the identity of  each MS requesting a connection.

The above discussion indicates the functionality of MSC, BSC and  BTS. The data base is in MSC. It further indicates the functionality of BTS.  BTS is, essentially concerned with transmission. The entire data base and the  function of identifying the user and the call is in MSC. The numbering plan  is one of the important elements of the network with MSC. The switching  system is with MSC. The network and switching system includes the above  two databases. The main component of network and switching subsystem ("NSS") is  MSC, which controls the traffic between different BSCs. One function of the  MSC is mobility management. Other functions are paging and location  update. All interactions between networks \026 especially the landline  public switched telephone network ("PSTN") \026 are performed by the  MSC. Therefore, the numbering plan, radio frequency ("RF"), BTS,  BSC, MSC, databases etc. form elements of the network of the service  providers.

The BTSs. and BSCs. are important components of base station  subsystem ("BSS"). The components of BSS are different from the  components of network and switching subsystem ("NSS"). The component  of NSS is MSC whereas the component of BSS consists of base transceiver  stations ("BTSs.") and base station controllers ("BSCs."). The BTS  establishes and maintains the connection to the mobile stations ("MSs.")  within its cell. The interface between the MS and the BTS is the air  interface. The BTS hosts the antennas and the radio frequency hardware of a  base station, as well as the software for multiple access. Several BTSs. are  connected to one BSC; they are either co-located, or connected via landline,  microwave radio links, or similar connections.

The BSC has a control functionality. It is responsible for Hand Over  ("HO") between two BTSs that are connected to the same BSC. Distribution  of the functionalities between BTS and BSC may differ depending on the  manufacturer. In most cases, one BSC is connected to several BTSs.  Therefore, it is possible to increase the efficiency of implementation by  shifting as much functionality as possible to the BSC. In general, the BSS is  responsible for channel assigning, maintenance of link quality and HO,  power control, coding and encryption.

xiv)    Difference between Wireless Systems and Services:         In systems, mobility per se is of value \026 e.g., in cellular telephony.  Such services can charge a premium to the customer \026 i.e., it is more  expensive than equivalent wired systems. In cellular telephony the per- minute price is higher than landline telephony and yet on account of  competition, the price has come down.  Services where wireless access is intended as a cheap cable  replacement without additional features have to be cost-effective, as the  infrastructure thereof has to be cheaper than wired connections. The classic  example of such services is FWA. In the case of systems, mobility is of value whereas in case of  services, wireless access is a cheap cable replacement without additional  features.

References:         The above technical data of concepts between sub-paras (i) to (xiv) is  based on references from the following books: 1.      Wireless Communications by Andreas F. Molisch 2.      Wireless Intelligent Networking by Gerry Christensen,            Paul G. Florack and Robert Duncan. 3.      India \026 The Emerging Giant by Arvind Panagariya

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4.      Location-Based Services \026 Fundamentals and Operation           by Axel Kupper 5.      From WPANs to Personal Networks-Technologies and Applications           by  Ramjee Prasad and Luc Deneire 6.      Mc Graw Hill \026 Encyclopedia on Networking & Telecommunications           by Tom Sheldon 7.      Encyclopedia of Technology Terms by Whatis.com

xv)     Generic Requirements: (a)     Generic Model of Wireless Local Loop System:         Apart from references to the technical data hereinabove, Government  of India (DoT) has issued G.R. No. G/WLL-01/01. MAY 96 regarding  generic requirements relating to Digital WLL system. These generic  requirements issued as far back as May, 1996 is in consonance with the  technological concepts enumerated in the above reference books. It supports  what is stated hereinabove. We, therefore, quote hereinbelow relevant  paragraphs from the above G.Rs.: "1.0    INTRODUCITON

1.1     This Generic Requirement (GR) relates to digital Wireless Local  Loop (WLL) system to provide two way communication for Department  of Telecommunication (DoT) customer Access Network.  It shall be  engineered to provide Wireless connections to cover subscribers located  upto 25 kms from the exchange.  The specification covers the technical  and general requirements of the various components of WLL system  namely Base Station Controller (BSC), Base Station (BS), Network  Management System (NMS), and Remote Station (RS).  The Remote  Station shall be a Fixed Subscriber Adapter Unit capable of supporting  standard 2W analogue interface such as standard telephone, FAX, Data  Modem, Payphone and 64 kbps interface as applicable.

\005

1.3     A generic model of Wireless Local Loop system consists of :

       1.      Base Station (BS)         2.      Remote Station (RS)         3.      Base Station Controller (BSC)         4.      Network Management System (NMS)

1.4     The Base Station Controller is responsible for inter-connection  between the WLL system and the PSTN.  It assigns traffic channels to  individual users, monitors system performance and provides interface  between the BS and PSTN switch etc. BSC can be either co-located with  the PSTN switch or located at a different location connected to a PSTN  switch through interfaces as specified at clause No.13.1 of this GR.  In  case of junction interface with PSTN, BSC shall provide switching and  charging functions for the area covered by the BSC.

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1.6     The Base Station (BS) is a conveniently located multiple circuit  Transceivers which shall radiate over a cell or a sector.  It consists of radio  modules, baseband signal processor, network interface, antenna, feeder  etc.  It can be co-located with BSC or remotely located.   1.7     The Remote Station (RS) provides single circuit and optionally  multiple circuit access to the network.  The functions of the Remote  Station are to convert user’s message from its original form into  appropriate digital signal and translate this signal into a form suitable for  radio transmission, to establish access to the network through Base  Station.  It has also the power supply, user interface, antenna, feeder etc.  and does not include customer premises equipment.

1.8     The system shall permit the same facilities to the subscriber as are

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available to the wire line subscribers as defined in clause No.4.2 of this  GR.

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2.0     GENERAL REQUIREMENTS

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2.12    Remote station equipment shall be a fixed indoor/outdoor unit  suitable for wall mounting with minimum inconvenience to the  subscribers.  All accessories for mounting shall be supplied alongwith the  equipment.          \005

2.20    Mobility functions : optionally the system may support limited  mobility within designated area.  The mobile handsets shall conform to  relevant standards for mobile application.  The equipment supplier shall  indicate the coverage area for mobility for the equipment offered.

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12.0    Network Management System (NMS) :

The Network Management System (NMS) shall be capable of performing  the following functions:

i)      Fault localization including BSC, BS, RS and links between them.

ii)     Network configuration i.e., addition, deletion and change of  network elements etc.

iii)    Performance, data collection.

iv)     Security against unauthorised access

v)      Network statistics \026 Data related to  channel occupancy, rejected  calls etc. with visual display of faulty elements of the network.         \005

15.0    Antenna : The type of antenna and gain may be decided by the  supplier for getting desired coverage and performance of the system.   Detailed specifications (technical as well as mechanical) shall be furnished  by equipment supplier.  Fixtures for antenna mounting at BSs and RSs  shall be included as part of antenna supply."

(b)     Principles of Wireless Access:         Principles of wireless access have also been enumerated in  recommendations of International Telecommunication Union-Radio  Communication Assembly ("ITU-RCA"). They are as follows:

"1      Introduction

This Recommendation consists primarily of those terms and definitions  that are considered essential to the understanding and application of the  principles of wireless access. However, they are not exclusive to wireless  access and are recommended also for application, insofar as they are  relevant, to other types of telecommunication systems and services.

Included are terms that may already be defined in the Radio Regulations

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(RR) and other ITU-R/ITU-T Recommendations. However, the definitions  given here embrace only the essential concepts and on this basis it is  considered that they are not inconsistent with the more specialized  definitions that appear in those texts.

Where a truncated term is widely used in an understood context, the  complete term is quoted following the colloquial form.  

Some definitions include terms in italic face to indicate that these terms  are defined elsewhere in this Recommendation.

Technologies in use today for implementing wireless access include  cellular systems, cordless phone and cordless telecommunication systems,  satellite systems, etc. New technologies and systems such as IMT-2000,  wireless broadband ISDN, wireless ATM, HAPS, etc., also form part of  wireless access if they satisfy the basic criteria of end-user radio  connection(s) to core networks

Wireless access may be considered from many perspectives, for example: \026 Mobility capabilities of the terminal: fixed, nomadic (may be used in  different places but the terminal must be stationary while in use), mobile,  restricted mobility (e.g. within a single cell), etc.

\026 Service support capabilities: narrow-band, broadband, multimedia, etc.

\026 Type of telecommunication service: conversational, distribution,  information retrieval.

\026 Connectivity: (which would depend on the switched network that the  terminal accesses, e.g. Internet, PSTN, etc.).  

\026 Radio transmission technology: access technique (TDMA, CDMA, etc.),  modulation technique (analogue, digital, etc.), duplex technique (FDD, TDD, etc.),  etc.  \026 Delivery mechanism: terrestrial, satellite, etc.

Of particular interest are the mobility characteristics of wireless access  systems; thus this Recommendation provides definitions of the terms  "fixed", "mobile" and "nomadic" wireless access.

The purpose of this Recommendation is to specify terms and definitions  for terrestrial wireless access.

2       Scope

The Recommendation specifies definitions for terms primarily focused in  the field of terrestrial wireless access systems. Wireless access  applications may be provided within the definitions of the radio services  FS, MS, FSS and MSS contained in the RR.

The ITU has deprecated the use of the term "loop" (see References below:  CCITT Blue Book, Vol. I, Fascicle I.3, 1988); for this reason, and more so  because this term does not make any sense with radio technologies, the  use of the terms that include loop are deprecated. These include wireless  local loop, radio local loop, and wireless access local loop.  

It should be noted that in many cases systems may be able to support a  mixture of users (i.e. fixed, mobile and nomadic) and possibly with  restrictions on the type of mobility. It is not practical to define terms for  each possible combination, but those above should suffice to refer to the  primary characteristics of the system."

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       In addition, the said recommendation also defines relevant terms. The  said definitions are contained in clause 4.1, which reads as follows: "4.1.1 Wireless access

End-user radio connection(s) to core networks.

NOTE 1 \026 Core networks include, for example, PSTN, ISDN, PLMN, PSDN,  Internet, WAN/LAN, CATV, etc. (See ’ 4.4 for list of acronyms and  abbreviations.) NOTE 2 \026 The end-user may be a single user or a user accessing the services on  behalf of multiple users.

4.1.2 Fixed wireless access (FWA) Wireless access application in which the location of the end-user  termination and the network access point to be connected to the end-user  are fixed.

4.1.3 Mobile wireless access (MWA) Wireless access application in which the location of the end-user  termination is mobile.

4.1.4 Nomadic wireless access (NWA) Wireless access application in which the location of the end-user  termination may be in different places but it must be stationary while in  use.

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4.2.2 Base station

See central station.

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4.2.4 Central station

The common name for all the radio equipment located at one and the same  place used for serving one or several cells.

NOTE 1 \026 Also known as hub station, and also as base station, even though RR  No. 1.71 defines base station more restrictively as "a land station in the land  mobile service".

4.2.5 Customer premises equipment/network

The equipment/network administered by the user.

NOTE 1 \026 Based on ITU-T Recommendation H.310.

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4.2.8 End-user

A human being, organization, or telecommunications system that accesses  the network in order to communicate via the services provided by the  network. (See ITU-T Recommendation J.112.)

4.2.9 End-user connection point

Point at which the end-user obtains the communications service (see Fig.  1).

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4.2.10 End-user termination, end-user radio termination

The end-user radio equipment antenna (see Fig. 1).

FIGURE 1 Illustration of terms

        End-user radio  Termination                                     End-user connection point

?

D

-------------

FWA radio  station ?        -------------

-------|      |      |      |

Anteena On Roof- Fixed  Network

xvi)    Classification of Services under Licence Agreement for Provision         of Unified Access Services after Migration:

       At the outset, it may be stated that appellants herein, who were  holders of basic service licence(s) migrated to Unified Access Services in  November, 2003. The said UAS licence is dated 20.7.2001 w.e.f.  21.11.2003.

       The said UAS licence covers "access service" which includes wireline  and/or wireless service including full mobility, limited mobility and FWA.  Basically, in these civil appeals we are concerned with three wireless  services, namely, full mobility, limited mobility and FWA. What is FWA  has also been explained earlier in this judgment. We quote hereinbelow  clause 2.2(a) and clause 2.2(c)(i), which read as follows: "2.2    (a)     The SERVICES cover collection, carriage,  transmission and delivery of voice and/or non-voice MESSAGES  over LICENSEE’s network in the designated SERVICE AREA and  includes provision of all types of access services.  In addition to  this, except those services listed in para 2.2 (b)(i) licensee cannot  provide any service / services which require a separate licence.   The access service includes but not limited to wireline and / or  wireless service including full mobility, limited mobility as defined in

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clause 2.2 (c) (i) and fixed wireless access.   However, the licensee  shall be free to enter an agreement with  other service provider(s)  in India or abroad for providing roaming facility to its subscriber  under full mobility service  unless advised / directed by Licensor  otherwise.  The LICENSEE may offer "Home Zone Tariff Scheme  (s)" as a subset of full mobile service in well defined geographical  Areas through a tariff of its choice within the scope of orders of  TRAI on the subject. Numbering and interconnection for this service  shall be same as that of Full mobile subscribers.

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2.2 (c) (i)     In respect of subscriber availing limited mobility  facility, the mobility shall be restricted to the local area i.e. Short  Distance Charging Area  (SDCA) in which the subscriber is  registered.  While deploying such systems, the LICENSEE has to  follow the SDCA based linked numbering plan in accordance with  the National Numbering Plan  of the respective SDCA within which  the service is provided and it should not be possible to authenticate  and work with the subscriber terminal equipment in SDCAs other  than the one in which it is registered.    Terminal of such subscriber  in wireless access system can be registered in only one SDCA.   Multiple registration or Temporary subscriber/ Subscription facilities  in   more than one SDCA using the same Subscriber terminal in  wireless access systems is not permitted and the same Subscriber  Terminal cannot be used to avail Limited Mobile facility in more  than one SDCA.  The system shall also be so engineered to ensure  that handover of subscriber does not take place from one SDCA to  another SDCA  under any circumstances, including handover of the  calls through call forwarding beyond SDCA. The Licensee must  ensure that the mobility in case of such limited mobile service/  facility remains restricted to SDCA."  

       The concept of limited mobility has been defined in clause 2.2(c)(i).  The UAS Licence clarifies vide clause 2.2(c)(ii) that the Basic Service  operators like the appellants after migration to Unified Access Licence  Regime can also offer limited mobility service for such customers who so  desire. In these civil appeals we are concerned with the concept of limited  mobility as a service which attracts ADC.

       Clause 2.2(d)(i) inter alia provides for compliance with standards  prescribed by ITU-RCA which have been quoted hereinabove. We quotre  hereinbelow clause 2.2(d)(i), which reads as follows: "2.2 (d)(i)     The LICENSEE is  permitted to provide, SERVICE by     utilizing any type of network equipment, including circuit and/or  packet switches, that meet the relevant International  Telecommunication Union (ITU)/Telecommunication Engineering  Center (TEC) / International standardization bodies such as  3GPP/3GPP-2/ETSI/IETF/ANSI/EIA/TIA/IS".     

Meaning of Interconnection Usage Charges ("IUC")/ ADC: 10.     On 29.10.2003, TRAI notified IUC. ADC is a part of IUC. ADC is a  percentage of the revenue. The framework of IUC regime was established by  TRAI through its Regulation dated 24.1.2003 which was subsequently  reviewed on 29.10.2003 and 6.1.2005. IUC has to be determined based on  minutes of usage for various network elements and the cost of these  elements. 11.     ADC, on the other hand, is  based on the consideration of cost based  rent, local call charges, low rental in rural areas, free calls etc. to make the  basic telecom services affordable to the common man, to promote universal  service and universal access as required by NTP, 1999. It is important to  note that ADC does not arise out of any  legal right. It arises out of

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TRAI’s consideration of smoothening the transition process during  competition, i.e., providing support during transition period when costs of  access is not fully recoverable from the revenues from access line monthly  rental under the existing tariff regime due to competition in the market. In  other words, ADC is a depleting regime for ADC purpose. Calls to/from  WLL(F) is similar to calls to/ from fixed lines. It is important to note  that fixed wireless services, provided by fixed service providers, and  unified access service licences are classified as Fixed Services. However,  fixed wireless services for all purposes tantamounts to full cellular  services and can be offered seamlessly throughout the SDCA which  created a non level playing field for cellular operators vis-‘-vis the fixed  wireless service providers, which has led to the present dispute, which is  primarily concerned with the "range of mobility" of Fixed Wireless  Terminals provided by appellants herein and Reliance Infocomm and not  with the size of the instrument "Walky" provided by appellants (Handset  provided by Reliance Infocomm) or the technology used therein, viz,  wireless or wireline, in the context of levy of ADC.

Submissions:

12.     Mr. Arun Jaitley, learned senior counsel for the appellants, submits  that the question to be decided in this case is whether the appellants’  instrument ("Walky") falls in the category of Fixed Wireless Service or  WLL(M) service. According to the learned counsel, the question of  classification under Telecom Regulatory Authority of India Act, 1997  ("1997 Act") can only be decided upon by TRAI and not by BSNL as is  purported to have been done in the present case, particularly when BSNL is  a competing service provider and a contracting party under IUC Regulations.  In this case, BSNL has demanded ADC from the appellants for the period  14.11.2004 to 26.8.2005. Learned counsel urged that, according to the  appellants, the instrument "Walky" is a fixed wireless phone having  portability as its feature. That, BSNL had no authority to classify the said  instrument as a mobile phone.  

13.     According to the learned counsel, the abovementioned WLL(M) is a  service. It refers to a mobile set and not to a portable FWP and, therefore,  the said instrument "Walky" which is portable is not classifiable as  WLL(M). That, in any event, classification disputes lay before TRAI under  the 1997 Act and that BSNL has no authority to classify/reclassify the said  "Walky" as WLL(M). In this connection, it is urged that BSNL could have  filed its complaint before TRAI and BSNL could not have unilaterally called  upon the appellants to pay ADC after such re-classification. The questions  raised on behalf of the appellants is: Who pays ADC? Who decides as to  who pays? In this connection, it is further submitted that under section  11(b)(ii) of the 1997 Act, the terms and conditions for grant of Inter- connectivity is to be fixed by TRAI; it is mandatory function of TRAI to do  so and, therefore, it is beyond the competence of BSNL to re-classify and fix  the ADC liability on to the appellants.

14.     Learned counsel urged that from 1997 to 2004, the said "Walky" had  been in the market to the knowledge of BSNL; the market knew the  distinction between the three services and that the said Instrument stood  classified during above period as WLL(F). That, GOTIT had also treated it  as WLL(F). That, the appellants had moved TDSAT, in the present case,  to  set aside the demand of BSNL only on ground that BSNL had no authority  to re-classify the said instrument from Fixed to WLL(M) service. That,  BSNL could have challenged the use of "Walky" without payment of ADC  before the TRAI in which event the said Authority could have taken up and  decided the classification dispute, but was not done.  

15.     It is next urged that "Walky" as an Instrument is portable, not mobile  and, therefore, BSNL had erred in reclassifying Walky as WLL(M).  Challenging the impugned decision of TDSAT, it is urged on behalf of the  appellants that TDSAT had erred in equating portability with mobility. That,  the said two concepts are different. That, the Telecommunication

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Interconnection Usage Charges Regulations, 2003 ("2003 Regulations")  treated WLL(M) and WLL(F) as a separate class of service. That, in the  absence of any change in the technology or the instrument and merely  because of the advertisement issued by the appellants, the character of  service or its classification cannot change. In this connection it may be noted  that appellants had given on Advertisement (Ex.-P8) in which it was stated  that "Walky" combines the best features of Mobile Phone and the Landline.  That, BSNL had complained to TRAI regarding the advertisement in which  "Walky" was shown as WLL(F) by invoking Rule 6 of the 2003 Regulations  and when the matter was sub-judice before the Authority, BSNL raised the  unilateral demand for ADC on the appellants which was mis-conceived.  That, under the contract between BSNL and the appellants, there was no  provision to dis-connect the Access Facility, unilaterally.

16.     Learned counsel urged that in the dispute raised by the appellants  before TDSAT the only question raised was regarding unilateralism on the  part of BSNL which TDSAT failed to decide and, therefore,  the matter  needs to be remitted to TRAI. In this connection it is urged that under clause  2.7 of the Consultancy Paper the "extent of portability" was the question  pending to be decided by the Authority and pending decision, BSNL had no  authority to raise the demand.  17.     On Technology, learned counsel urged that after introducing the  concept of ADC, the categories of the services were Fixed Wireline,  WLL(F), WLL(M) and Cellular which is now re-classified unilaterally by  BSNL and DoT as Fixed Wireline; WLL(F) = WLL(M) and Cellular.  Learned counsel urged that if WLL(F) had to be shifted to WLL(M), then  that question needs to be looked into by the Authority, hence remand  becomes necessary as such re-classification cannot be done by BSNL  unilaterally. Learned counsel submits that correct classification for ADC  could have been done only by TRAI and not by BSNL/DoT and that too  after following the procedure under section 11 of the 1997 Act.

18.     Learned counsel next urged that neither in the Licence nor in the 2003  Regulations is there any Premises Specific Restriction ever imposed and,  therefore, it was not open to BSNL to make the impugned demand as the  said restriction was not there during the relevant period. In this connection it  was urged that during the entire period between 1997 to November, 2004,  even DoT understood "Walky" to be portable in the entire SDCA; that  only in March, 2005 it gave directions to the contrary to the appellants  incorporating the above "Premises Specific Restriction" and that too without  any change in the licence or the IUC Regulations 2003; that till 4.3.2005 the  said restriction was never mentioned; that without complying with section  11 of 1997 Act, TRAI could not have issued such a directive on 4.3.2005,  particularly when it seeks to impose a liability to pay ADC with  retrospective effect. Learned counsel submits that, in the circumstances,  matter of classification/reclassification arises which needs to be decided by  TRAI.

19.     Mr. Gopal Subramanium, learned senior counsel on behalf of  respondent no. 1 - BSNL, at the outset submits that, this civil appeal is  infructuous. In this connection, it is urged that by Circular dated 4.3.2005  issued by TRAI,  all Access Providers (including appellants herein) were  directed to ensure that the terminal used for Fixed Wireless Services should  be confined to the premises of the subscriber as the issue of mobility had  revenue implications. Learned counsel submits that this circular has not  been challenged till date and, therefore, this civil appeal is infructuous.

20.     It is next urged that the contention of the appellants that when  consultation process was on BSNL could not have made the Demand has no  merit because in that Process the question was not of reclassification but the  question was whether ADC was payable to other Fixed Service Providers,  besides BSNL. In this connection, it was pointed out that before 1.2.2005,  appellants herein used to receive ADC as Fixed Service Provider in respect  of "Walky", however, after that date BSNL alone became entitled to ADC  which led to disputes. It is urged that neither the Consultation Paper nor the

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2003 Regulations was concerned with characteristics of WLL(M) services as   that issue stood decided by TRAI vide circular dated 4.3.2005 as well as by  Order dated 26.8.2005 issued by DoT by which it was held that appellant  had provided Fixed Wireless Terminals as Mobile Terminals. The said Order  of DoT stood complied with by the appellant and, therefore, there was no  merit in the contention of the appellant on the issue of unilateralism. The  said Order dated 26.8.2005 was passed by DoT after giving show cause  notice. It is based on breach of licence conditions by appellants.

21.     On the technology, it is urged on behalf of BSNL, that WLL(M) is a  service which is put in the "Walky". It is urged that WLL(M) is a service  given by the instrument "Walky". What is relevant is the Service and not the  Instrument. It is urged that the appellants herein had invoked the Original  Jurisdiction of TDSAT on the question of characterization of service which  has been answered in favour of BSNL. It is urged, that nature and  classification of instrument was not relevant; that what was relevant was the  feature of the service in the instrument "Walky" and whether that feature  made it WLL(M) service, to which ADC stood attracted. All these questions  have been answered by TDSAT by its impugned judgment in favour of  BSNL. By the impugned judgment, it has been held by TDSAT that Walky  Calls attract ADC under the Regulatory Regime.

22.     It was next urged that on facts there was no unilateralism as the  Demand was made by BSNL only after the TRAI and the DoT had issued  the above Circular and Directive respectively which have not been  challenged. It is pointed out that in fact appellants have complied with  DoT’s order. Learned counsel would submit that if there was compliance of  the Order/Directive of DoT dated 26.8.2005 there is no reason why  appellants should not pay ADC for the period in question, viz, 14.11.2004 to  26.8.2005. According to learned counsel, compliance of DoT’s Order dated  26.8.2005 itself indicates that even according to the appellants, ADC was  payable in respect of the service, i.e., WLL(M) and, therefore, there is no  merit in the argument advanced on behalf of the appellants that ADC could  not be charged without change in the conditions of licence or 2003  Regulations.

23.     It was next contended that under 2003 Regulations, reference is made  to Fixed Wireless Access, Mobile Wireless Access and Nomadic Wireless  Access. Before TDSAT, the controversy was regarding WLL(M) Service  in SDCA. Before us it was contended that the levy of ADC is not on  movement of Walky within SDCA but it is in respect of service rendered in  SDCA. That, WLL(M) is a type of service within SDCA.

24.     Learned counsel would submit that with the introduction of Unified  Access Service Licence ("UASL") in 2003 the distinction between Fixed  Wireless, WLL(M) and mobile stood obliterated. The said UASL 2003  brought in the Numbering Plan which categorized the series in the said Plan  to identify and measure the call for billing purposes. That, in terms of clause  2 of UASL, "mobility" refers to service(s) within SDCA.

25.     The above arguments of learned counsel for BSNL were adopted by  Dr. A.M. Singhvi, learned senior counsel for Cable Operators Association.  

26.     Mr. Rakesh Dwivedi, learned senior counsel appearing for intervenor- TRAI would submit that in November, 2000, TRAI recommended Limited  Mobility Service, i.e., WLL(M) on 25.1.2001, DoT permitted it, whereas  Walky came into the market only in October, 2004. According to learned  counsel, vide IUC Regulations, 2001, WLL(M) was defined which was  incorporated in UASL on 26.11.2003 and, therefore, appellants were fully  aware of the difference in WLL(M) Service vis-‘-vis WLL(F) and Cellular.

27.     On technology, learned counsel submits that under WLL(M), the  terminal of the subscriber must be fixed to a socket in the subscriber’s  premises. That, service given by the appellant is that of Limited Mobility.  That in case of WLL(F) the Basic Phone Instrument has to be fixed indoor

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and since that is not the case of appellants, the instrument "Walky" would  fall in the category of WLL(M). Finding:

28.     India’s phenomenal growth in the mobile subscriber base and  penetration rate (or teledensity as measured by number of phones per  hundred) has attracted global attention. Mobile phones have introduced  competition in providing access and services at global competitive prices  and state-of-art technology. The competition is now relevant not only among  the private providers of mobile services, but also among the private and  public providers of both fixed and mobile services. India’s NTP 1999  emphasised the Government’s commitment to provide basic telecom  services to all people at affordable and reasonable prices. This commitment  is called the Universal Service Obligation ("USO").  

29.     At the outset, it may be stated, that, Regulatory Restriction should not  be confused with technology limitation. With the technological  advancement, "extent of mobility" has gone way beyond the "Premises  Specific Restriction" but in this case we are not concerned with technology  but with the levy of ADC. According to some authors, ADC is a tax. In the  Revenue Regime, the Authority imposing the levy is not always bound by  the concepts in technology. It is open to the Authority under the Revenue  Regime to impose by way of Regulatory Restriction a parameter like  Premises Specific Restriction to explain the concept of Limited Mobility.

30.     WLL is a technology. In this case we are only concerned with  Wireless Local Loop Mobile Service.  As a technological concept, wireless  in local loop technology simply means that the subscriber is connected to the  nearest exchange of the appellants (MSC) through BTS (which is only  concerned with transmission) through a radio link instead of through the  copper wires. In general, it is cheaper than copper wire connectivity. In  traditional wire-line network, the cost of the Last Mile amounts to  substantial portion of the total cost of putting up the network. CDMA and  FDMA are technologies used for WLL.

31.     In this civil appeal we are not concerned with WLL per se but with  the concept of "limited mobility".

32.     WLL is also called Broadband Wireless Access (BWA) or fixed-radio  access or fixed-wireless access or fixed wireless terminal (FWT). 33.     FWT units differ from mobile terminal units operating within cellular  networks \026 such as GSM - in that a fixed wireless terminal or deskphone  will be limited to an almost permanent location with no roaming facility.

34.     WLL + FWT are generic terms for radio based telecommunications  technologies and the respective devices which can be implemented using a  number of different wireless and radio technologies. In generic sense, WLL  is a technology. It cannot be equated to WLL(M) which is a service like  WLL(F). Under the Worldwide Database, WLL does not refer to Limited  Mobility. Worldover WLL is used to provide Fixed Wireless Access for  speedy roll-out of fixed services. However, under the NTP 1999, cellular  operators are allowed to offer all types of mobile services whereas fixed  operators like the appellants are allowed to offer fixed services.

35.     The core issue, therefore, is not whether Limited Mobility is or is not  possible but whether fixed operators are liable to pay ADC when the  service(s) provided by them fall in WLL(M) service.

36.     The main contention advanced on behalf of the appellants is regarding  alleged unilateralism by BSNL in calling upon the appellants herein to pay  ADC. According to the appellants, BSNL is a service provider and a  competitor to the appellants, therefore, BSNL has no authority to impose  ADC liability on the appellants. According to the appellants, BSNL is a  contracting party and, therefore, BSNL has no authority to levy ADC  unilaterally on the appellants. According to the appellants, TRAI had issued

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its directive dated 4.3.2005 at the behest of BSNL without TRAI itself  decided the categorization of service. According to the appellants, in any  event, TRAI had acted at the behest of BSNL in issuing the said directive.  According to the appellants, the said directive seeks to treat the Walky calls  as WLL(M) whereas all over the years between 1997 to 2004 the said  service stood classified as WLL(F). According to the appellants, if at all  TRAI wanted to reclassify the said service as WLL(M) it ought to have  followed the procedure laid down under Section 11 of the 1997 Act. The  effect of such directive, according to the appellants, is not only to reclassify  the services but it also seeks to amend the terms and conditions of UAS  Licence. It may be stated that directive dated 4.3.2005 stood clarified by  DoT vide two clarifications dated 23.3.2005 and 26.8.2005. According to the  appellants, the said clarifications were issued in the context of advertisement  given by the appellants, which were later on withdrawn and that the said  directive had no connection with ADC chargeability. According to the  appellants, DoT is a licensor. According to the appellants, DoT had no  authority to categorize Walky as WLL(M). According to the appellants,  during the period 1997 to 2004, DoT and TRAI have treated Walky as  WLL(F). According to the appellants, by reclassifying Walky as WLL(M),  DoT had sought to unilaterally reclassify Walky as WLL(M) which amounts  to change in licence conditions. According to the appellants, reclassification  could have been done only by TRAI under Section 11 of  1997 Act and not  by DoT. Therefore, as can be seen from the above arguments, it is clear that  the basic complaint of the appellants is based on unilateralism in imposing  ADC liability on them.

37.     Before proceeding to deal with the arguments on unilateralism, we  quote hereinbelow, in extenso, the directive issued by TRAI dated 4.3.2005,  clarification issued by DoT dated 23.3.2005 and further clarification issued  by DoT dated 26.8.2005, which read as follows:

"File No.406-2/2004-FN                         Dated 4th March, 2005

To:

       All the Access Providers

Subject:-       Issues relating to WLL (F) services

       The Authority has noted that fixed wireless services were  being provided through fixed wireless terminals in which the  location of the network access point was fixed and end user  terminal was connected to it.  Recently it has come to the notice  of the Authority that new terminals being deployed by access  providers do not have any fixed network Access Point  physically located at the address of the subscriber.  In this  regard certain complaints including those of misleading  advertisements have also been received by the Authority and  subsequently show cause notices were issued to the concerned  operators.  The responses given by the service providers were  not found to be in order.

       As the issue of mobility has implications with respect to  applicability of ADC, the Authority directs you to strictly  ensure that the terminal used for fixed wireless services should  be strictly confined to the premises of the subscriber.  All  Access Providers should also ensure that there are no  misleading advertisements in the electronic and print media.  It  should also be further noted that it is licensee’s responsibility to  ensure that the subscriber terminal is operated in accordance  with the terms of the License for fixed lines.  Any violation will  attract action against you under the relevant clauses of the  License Agreement.

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       This issues with the approval of the Authority.

Sd/- (R.K. Bhatnagar) Advisor (FN)"

\005   \005   \005

"No. 10-10/2003-BS II/Vol.VI Government of India Department of Telecommunication Licensing Cell (Basic Services Group)

       1406 Sanchar Bhavan, 20, Ashoka Road New Delhi \026 110001

23rd March, 2005

To         All the UASL Licensees         BSNL and MTNL

Sub:    Clarification regarding Fixed Wireless Terminal in  UAS/Basic Service Licence.

With reference to the subject mentioned above, the undersigned  is directed to clarify that the terminal used for fixed wireless  services should be strictly confined to the premises of the  subscriber where the telephone connection is registered.  It  should also be noted that it is licensee’s responsibility to ensure  that the subscriber terminal is operated in accordance with the  terms of the Licence for fixed lines including this clarification.

       This is to further reiterate that separate level within  allocated SDCA based Link Numbering is to be used for  Wireline & Fixed Wireless Services.

       Wherever such restriction cannot be imposed, it shall be  treated as WLL (M) feature for all purposes which inter-alia  includes Numbering plan, Interconnection Usage Charges,  Interconnection arrangements etc.

(Subhash Chander) ADB(BS-II) 011-23036536

Copy to: The Secretary TRAI, Safdarjung Enclave New Delhi

Sr. DDG (VAS), DOT"

\005   \005   \005

"Government of India Ministry of Communications & I.T. Department of Telecommunications Licensing Cell (Basic Services Group) 713, Sanchar Bhawan, 20, Ashoka Road, New Delhi\0261

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No.16-10/2004-BSII/TTSL                 26th August 2005

To

M/s. Tata Teleservices Ltd. 10th Floor, Tower-I, Jeevan Bharti, Connaught Place, New Delhi-110001.

Sub:    Alleged Violation of licence conditions.

       Whereas M/s.Tata Teleservices Ltd. (M/s TTSL) has  been granted licence under Section 4 of Indian Telegraph Act,  to establish, maintain and operate telegraph services in the  following service areas:-

SNo.             SERVICE AREA   LICENCE AGREEMENT NO.

1.      Andhra Pradesh  10-02/2004/BSII/TTSL/AP 2.      Gujarat 10-05/2004/BSII/TTSL/Guj. 3.      Karnataka       10-09/2004/BSII/TTSL/KTK 4.      Tamil Nadu      10-17/2004/BSII/TTSL/TN 5.      Chennai 10-20/2004/BSII/TTSL/Chennai 6.      Delhi   10-21/2004/BSII/TTSL/Delhi 7.      West Bengal     20-201/2003/TATA/BSIII 8.      Bihar   20-204/2003/TATA/BSIII 9.      Haryana 20-206/2003/TATA/BSIII 10.     H.P.    20-207/2003/TATA/BSIII 11.     Kerala  20-210/2003/TATA/BSIII 12.     Madhya Pradesh  20-211/2003/TATA/BSIII 13.     Orissa  20-214/2003/TATA/BSIII 14.     Punjab  20-215/2003/TATA/BSIII 15.     Rajasthan       20-216/2003/TATA/BSIII 16.     UP(W)   20-218/2003/TATA/BSIII 17.     UP (E)  20-219/2003/TATA/BSIII 18.     Kolkata 20-222/2003/TATA/BSIII

       Whereas a complaint was received from Cellular  Operators Association of India that M/s Tata Teleservices Ltd.  is providing fixed wireless terminals as mobile terminals and  such terminals are being openly advertised and promoted as  "WALKY-Enjoy freedom of mobility at landline rates".

       Further it was pointed out that BSNL is being severely  disadvantaged as they have not received ADC from WALKY  Calls.

       Whereas M/s. Tata Teleservices Ltd. was supposed to  provide services within the scope of its licence agreement and it  was expected that by way of advertisement or promotion of its  services, the subscriber should not be misled.

       Whereas a notice was issued for alleged violation of  conditions and not limited to clause 2 of Unified Access  Services Licences on 06.01.2005 and 31.01.2005 regarding  WALKY service.

       And whereas M/s Tata Teleservices Ltd. replied to the  notice vide letter dated 21.01.2005 and 02.02.2005 of stating  that there has been neither any attempt nor any intention to

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mislead any subscriber in relation to services being provided by  M/s TTSL and they continue to provide services within this  scope of licences.  The Fixed Wireless Terminal (FWT)  instruments are prominently advertised as bulky desktop phones  and therefore customer is clearly informed of the nature of the  services and the phone instrument.  The numbering scheme of  both FWT & Wireline Phones is same and is different from that  of limited mobile services.  The FWTs covered by one or  sometime more than one Base Trans-receive Stations (BTSs).

       M/s TTSL further submitted that "Walky" is a brand  established by Tata Teleservices essentially to promote and  market their desktop Fixed Wireless Phones.  These Fixed  Wireless Phones combined the advantages of both mobile  phones and landline phones.

       Further, clarification regarding Fixed Wireless Terminals  was issued vide this office letter No. 10-10/03-BS-II/Vol.VI  dated 23.03.2005 vide which it was clarified that the Terminal  used for Fixed Wireless Services should be strictly confined to  the premises of the subscriber where the telephone connection  is registered.  Separate levels within allocated SDCA based link  numbering scheme are to be used for Wireline and Fixed  Wireless Services.  Wherever such restriction cannot be  imposed, it shall be treated as WLL (M) feature for all  purposes.

       It is needless to mention that the word "Fixed" is clearly  understood and it does not require a separate definition in legal  or common parlance.

       M/s TTSL submitted compliance to letter dated  23.03.2005 vide its replies dated 31.03.2005 stating that, "the  Licensor would surely be aware of the inherent "Soft handover"  nature of CDMA technology due to which CDMA terminals  (FW or mobile) utilize network and proving to be extremely  spectrally efficient.  Therefore, the implementation of any  restriction would require considerable changes to the network,  which need time, effort and considerable resources to complete  something that DoT requires to provide.  Nevertheless, under  constraints of time, some actions have been initiated which are  detailed further in this letter".  Further vide letter dated  08.04.2005, M/s TTSL has stated that they have taken some  exercise to restrict service to the BTSs.

       After examining all the responses of M/s Tata  Teleservices Ltd. on the above mentioned subject, it is noticed  that initially, M/s Tata Teleservices Ltd. has not taken  appropriate steps to restrict the mobility within the premises  and has advertised such service where consumer can have the  impression that mobility is one of the features.  In the response  also M/s TTSL stated that fixed wireless phones combine the  advantage of both mobile and landline phones.  Moreover, the  measures taken, later on, to restrict the mobility has also been  found to be unsatisfactory.  It is, therefore, clearly established  that mobility is not restricted to the premises and the terminal  cannot be treated as fixed terminal.

       Whereas such services offered by M/s Tata Teleservices  Ltd. does not conform to the scope and character of the fixed  service and provide the character of Limited Mobile Service.

       Keeping in view the above, the competent authority has  decided that such services are to be treated as limited mobile  service within the scope of the licence.

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       This is without prejudice to any other action that may be  taken by the Government in this regard.

           Sd/- 26/8/05

(Sukhbir Singh) Director (BS-II) Tel. No.23036536 CC: 1.  The Secretary, TRAI, Safdarjung Enclave, New Delhi.         2. Shri Rakesh Mehrotra, Chief Officer-Corporate Affairs, M/s Tata  Teleservices Ltd., Indicom Building, 2-A, Old Ishwar Nagar, Main  Mathura Road, New Delhi-110065."

38.     Analysing the directive dated 4.3.2005 issued by TRAI, the point  which arises for determination is  whether such directive is clarificatory or  amendatory. According to TRAI, it is clarificatory whereas according to the  appellants it is amendatory. In this case, as stated above, we are concerned  with the demand of ADC on the appellants for the period 14.11.2004 to  26.8.2005. According to the appellants, such a directive dated 4.3.2005  cannot operate retrospectively. This is the key issue which we need to  decide. In this connection, it may be noted that the said directive was issued  to all access providers. The said directive came to be issued as it was  brought to the notice of TRAI that new terminals were being deployed by  access providers which terminals do not have any fixed network access point  physically located at the address of the subscriber. In the said circular dated  4.3.2005, TRAI noted that fixed wireless services were required to be  provided through fixed wireless terminals with the location of the network  access point being fixed and with the end-user terminal being connected to  it. That, it had been brought to the notice of TRAI that new terminals were  being deployed by certain access providers which did not possess fixed  network access point physically located in the premises of the subscriber  (PSR). Therefore, by the said circular, TRAI directed the service providers  to strictly ensure that the terminal used for fixed wireless services should  strictly comply with premises specification restriction, i.e., to the premises  of the subscriber. This stipulation in the directive, according to the  appellants, constitutes a new requirement which has the effect of amending  the terms and conditions of the UAS licence as well as the  Telecommunication Interconnection Usage Charges Regulation 2003. The  said directive dated 4.3.2005 stood followed by letters from DoT dated  23.3.2005 and 26.8.2005.

39.     In our view, there is no merit in the above contention advanced on  behalf of the appellants that the above directive dated 4.3.2005 is  amendatory and not clarificatory. The reasons are as follows.

40.     Firstly, the UAS licence classifies wireless service into three  categories, namely full mobility, limited mobility and fixed wireless access.  As stated above, in FWA there is no mobility of the User Device. FWA  replaces copper lines to the homes of the users by wireless links but without  the benefit of mobility for the User Devices. FWA is one type of service.  Mobility is a service feature. In FWA system, the location of end-user  terminal and the network access point to be connected to end-user are fixed.  In circular dated 4.3.2005, TRAI has used certain technological terms  generally used in telecommunications like network access point, end-user  terminal and fixed network access point. These terms find place in the  generic requirement formulated as far back as 1996. They also find place in  the Principles of Wireless Access formulated by ITU-RCA. Keeping in mind  the definitions given both in the technical references as well as in the  principles of wireless access formulated by ITU-RCA, it is clear that  Premises Specific Restriction ("PSR") is not something new which stood  evolved for the first time by circular dated 4.3.2005. In substance, PSR

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emanates from concepts, which are well known in telecommunications, both  in technological references as well as in terms of generic requirements and  in terms of principles of wireless access. We may state that broadly FWA is  called WLL(F). As stated above, the UAS Licence refers to three types of  wireless services, namely, full mobility, limited mobility and FWA. As  stated, in FWA, the location of the end-user (Walky) and the network access  point (antenna connected to the end-user) are both fixed whereas in the case  of mobile wireless access, the location of the end-user is mobile. WLL(M) is  a hybrid between FWA and MWA. Wireless access may be considered from  many perspectives. In this case, we are concerned with mobility capabilities  of the terminal: fixed, nomadic, mobile, restricted mobility etc. As stated  hereinabove, the main purpose of FWA [WLL(F))] is to provide network  access to buildings through exterior antennas communicating with Central  Radio Base Stations. In FWA, users in a building are allowed to connect to  the network with conventional in-built networks. FWA is a service. It is  intended as a cheap cable replacement, without additional features. Wireless  systems differ depending upon the amount of mobility that they allow for the  users. FWA system is a derivative of cordless phones. In FWA there is no  mobility of the user devices. This is where the concept/principle of PSR  emerges. As stated above, there is a difference between mobility and  portability. A terminal may be portable but every portable device is not  mobile. Therefore, in our view, the concepts mentioned in circular dated  4.3.2005 issued by TRAI exist in telecommunications right from 2001. The  said circular merely clarifies and brings out the concept premises specific  restriction.

41.     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.

42.     Secondly, the facts noted above indicate that the classification of  wireless service is done under the licence and based on that classification,  chargeability for imposition of interconnection usage charges and ADC is  contemplated by IUC Regulation of 2003. In other words, classification is  done by UAS licence followed by chargeability under IUC Regulation,  2003. Therefore, it would be wrong to say that vide circular dated 4.3.2005  Walky has been reclassified as WLL(M) for the first time by TRAI. If the  concept of FWA embodies PSR and that too from 2003 then it is clear that  the said circular dated 4.3.2005 is clarificatory. It does not alter the terms  and conditions of the licence. As stated, FWA is one of the wireless services  contemplated by UAS Licence which is dated July, 2003, therefore, much  prior to circular dated 4.3.2005 these concepts were known to all access  providers right from 2003. Therefore, the said circular cannot be called as  amendatory. It is purely clarificatory in nature.

43.     Thirdly, as stated above, in this case we are concerned with regulatory  regime. ADC is a levy. Its levy depends on mobility as a service feature. As  stated above, the numbering plan, radio frequency etc. are all important  elements of a network. The numbering levels for fixed wireless services and  for WLL(M) services are different. So also the numbering levels for fixed  wireless service, limited mobility service and full mobility service are  different. The identification of the call whether originating from mobile or  from Walky or FWA has a correlation with the numbering plan which is an  important element of the network of the appellant in its MSC. For levy of  ADC, integrity of numbering plan is very important. In the present case,  TRAI has detected that the appellant is providing WLL(M) service in the  garb of fixed wireless phone service (FWA) which disturbs the integrity of  the numbering plan. It is important to note that in the case of full mobility,  the rate is different as compared to the rate in the case of limited mobility as

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compared to the rate in fixed wireless service. This difference in the rates is  spelt out in IUC Regulation, 2003. It is for this reason that even in the  clarification issued by DoT on 23.3.2005 that DoT had warned the access  providers by pointing out that the issue of mobility has implication with  respect to the applicability of ADC. It was further clarified that if it is not  possible for the access provider to comply with the requirement of PSR then  the Walky services shall be treated as WLL(M) service for all purposes  including numbering plan, interconnection usage charges, ADC etc. This is  because a separate level with allocated short distance charging area based  link numbering is to be used for wireline and fixed wireless services. ADC is  a levy. It is based on what is called as recognition of services. Mobility is an  important service feature. The record indicates that right from 2003 when  UAS licence stood issued the classification was contemplated by the  licensor-DoT when it categorized wireless service into full mobility, limited  mobility and FWA. ADC, interconnection usage charges etc. follow that  classification. IUC Regulation, 2003 imposes the statutory charges based on  the classification in the licence. What is important in this case is that besides  technological data, even as a matter of policy if there is a contract between  DoT and the access provider in terms of UAS licence which provides for  three categories then the levy of ADC would depend upon the service which  is rendered to the user by the access provider. In the circumstances, apart  from technology, this case is more on tax policy which levies ADC on  services which fall in the category of WLL(M).

44.     Fourthly, wireless systems differ in the amount of mobility that they  have to allow for the users. The ability to move around while  communicating is one of the main features of wireless communication for  the user. However, within that requirement of mobility, different grades  exist:

(i)     Fixed Devices:

Fixed devices are placed only once. There is no  mobility of the user devices in this grade. The  main object for using such devices lies in avoiding  the laying of cables. All wired communications fall  also in this category (example: PSTN).

(ii)    Nomadic Devices:

Nomadic devices are placed at a certain location  for a limited duration of time and then moved to a  different location. Laptops are typical example of  nomadic devices.

(iii)   Low Mobility:

Cordless phones are typical example of low  mobility.

45.     The point to be noted is that in the licence we have three types of  wirelss services, namely, limited mobility, full mobility and FWA. IUC  levies the charge based on this classification. ADC is a part of IUC. ADC is  also levied under IUC Regulation, 2003. In the case of Walky, the  instrument can be put in the car, it can be carried throughout SDCA  and  Walky calls can originate not only from the subscriber’s premises but it can  also originate from any point in the SDCA. Because of this mobility, it is  classifiable in the category of limited mobility. As stated above, in the case  of FWA [WLL(F)] there is no mobility of the user device. When there is no  such mobility of the user device, it is similar to all wired communications.  Therefore, FWA is categorized as WLL(F). All wired communications can  also fall in WLL(F) for the purposes of levy of ADC. However, since the  user device in the case in hand is mobile throughout SDCA, the services  which the instrument Walky offers has to be categorized as WLL(M)

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service. In the present case, we find merit in the contention advanced on  behalf of BSNL that the appellants were providing WLL(M) services during  the above period in the garb of FWA or fixed wireless phone services and  thereby they have infringed the integrity of the numbering plan. Therefore,  ADC is payable by the appellants for the aforesaid period, namely,  14.11.2004 to 26.8.2005.

46.     Lastly, as stated above, classification of services stood effected under  UAS Licence 2003. Under the terms and conditions of that licence, the  access providers were required to maintain the integrity of the numbering  plan. This was one of the conditions of the licence. Similarly,  classification/categorization of wireless services was done under the licence.  The categorization constituted the term of the licence. As a matter of follow- up for the purposes of levy of certain charges, including ADC, IUC  Regulation 2003 stood enacted. Under Section 11(1)(b) of the 1997 Act, the  TRAI is empowered to ensure compliance of terms and conditions of licence  and to fix the terms and conditions of inter-connectivity between the service  providers [see: section 11(1)(b)(i) and (ii)]. Similarly, under Section  11(1)(c), TRAI is also authorized to levy fees and other charges at such rates  and in respect of such services as may be determined by regulations. In the  present case, the IUC Regulation, 2003 indicates by way of schedule the rate  chargeable for a call originating from mobile to fixed, fixed to fixed, fixed to  mobile etc. Under Section 13 of the 1997 Act, TRAI is empowered to issue  directions from time to time to the service providers for the discharge of its  functions under Section 11(1) of the 1997 Act. As stated above, the  classification of the three wireless services was done under the licence. The  clarification issued by TRAI on 4.3.2005 was under Section 13 of the 1997  Act. In the circumstances, the said clarification dated 4.3.2005 was issued by  TRAI in accordance with law.

47.     In our judgment, we have examined the nature of the services, the  status of the circulars issued by TRAI and the status of the directive issued  by DoT. The reasons given in our judgment are in addition to the reasons  given in the impugned order dated 9.9.2005 by TDSAT. We find no  infirmity in the judgment of TDSAT.

48.     Mr. Arun Jaitley, learned senior counsel for the appellant, on the issue  of Unilateralism submitted that when the question \026 whether portable  WLL(F) Phones should be treated alike as WLL(M) phones was pending  before TRAI pursuant to complaints from BSNL dated 4.1.2005, was it open  to TRAI to issue a directive as is done in this case on 4.3.2005 without  waiting for a Determination by the Competent Authority. In this connection  reliance was placed on paras 2.26 and 2.27 of the Consultation Paper. We  find no merit in this argument. As stated above, directive dated 4.3.2005 is  clarificatory and not amendatory. The context in which the Consultation  Paper emanated has been explained by us in our Judgment in the Civil  Appeal of Reliance Infocomm Ltd.. We do not wish to repeat the reasons  herein once again. In any event, we have looked into technology aspect and  policy framework for levy of ADC hence there is no unilateralism as alleged  by the appellant.

49.     Before concluding, one aspect needs to be mentioned. It is alleged by  the appellants and also by Reliance Infocomm Ltd. in the conjoint appeal  which we will separately deal with in the subsequent judgment that BSNL  have also not disclosed their numbering levels for their fixed wireless  service and for their LL(M) services which they have been providing during  the relevant period in the name of "Tarang", which according to the  appellants, would now constitutes WLL(M) service. According to the  appellants, BSNL has also been providing fixed wireless phone services  which has limited mobility.  This is a matter of quantification. That stage has  not yet arrived. However, Mr. Gopal Subramanium, learned senior counsel  appearing on behalf of BSNL, has fairly stated that BSNL would abide by  the parameters laid down in our judgment and whatever adjustments

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required to be made in that regard in the context of claims and counter  claims, the same shall be worked out in near future. Be that as it may, we  express no opinion on the point of quantification which question did not  arise even before TDSAT in this case. Suffice it to state that the services of  the appellants vide the instrument Walky falls in the category of WLL(M)  service and, accordingly, the appellants would be liable to pay ADC in that  regard during the relevant period 14.11.2004 to 26.8.2005.  

50.     Accordingly, civil appeals stand dismissed with no order as to costs.