Unified licensing: A bad precedent

<div class="section1"><div class="Normal">There are many misconceptions about the government''s October 31 decision to unify the mobile and fixed telecom licensing regime - a move that has been speedily designed with one apparent objective, namely, to regularise the illegal mobile telephony services being provided by Reliance Infocomm on payment of close to Rs 1,600 crore.<br /><br />It has been claimed that unified licensing would help the consumer by providing access to latest technology.Trai has stated that consumers would benefit from a common customer care and billing system. <br /><br />Now, such benefits can also be available under a service specific system. Trai''s recommendations - which were accepted in full by the group of ministers and the Union Cabinet - add that customers would access latest technology.<br /><br />Since September 1999, all telecom licences issued are and have been technology neutral. In other words, the service provider can use any technology - GSM, CDMA or any other technology. <br /><br />The debate on the superiority of one technology over another is irrelevant in this context. Earlier cellular firms did not have a choice - their licences prohibited them from using any technology other than GSM. <br /><br />A short while before bids for the fourth cellular licence, firms wrote to the government committing large amounts for permission to use CDMA but these offers were ignored.<br /><br />Communications minister Arun Shourie has gone on record saying cellular operators have no case for compensation. <br /><br />Once again, the fact is that Trai unilaterally decided the compensation package, including the levy of a fine on Reliance, without any dialogue with any of the aggrieved parties. <br /><br />It is being claimed that the government acted tough by asking Reliance to shell out a large sum, that the entire exercise was akin to municipal authorities regularising an illegal construction. <br /><br />Once again, the reality is more complex. If one charitably assumes that half of the five million customers of Reliance would not have gone to it had its service been earlier declared illegal and if one assumes an international norm of $300 for acquiring a single mobile subscriber, Reliance would be gaining at least twice the amount it would currently have to pay to regularise its illegal service.<br /><br />In August 2001, Reliance had obtained a licence for fixed telephony for Rs 485 crore. If it had instead obtained a licence to provide all-India mobile services, it would have had to shell out more than three times the amount or Rs 1,633 crore - this was paid during the bidding for the fourth cellular licence and Reliance had opted out mid-way. <br /><br />The moot question is whether Reliance would have got the number of subscribers at the price it did if it had to fork out a higher licence fee and if the playing field had been level.<br /><br />The company subsequently used multiple registration and call-forwarding to provide national mobile services while claiming it was doing nothing illegal. This claim has been rejected by the government, Trai and TDSAT. <br /><br />On August 8, TDSAT Chairman Justice D P Wadhwa had cited judicial restraint for not using harsher language to indict government officials for favouring Reliance.<br /><br />The law may indeed be an ass. But by brazenly violating an asinine law, one firm does not become holy. Nor is it anyone''s case that existing players are saintly. <br /><br />Reliance may be the only truly private "swadeshi" telecom firm at present, but Shourie is fooling few when sanctimonious claims are made that unified licensing would benefit the customer.<br /><br />A bad precedent has been set. The message that Shourie has sent out is that you may break the law today and not lose your sleep for the law would be amended tomorrow.<br /><br />(<span style="" font-style:="" italic="">The author is director, School of Convergence</span>)</div> </div>