JUDGMENT:

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 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 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 (termina