UNDER SECTION 26(2) OF THE COMPETITION ACT. 2002

This Information has been filed by the Informant on 13.10.2009 and was considered by the Commission in its meeting held on 27.10.2009. The Commission decided to request the opposite party for its views in the matter. The opposite party sent its views vide its letter dated 3.12.2009. Subsequently, the Informant was also given opportunity to present its views/comments before the Commission. The Informant appeared before the Commission through counsel on 9.2.2010 who made detailed submissions and requested to file an amended information. The amended information was filed on 10.3.2010 which was dicussed in the meeting of the Commission on 25.3.2010 when the Informant was also present. Subsequently Informant filed additional information on 21.4.2010 and made oral submissions regarding the same in the meeting of the commission held on 4.5.2010.

2. Brtief facts of the case as stated by the Informant are as follows:-

2.1 The Informant is a registered association of various Internet Service Providers (ISPs) in India. The information relates to alleged discrimatory behaviour of the Department of Telecommunication (Opposite Party) in providing permission for internet telephony services.

2.2 The opposite party is responsible for grant of licenses to operators for providing basic and value added services in the telecom sector in the country. It has been alleged that opposite party has imposed discriminatory restrictions on Internet Service Providers (ISPs) in providing internet telephony services. Whereas, Unified Access Service License (UASL), Basic Service Operators(BSO) and Cellular Mobile Telephone' Services (CMTS) licensees have been allowed to provide unrestricted internet telephony services to their subscribers, the same has not been permitted to internet service providers. UASL, BSO and CMTS licencees are not launching/promoting internet telephony services for fear of bringing down call charges which would hurt their existing revenue model. Possible competition from ISPs has been prevented by not permitting them to provide unrestricted internet telephony services. ISPs are not allowed to offer connectivity with Public Switched Telephony Network (PSTM)/Public Land Mobile Network (PLMN). In other words ISPs are not allowed to connect to regular land lines phones or mobile phones. Such restrictions are not imposed on UASL/CMTS licencees. Thus Department of Telecommunications is abusing its dominant position as a licensing authority.

2.3 It has also been pointed out that the conduct of UASL/CMTS service providers is in violation of Sec 3(1) and 3(3) of the Competition Act, 2002 as despite being vested with rights to provide internet telephony services they are not doing so. This results in limiting the market for the provision of internet telephony services and thereby deprives the consumers of a viable and cheaper alternative. It has also been alleged that Department of Telecommunication is providing telecom services itself through its unit Bharat Sanchar Nigam Limited (BSNL). BSNL is a dominant service provider by revenue and it has a legitimate interest alongwith other UASL/CMTS service providers to limit the introduction of internet telephony services into the market for voice telephony. The Informant have stated that permitting ISPs to provide unrestrictive internet telephony will immensely benefit the consumers as well as service providers.

2.4 It has also been stated that Telephone Regulatory Authority of India (TRAI) has recommended that unrestrictive internet telephony services be permitted to ISPs as in the case of Universal Access Service License/Cellular Mobile Telephone Services License. Despite the recommendations of TRA1, opposite party has not yet permitted unrestrictive internet services to ISPs.

3. The Informant has sought following reliefs: -

IDirecting the institution of enquiry into (i) violation of the provisions of Section 4 by DoT; (ii) violation of the provisions of