From time to time, the telecom sector seems to burst into controversies that invariably harm the sector. Having successfully achieved a revolution in voice telephony and narrowband data services, at this juncture, we should be concentrating all our energies to bring in a similar broadband revolution. Instead, all we are getting into the press are allegations and counter-allegations. There appears to be a hint of ad-hoc decision making in the recent past.
First, we had the case of announcement that new 2G licences will be issued to promote competition and this will be done on ?first come first serve? basis. All those who applied by October 1, 2007 will be considered. Considerable thinking was required, when such a major decision of adding several new service providers, was being taken. Let us examine whether such an application of mind did take place.
This required putting a price tag for which the only benchmark available was the auctioned price of fourth cellular operator. One had to consider whether such an old price tag (over six years old) would still hold when the number of voice connections was surging? While a transparent auction process would have obviated such guesswork, at least an indexing could have been considered. Then there was the sudden announcement by the minister that only applications received till September 25 will be considered. Why September 25? No convincing reason was assigned for this change. Surprisingly, no legal challenges were seen either.
Then, it was announced that priority to determine the position in the queue will be decided on the basis of time of payment of money and that even seconds will count. It was reported in the media that this resulted in the unseemly spectacle of sprinting by executives of various bidders inside Sanchar Bhawan. Not only that, there were reports of some CEOs being held back by muscle men from entering the room where payments were being made. A logical and well-considered approach to the entire issue based on the transparent process of bidding would never result in such happenings.
The entire issue of spectrum norms revision based on a new set of revised consumer number guidelines is another example of inadequate application of mind to sort out a vexed issue. Repeated comments have been made regarding the fact that subscriber-based criterion for determining the quantum of spectrum to be allotted to a service provider, is at best a temporary and interim criterion and should be replaced ultimately by the transparent process of auction. The subjective nature of this approach is evident from the fact that first Trai came up with one revision, which was substantially modified by the Telecom Engineering Centre and finally a committee of experts (including faculty members from IIT and management institutes) came up with yet another set of recommendations. Application of information, which is common knowledge, shows that since base stations are both traffic and capacity limited, determining spectrum requirement based on subscriber number alone (particularly in high traffic areas) will never give a satisfactory result.
It is for this reason that internationally, spectrum auction that allows market forces to determine the price is the preferred approach. The argument of legal limitations based on 1999 agreement with cellular operators, which is sometimes used to justify not going for auction, even if valid, cannot hold in perpetuity since the existing operators have already benefited from spectrum-linked licensing for several years. Additional spectrum, if needed by an operator, must come to him at a cost to ensure he maximises spectrum efficiency through greater investment in latest techniques. The ad-hoc revision of norms has literally cut the existing operators off from any additional spectrum while growth of subscribers continues. This is a major contributor to the type of poor quality of service customers are getting today.
Yet another example of ad-hoc decision making is the levy of a spectrum usage charge after the spectrum has been auctioned. In the case of 3G services spectrum, one lauds the government for going in for the transparent auction route, though the reported availability of only limited spectrum does not auger too well for the telecom industry. Once auction is carried out, the sovereign is effectively leasing its own asset to an operator. Clearly, the auction implies that the operator has taken it for purposes of using it. Why should he have to pay for utilising this asset? Besides, initially it was decided that for 3G services it would be 1% of AGR. That decision has been revised to 3%. Since the charge itself is arbitrary, no reason has been given for this decision.
If one were to learn from history, one would know that in an intensely competitive sector such as telecom, where the top lines can only be maintained through highly innovative new approaches and services, any arbitrary decision without well publicised basis for it will always lead to protracted legal battles. Such legal battles always harm the sector. A well considered vision and policy document on the lines of NTP 99 was needed before taking several of the above decisions to prevent the quagmire towards which this once successful sector seems to be sliding.
?The writer is a former member of the Telecom Regulatory Authority of India