Renewal of Telecom License and Additional Spectrum

The Islamabad High Court’s decision in the case of China Mobile Pakistan Limited (ZONG) vs. Federation of Pakistan and others centers on the renewal of ZONG’s telecom license, particularly the contentious issue surrounding the additional spectrum in the 1800 MHz band. This spectrum had been temporarily allocated as compensation for cross-border interference in the 900 MHz band.

Background:

The dispute originates from the interference issues ZONG faced in the 900 MHz band, primarily due to cross-border signals from India. To mitigate this, the Frequency Allocation Board (FAB) temporarily allocated additional spectrum in the 1800 MHz band to ZONG in 2007. This allocation was repeatedly extended due to ongoing interference. As ZONG’s 15-year license, granted in 2004, neared its expiration in October 2019, the company applied for a renewal, seeking to include the additional spectrum as a permanent part of its license.

Contentions of ZONG: It’s position was that the additional spectrum had become essential to its operations and that the interference in the 900 MHz band remained unresolved. The company sought the renewal of its license on similar terms as before, which included the additional spectrum, arguing that the failure to do so would result in significant operational and financial difficulties.

Contentions of PTA and FAB: Conversely, the PTA and FAB argued that the additional spectrum was only a temporary measure to address the interference and that it was never intended to be a permanent allocation. They contended that with the expiration of ZONG’s license, the additional spectrum should revert to the regulatory authority and be re-auctioned. Additionally, PTA demanded payment for ZONG’s unauthorized use of the spectrum after the license expiration.

Key Issues:

Validity of PTA and FAB’s Decision on Spectrum Allocation: Whether PTA and FAB were within their rights to limit the use of the additional spectrum in the 1800 MHz band to the term of ZONG’s original license, despite the ongoing cross-border interference in the 900 MHz band.

Entitlement to License Renewal on Existing Terms: Whether ZONG was entitled to a license renewal that included the additional spectrum allocation, based on the argument that the conditions necessitating its initial grant persisted.

Legality of PTA’s Payment Demand: Whether PTA’s demand for payments related to the unauthorized use of the additional spectrum post-license expiration was lawful.

Court’s Analysis: The court meticulously analyzed the provisions of the Pakistan Telecommunication (Re-organization) Act, 1996, particularly sections dealing with the issuance, renewal, and conditions of telecom licenses. It also examined the relevant policy directives issued by the Federal Government that governed spectrum allocation and renewal processes.

Spectrum Allocation and Temporary Assignments: The court upheld PTA and FAB’s position that the additional spectrum in the 1800 MHz band was allocated as a temporary solution to a specific problem, not as a permanent license component. The court found that the authorities had made it clear in the relevant FAB meetings, particularly in the 42nd meeting held on 19 February 2016, that the use of the additional spectrum was contingent on the continued interference and would cease upon license expiration.

The court noted that ZONG had been informed on multiple occasions that the spectrum was a temporary allocation and that it should seek a long-term solution to the interference issue, either through technical adjustments or alternative spectrum arrangements. The court emphasized that spectrum is a scarce national resource and that its allocation must be managed in a manner that benefits the broader telecom market and the public interest.

License Renewal Terms: The court rejected ZONG’s claim that it was entitled to a renewal of its license on the same terms, including the additional spectrum. It held that under Section 22(3) of the 1996 Act, the renewal of a telecom license must be consistent with the policy directives in force at the time. The court found that the policy directive issued by the Federal Government in 2019 did not support the inclusion of the additional spectrum in the renewed license. Instead, it provided for the re-auctioning of the spectrum, with ZONG required to compete alongside other operators.

Demand for Payment: The court upheld PTA’s demand for payment related to ZONG’s unauthorized use of the additional spectrum after the expiration of its license. It ruled that ZONG had no legal basis to continue using the spectrum without a valid license and that PTA was within its rights to seek compensation based on the market value of the spectrum.

Court’s Conclusion: The Islamabad High Court ruled in favor of PTA and FAB, affirming their actions as consistent with the law and policy directives. The court held that ZONG’s use of the additional spectrum beyond the license period was unauthorized and that the company was liable to make payments for its use. The decision underscored the importance of adhering to regulatory frameworks and policy directives in spectrum management, particularly given the competitive and resource-constrained nature of the telecom industry.

Contact Us:

Telecom operators and professionals facing regulatory challenges or seeking guidance on spectrum management and license renewals are invited to contact AUJ LAWYERS LLP. Our firm has extensive experience in telecom law and is well-equipped to provide expert legal services tailored to the complexities of the telecom sector.

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