Column : Got a problem Get a policy

Written by Rishi Raj | Updated: Mar 12 2011, 04:28am hrs
In 2003, when it was clear Reliance Infocomm was providing full-blown mobility instead of the limited mobility that its licence allowed, the Telecom Dispute Settlement and Appellate Tribunal (TDSAT) came up with a 2:1 judgement that said Reliances unlimited mobility services had to be stopped. The government had only one option, to implement the order; or two, if you consider the possibility of not implementing the order. It came up with a third, a new policy!

The Telecom Regulatory Authority of India (Trai) came up with a recommendation saying that it would be a good idea to have a Unified Service Licence (USL), one licence that allowed telcos to offer any service, from landline to mobile to Internet, whatever. And in the interim, Trai said, why not unify the licences for mobile phones and landlinesthrough this fiction called the Unified Access Service Licence (UASL), Reliances service got legalised. A further twist: Trai argued that Reliances service would not have been illegal had it got a UASL a couple of years earlier, so it assumed Reliance had been given a UASL earlier but forgot to pay the licence feeso a penalty was charged for this default!

It was dj vu time last Tuesday. When telecom minister Kapil Sibal met telecom industry representatives, he said it was time to move on, to put differences between operators behind them (its another matter that all differences are with the government, which gave out the licences at a fraction of their market price!), and to move towards a USL!

Unlike Trai in 2003, Sibal has not spelt out the exact contours of how the USL will help fix the problem of Rajas licences and how this has badly distorted the playing field between the older and the newer players, but its apparent he is looking at USL as a possible solution to the problem. Whether the new policy gambit works as well as in 2003 remains to be seen, but its useful to examine what the policy can do.

A USL is a good idea to the extent it will mean there will be one revenue-share licence fee for all services. So, whether you offer long distance calls, Internet services or mobile phone services, you will pay 6%, say, of the revenues received as a fee to the governmentcontrast this with the 6-10% paid for mobile phones, 6% paid for long distance and nil for Internet services. Given this arbitrage has resulted in mis-classification of revenues, a single revenue-share is a good idea.

Beyond this, however, the move doesnt make much sense. Most of the incumbent operators have all the licences anyway, so what will they do with a unified licence So, may be the new ones would like a USL Well, an Internet licence can be obtained for free, theres a R5 crore cost for the long distance one. So do we really need a USL to provide long distance licences to some six operators for R5 crore each Will it lower the cost structure Will it improve efficiency Will it allow infrastructure sharing that is not allowed currently Will it lower tariffs Will it expand the scope of licences or just be a cumulative licence combining five different licences What will be the migration path for existing operators to this licencevoluntary or compulsory How will such a licensee stand in queue for spectrum in case they wish to offer mobility The list can be endless and the answer simply onetoday unified licensing will not serve any purpose so its talk is just a red herring to divert attention from the real issues.

Theres another interesting fact regarding unified licensing. After Trai recommended unified licensing in 2003 with UASL in the interim, the regulator submitted a full recommendation on unified licensing to the government (UPA) in 2005. This was later rejected by Raja as he went ahead and gave licences to his favourites using a later Trai recommendation. Later still, when one of the operator moved court against him, challenging his cut-off date and court ruled against Raja, a reference was made to Trai to understand how to tide over shortage of spectrum. Trai recommended that licences be delinked from spectruma variant of unified licensing!

Theres a common thread to the telecom story since 2001: blame all problems on policy, and then find all solutions in policy, in new policies. In 2001, Ram Vilas Paswan created a new policy called WLL to allow landline players a back-door entry into mobile phones by offering what was called limited mobility; in 2003, when this limited was made unlimited, the UASL policy was used to fix the illegality; in 2008, Raja blamed the existing first-come first-served policy to perpetuate his scam; in 2011, Sibal is proposing a new policy solution.

Long live policy!