LEADER ARTICLE
Tinkering with Telecom: Undermining a Genuine Success Story

The war between the Reliance-backed Wireless in Local Loop votaries and cellular operators has everybody, from the nation’s apex court to the telecom tribunal to the telecom regulator to the minister concerned, excited. Also watching are the consumers, in whose name most of the duels are fought, but who, unfortunately have little say in the matter.
When the apex court recently referred the WLL issue back to the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), both parties claimed victory. The WLL operators because there was no stay on the roll out of new services, and the cell operators because of the stinging indictment of the TDSAT, which was faulted on not applying its mind to issues like level playing field and interconnect when the matter was brought to it earlier. In between, the minister started making noises about allowing a fifth, even a sixth licensee into the cellular segment, subject to availability of the so far elusive, spectrum. Of course, there is still the debate whether the FDI cap in the sector should be hiked to 74 per cent from the current 49 per cent or not. And if that is not enough, the terms of both TDSAT and TRAI members are coming to an end and hectic lobbying is on for the coveted positions.
Strange as it may sound, the issue is not really as difficult as it seems. It appears to have been made so to make it difficult for most to come to grips with it. Let us take a close look at the situation.
Although a lot has already been written and debated about CDMA and GSM, the current technologies for WLL and cellular operations, people who are still muddled by limited vs full mobility are missing the woods for the trees. In this era, when the future of telephony lies in mobile communications, none want to venture into the sector and be saddled with ‘limited mobility’ alone. Therein lies the real story. It does not need an expert to figure out why there is this sudden talk of fifth and sixth licensees, and the issue of making the telecom services technology neutral. However, while technology neutra-lity is welcome, the reasoning for more licensees raises a few eyebrows, as does the manner in which spectrum allotment is being handled.
The unavailability of adequate spectrum has been a bugbear of the cellular industry. Even as the subscriber figure grew, the absence of additional spectrum affected the quality of service. If that were the case in the four-operator scenario, how would it be tackled for the fifth and sixth licensee, one wonders. But under the guise of technology neutrality, a new view is being articulated.
In India, a limited amount of spectrum is allocated for CDMA. Out of this, 40 per cent each is allotted to BSNL and the private operator. The remaining 20 per cent is kept as a reserve for any operator on a first-come first-served basis. Last year, the regulator moved to take some spectrum away from existing operators so that there is some available for new entrants. Most view this as an attempt to free spectrum for a favoured new player. Whatever might be the justification behind the move, it is fraught with the risk of litigation from the existing spectrum holders, whose licence agreements clearly mention their share of the existing spectrum.
The issue of raising the FDI cap from 49 to 74 per cent is another contentious one. Those opposed to the move cite security concerns, and those favouring it say it is the only way much-needed cash would flow into the sector. Some have also expressed fears that the hike is being pushed only to help some launder their money currently stashed overseas. The incorrect premises justifying the hike in FDI cap in the recent N K Singh report did not help either.
The other way of looking at it is that some companies have already ceded control illegally to foreign management. By increasing the cap, it would merely legitimise the move. The question, however, is that those who chose to go by the rules and didn’t do anything illegal stand to lose out in the process. It is like the tax amnesty schemes announced by the government from time to time. It pardons the defaulter while not rewarding the honest person.
Another issue is the constitution of the new telecom regulatory authority. The term of most current members is ending soon. Going by the supine manner of its functioning, not many, except those whose bidding it did unabashedly, will miss them. There have been reports that some of the present ones are being induced with various offers, and threats, to deliver the goods before they leave. The minister too is guilty of meddling frequently with the functioning of an ‘independent’ body. The result has been an erosion in the institution’s status.
Telecom has been one of the genuine success stories of the Indian liberalisation process. However, instability in policy regime, and the other issues mentioned earlier, have muddied it completely.
There must be recognition that this sector is an important growth engine of any economy. In this country, unfortunately, due to bad driving, this engine needs an overhauling. It would be in the larger interest of the sector that all the issues are studied carefully, remedial measures applied, and only then any major decision taken.