Supreme Court Orders Disclosure of Segmented Offers in Telecom Tariff Dispute: TRAI vs. Bharti Airtel Ltd. (2020) INSC 721 (06 November 2020)

Date of the Judgment: 06 November 2020
Citation: (2020) INSC 721
Judges: S.A. Bobde, CJI, A.S. Bopanna, J., V. Ramasubramanian, J.
Can a telecom regulator demand details of segmented offers from service providers to ensure fair pricing? The Supreme Court addressed this question in a dispute between the Telecom Regulatory Authority of India (TRAI) and various telecom service providers. The core issue revolved around TRAI’s authority to obtain information on segmented offers to ensure transparency and non-discrimination in tariff plans. The judgment was delivered by a three-judge bench comprising Chief Justice S.A. Bobde, Justice A.S. Bopanna, and Justice V. Ramasubramanian, with the opinion being unanimous.

Case Background

The Telecom Regulatory Authority of India (TRAI) issued the Telecommunication Tariff (63rd Amendment) Order, 2018 on 16 February 2018. This order led to appeals by Bharti Airtel Limited, Idea Cellular Limited, and Vodafone Mobile Services Limited before the Telecom Disputes Settlement and Appellate Tribunal (TDSAT). The telecom companies challenged the “Reporting Requirements” and “Significant Market Power” (SMP) aspects of the order, as well as TRAI’s demand for disclosure of segmented discounts and concessions.

Pending the appeals, TDSAT issued an interim order on 24 April 2018, staying the clauses related to Reporting Requirements and the definition of SMP. However, TDSAT allowed TRAI to seek details of segmented discounts/concessions for analysis, while exempting the service providers from disclosing customer names and other sensitive information. TRAI challenged this interim arrangement before the High Court of Delhi, which dismissed the petitions on 4 May 2018, requesting TDSAT to expedite the appeals.

Subsequently, TDSAT partially allowed the appeals on 13 December 2018, setting aside the 63rd Amendment Order concerning SMP, non-predation, and related provisions. TRAI then filed civil appeals before the Supreme Court against this final order of TDSAT. On 21 January 2019, the Supreme Court admitted the appeals, but did not grant a stay on the TDSAT judgment except for the remand aspect. TRAI then filed an application (I.A.No.46116 of 2020) seeking an interim direction for the telecom service providers to disclose information regarding segmented offers.

Timeline

Course of Proceedings

The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) initially stayed parts of the TRAI order related to Reporting Requirements and Significant Market Power (SMP). However, it allowed TRAI to request details of segmented discounts for analysis. The High Court of Delhi dismissed TRAI’s challenge to this interim order, urging TDSAT to expedite the final hearing. TDSAT then partially allowed the appeals by the telecom companies, leading TRAI to appeal to the Supreme Court. The Supreme Court admitted the appeals but did not stay the TDSAT order except for the remand portion. Subsequently, TRAI filed an interim application seeking disclosure of information regarding segmented offers, which is the subject of this judgment.

Legal Framework

The Telecom Regulatory Authority of India Act, 1997 empowers TRAI to issue regulations and orders related to the telecom sector. Specifically, Section 11(1)(b)(i) read with Section 11(2) of the Act grants TRAI the authority to issue tariff orders. The Supreme Court noted that the Telecommunication Tariff Orders have historically included provisions for “Reporting Requirements”. The court also considered the various amendments to the definition of “Reporting Requirement” over the years, highlighting that the requirement is for the information and record of the TRAI.

The relevant provisions are:

• Section 11(1)(b)(i) of the Telecom Regulatory Authority of India Act, 1997: This section empowers TRAI to regulate telecom tariffs.
• Section 11(2) of the Telecom Regulatory Authority of India Act, 1997: This section outlines the powers of TRAI in regulating tariffs.

Arguments

Arguments by TRAI (Applicant/Appellant):

• TRAI argued that it needs details of segmented offers to analyze whether the plans are transparent, non-discriminatory, and not predatory.
• TRAI contended that despite being the regulator, they are not in a position to analyze the segmented offers due to lack of disclosure by the TSPs.
• TRAI submitted that the Telecom Service Providers (TSPs) have a statutory obligation to offer tariffs transparently and without discrimination, and to report all tariffs to the authority.
• TRAI emphasized that the TSPs are not disclosing the details of segmented offers, which hinders their regulatory function.

Arguments by Telecom Service Providers (Respondents):

• The TSPs argued that segmented offers are “confidentially designed trade practices” and do not need to be reported, as per the TDSAT order.
• The TSPs contended that they are already complying with the TDSAT order by providing the number of segmented offers and a declaration of non-discrimination.
• The TSPs submitted that they are willing to furnish details of segmented offers if TRAI receives a complaint about a specific offer.
• The TSPs argued that TRAI cannot seek interim directions, especially after failing to secure a stay of the TDSAT order.
• The TSPs also argued that granting the interim directions would be equivalent to allowing the appeal itself.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was whether the Telecom Regulatory Authority of India (TRAI) is entitled to an interim direction for the disclosure of information/details regarding segmented offers by the Telecom Service Providers (TSPs), pending the final disposal of the appeals.

Treatment of the Issue by the Court

Authorities

The Court considered the following legal provisions and historical context:

• Section 11(1)(b)(i) of the Telecom Regulatory Authority of India Act, 1997: This provision grants TRAI the power to issue tariff orders.
• Section 11(2) of the Telecom Regulatory Authority of India Act, 1997: This section outlines the powers of TRAI in regulating tariffs.
• Telecommunication Tariff Order dated 09.03.1999: The first tariff order which contained provisions for Reporting Requirement under Clause 7.
• Telecommunication Tariff (17th Amendment) Order issued on 22.01.2002: This order brought about changes in the “Reporting Requirement”.
• Telecommunication Tariff (21st Amendment) Order issued on 13.06.2002: This order made further changes to Clause 7 dealing with Reporting Requirement.
• Telecommunication Tariff (30th Amendment) Order dated 16.01.2004: This order substantially modified the definition of “Reporting Requirement”.
• 42nd Amendment Order dated 07.03.2006: This order amended the definition of “Reporting Requirement”.
• 52nd Amendment Order dated 19.09.2012: This order introduced a penalty clause to the Reporting Requirement.
• 63rd Amendment Order dated 16.02.2018: This is the impugned order which was challenged before the TDSAT.

Judgment

How each authority was viewed by the Court?

• The Court considered Section 11(1)(b)(i) and Section 11(2) of the Telecom Regulatory Authority of India Act, 1997* as the basis for TRAI’s power to issue tariff orders and regulate tariffs, respectively.
• The Court reviewed the historical context of the Telecommunication Tariff Orders* and their amendments, noting that the “Reporting Requirement” has been a consistent feature.

What weighed in the mind of the Court?

The Court’s decision was primarily influenced by the need to ensure that TRAI can effectively perform its regulatory functions. The Court recognized that without access to information on segmented offers, TRAI would be unable to verify whether tariff plans are transparent, non-discriminatory, and non-predatory. The Court also acknowledged the need to balance regulatory oversight with the confidentiality of business practices.

The Court’s reasoning was based on the following points:

• The jurisdiction and power of TRAI to issue the Telecommunication Tariff Order was not seriously disputed.
• TDSAT did not find that TRAI had no jurisdiction to demand details of segmented offers.
• TDSAT itself acknowledged the importance of non-discrimination between the same segment, which requires reporting in certain cases.
• The issue of confidentiality can be addressed through appropriate directions.
• The limited interim order passed at the time of admission of the appeals does not prevent TRAI from seeking interim directions on specific issues.
• The interim directions sought are limited to one issue and do not amount to allowing the appeal itself.
• The historical background of tariff orders shows that Reporting Requirements have always been a part of the regulatory framework.

The Supreme Court stated, “…the issue of non­discrimination between the same “segment” is too important to be ignored and that would require reporting in any particular case when the Authority has reasons to call for reporting any so called segmented offers/discounts during a particular period.”

The Court also noted, “Such power is ancillary and essential for effective implementation of the principle of non­discrimination in the matter of all tariff plans…”

The Court further observed, “what is now sought by TRAI to ensure adherence to the regulatory principles of transparency, non­discrimination and non­predation, cannot be said, at least prima facie to be either illegal or wholly unjustified.”

There were no dissenting opinions in this case. The three-judge bench was unanimous in its decision.

Key Takeaways

• Telecom service providers must disclose details of segmented offers to TRAI to ensure transparency and non-discrimination.
• TRAI has the authority to seek information on segmented offers to effectively regulate the telecom sector.
• Confidentiality of business practices can be maintained through appropriate directions from TRAI.
• The decision reinforces TRAI’s role in ensuring fair and transparent tariff plans.

Directions

The Supreme Court directed the respondents (telecom service providers) to disclose the information/details sought by the applicant/appellant (TRAI) regarding segmented offers. The Court also directed TRAI to ensure that such information is kept confidential and not made available to competitors or any other person.

Development of Law

The ratio decidendi of this case is that TRAI has the power to seek details of segmented offers from telecom service providers to ensure transparency, non-discrimination, and non-predatory pricing. This decision clarifies the extent of TRAI’s regulatory powers and reinforces the importance of transparency in the telecom sector. There was no change in the previous positions of law.

Conclusion

The Supreme Court allowed TRAI’s application, directing telecom service providers to disclose details of segmented offers. This decision underscores the importance of regulatory oversight in ensuring fair and transparent tariff plans in the telecom sector. The Court balanced the need for transparency with the confidentiality of business practices, emphasizing TRAI’s role in maintaining a level playing field.