Why Sibal Overruled His Bureaucrats On RCom Penalties

Mumbai, India (PressExposure) July 04, 2011 -- When bureaucrats of the Department of Telecom presented Communications Minister KapilSibal with a file demanding the imposition of a fine of Rs 50 crore on Reliance Communications (RCom) of the Anil Ambani group, he was probably flabbergasted.

He had hardly come into the job a few days ago and here was a file seeking to impose a fine of Rs 50 crore for alleged breach of contract in the Universal Service Obligation space (USOF).

RCom's agreement with the Universal Service Obligation Fund had its own clear penalty clauses, which called for fines of Rs 500 a day for service disruption . Reuters

The case was simple. RCom had unilaterally informed the USOF administrator in December 2010 that it was pulling the plug on several base tower stations (BTSs) in rural areas that it had contracted to run because it found them unviable.

Sibal knew that he was sitting on a landmine. While the RCom move was patently ill-advised, the company's agreement with the Universal Service Obligation Fund had its own clear penalty clauses, which called for fines of Rs 500 a day for service disruption .

The ministry bureaucrats, on the other hand, used the maximum penalty prescribed under the Unified Access Service Licence (UASL) - which is the general licence issued to all basic and mobile telephony services companies.

Sibal clearly saw that in the current climate where telecom was widely seen as the source of trouble with the law, bureaucrats were being extra careful to protect themselves from allegations of wrongdoing by prescribing unduly harsh punishments for RCom's transgressions.

But he decided to do what he felt was right. He, therefore, over-ruled his babus and took the bold decision to set things right by invoking the penalty clause under USOF, and not UASL.

This is how he saved RCom from a bigger fine.

http://www.firstpost.com/business/why-sibal-overruled-his-bureaucrats-on-rcom-penalties-35373.html

About RCom

Reliance - ADA Group's flagship company, Reliance Communications, is India's largest private sector information and communications company, with over 100 million subscribers. It has established a pan-India, high-capacity, integrated (wireless and wireline), convergent (voice, data and video) digital network, to offer services spanning the entire infocomm value chain.


Other major group companies - Reliance Capital and Reliance Infrastructure - are widely acknowledged as the market leaders in their respective areas of operation.

Press Release Source: http://PressExposure.com/PR/RCom.html

Press Release Submitted On: July 04, 2011 at 6:24 am
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