Supreme Court Verdict on = 2G LICENCES MUDDLE = WHAT MUST BE THE ROAD AHEAD?

Supreme Court Verdict on

2G LICENCES MUDDLE

WHAT MUST BE THE ROAD AHEAD?

The SUPREME COURT’S VERDICT in the 2G licences case, cancelling 122 telecom Licences issued under A.Raja’s directions, is MOST WELCOME.

No one should argue for Protecting a Licence which was ab-initio controversial, illegal, bad and not in the best interests of the Country. It was illegal when it was issued. Therefore, it ought to be cancelled.

What is UNFORTUNATE  is that it has taken so much time to bring out the truth – even now partially only – that the issue of Licences  under A.Raja was illegal, unethical and not in the interests of this country.

The “DEVIL QUOTES THE SCRIPTURE” is a principle used unabashedly by Sri A.Raja to justify the MOST UNJUSTIFIABLE DEEDS in issuing the Licence.

Essentially there are 2 areas where errors and illegalities have occurred.

One is the PRINCIPLE  to be followed. There are 2 routes / principles for granting Licences (1) First-come-first-served  and (2) Auction.  The other is the the actual process followed in implementing the principle.

First-Come-First-Served is a principle that can be followed in the first introduction of a huge, much needed public scheme, when there are no experienced players in the country, and where granting of licences to any tom-dick-or-harry who approaches Government by paying huge licence fees, without the ability to introduce the scheme – is not in public interest.

We need to identify the public need in such cases – and be very clear on what the country and the people need. For instance, for establishment of Hospitals in rural areas, Government can give  free land, subsidized  electricity and waive all Licence fees and taxes – if the person offering such services is a devoted, experienced person fit for the Job. You can’t give such a Licence to a Liquor baron or people whose interest is earning money, not serving people.

This principle is still valid and needed in such cases. Establishment of Hospitals, medical colleges, schools, orphan homes, Old age Homes etc is needed in India in a Big way – and the deserving persons, rightly identified through right criteria, need to be encouraged through the first come first served principle. There is NO PROBLEM, if they too make some money ( deserving for their work) in the process. That need not be grudged. But, if we grant permissions to a person without ethics and without people’s interests in mind (say, for establishing medical college) – he will charge huge, (under the-table) capitation fees, admit undeserving persons and grant degrees of questionable merit. And the Doctors, who come through such methods will indulge in all UNFAIR PRACTICES towards their Patients.

The initial introduction of Telecom services in India in a Big way – was one of the biggest needs of India and Indians – and it probably needed the Auction route at that time.

In fact, Government itself kept the prerogative of offering telecom services to itself, through the DOT / BSNL for a long time (Over hundred years) keeping it not as a commercial proposition but as a service. But, the monopolistic service became so inefficient and corrupt – that it was not expanding and not serving the PUBLIC, fast enough for India’s growth.

It was GOOD that India decided to grant licences to private players to introduce mobile and landline phone services in India. It was good that the Licence fees at that time was kept reasonably LOW and  AFFORDABLE – and India today is reaping its Benefits through the FASTEST EXPANDING TELECOM MOBILE NETWORK anywhere in the world, with the LOWEST TARIFFS  anywhere in the world.

It was also GOOD that India granted licences to a LIMITED NUMBER of entrepreneurs – who rose up to the occasion – and brought in the best of technologies. Reliance and TATAs brought in CDMA while others brought in GSM technology. GSM became more popular and CDMA did not gain much acceptance. That is of course Market Dynamics. The Odd man in the game at that time was Sunil Bharti Mittal whose credentials at that time was merely of the FIRST MOVER. But he proved his mettle in a resounding way.

We do need to remember the hurdles created for these private players by the incumbent operators – without trying to compete with them in a fair manner. But, some private players also were adopting unfair business techniques – to cheat the incumbent operators. This is INDIA. Fair Business Practices  and Transparency in operations is not everybody’s game. Some follow; Some don’t. There wasn’t a strong regulator to check them initially. Then came TRAI – and introduced some sanity into the business operations of all players.

Land Line was dying – and nobody was crying. Not even BSNL. Land line did not need to die. But, Government Policies – both at  Centre and in states – and the perennial bungling by Incumbent operators ensured that LAND LINE has to die.

That was the BIG OPPORTUNITY for mobile operators. They grew fast. More Indians talked more on their Mobile phones – at much lesser cost. And, Mobile operators made good money and fair enough, they ploughed back the profits into the same business again.

INDIA was clocking the FASTEST RATES of telecom Growth. In this background and context, the question arises – did we at all need to issue huge number of new Licences again – to new operators - additionally.

Considering the CAPITAL COSTS  involved INITIALLY, India needed to issue state-wise licences, and even city-wise licences. But, that time is LONG PAST. Today, we only need PAN-INDIA LICNECES for all operators – and their number need not be more than 6 or 7. Today, we do not need state-wise licences. Today, we do not need first-cum-first served principle.

What was GOOD 20 years ago – is BAD today. If it is applied now – it is like Devil-quoting-the-scripture.

But, we do need to allow all incumbent operators to establish telecom services with PAN INDIA footprint. That is the easiest way – to proliferate the services Fast. They all need to be given the first mover advantage – not merely BSNL. We need to recognize that with the huge existing competition – many operators are not making any money – but are carrying on – despite low profits or even losses. And, 2 LOSS MAKERS  are Government’s own BSNL and MTNL. There are others in the Private sectors. There is therefore need to ensure that the Industry as such remains healthy and profitable – as all profits are being ploughed back into the Industry itself, by all incumbent operators. That needs some recognition.

In my humble opinion, NEW OPERATORS were actually not needed at all. We had enough of incumbent operators – struggling to make a decent pie in telecom Industry already. It would be foolhardy to expand competition when the best of operators here is not making enough money and is investing his money in foreign countries – in the same telecom market.

If someone wanted to enter an already crowded Market - India could choose, based on the OFFERER’S  world /Indian track record, his intent, his technology and so on. There was no need at all – to go for opening the LICENCE RAJ  in such a Big way – to pull down an Industry which served India so well.

The real scam was therefore - issuing hundreds of LICENCES – without choosing the BEST ENTREPRENEUR who can offer the BEST SERVICES at BEST TARIFFS. Telecom is not a field for start-ups now. That time has passed long ago. This is the time for the BEST OF THE LOT  to come in to offer the BEST OF SERVICES at the Best Of Tariffs.

Yes. A Reliance Under Mukesh Ambani could be a good bet – for offering Broadband wireless Access service. But, Reliance did not come directly. It bought a company, which got the Licence. And, that would be a monopoly! Isn’t that a bad Mistake in itself? There should have been at least 3 players with such licence for a new service. And, the Licence fees should be more moderate – so that all incumbent operators would have taken it and offered the same. Don’t we need GOOD WIRELESS BROADBAND from all Incumbent operators?

The Auction route is intrinsically FLAWED  for that one reason. In an auction route, people do quote astronomical prices – just to get the Licence. And then, they fumble in providing the service – or they sell the licence – or get themselves acquired by bigger players – for a fat profit. In this case, did Government judge INFOTEL or RELIANCE? Yes. Reliance is better suited. But, why did Infotel get the Licence at all then? The Auction route – when you don’t look at the credentials of the applicant and his long term capabilities (and his intentions) is absolutely FLAWED.

Auction is good for pure Business propositions where no significant public Interest is involved. The only thing good about it – is that Government gets the fattest one time cheque. But, what will people get and when? If people don’t get a wireless broadband for 2 years – what for was the auction then? Will people get wireless broadband at a decent price or at a huge price? Who will ensure that? These are questions which will come in a monopoly licence case.

What about the 2G licences that were granted by Sri A.Raja? There is the larger question whether he only is to be Blamed – or - all those who did not question him and all those who did not stop him too should be blamed.

It is a relevant question, no doubt. Why did the whole Government, including the entire Cabinet and the entire Bureaucracy, remain silent spectator of a single person, who would flout every norm to suit his whims and fancies? The PM can certainly point out to the  single, wise comment he made – which we do appreciate – but that does not minimize the responsibility for the glaring  misdeeds happening under HIS GOVERNMENT, which was not A.Raja’s Government, any way. But, coalition Politics do have some compulsions of this sort, which Indian voters need to keep in mind.

Admittedly, Dr.Manmohan Singh is of an impeccable personal track record, probably the best face of a Prime Minister that UPA can offer.

The irony, however is, the allies were not willing to listen to his SANE VOICE. Many feel, that even congress leaders were not listening to his sane voice.  In a Democracy, it is essential that Prime Minister is accepted as the UNDISPUTED LEADER  of the Government and his final decisions, even if slightly flawed and causing differences, are accepted by all allies and congress itself. That is not happening.

In this context, A.Raja’s blatantly personal decisions, beyond all accepted norms, needed to be annulled. It should have come from the Government itself – but, it came from Supreme Court. Democracy is working, and it is good. Democracy is not represented only by Government, in which not many listen even to a Good prime minister. Democracy is also represented by the Opposition Parties, the Supreme Court, the Free Press and the people’s voices (Like that of Team Anna). All are different faces of Democracy. If and when the Prime Minister decides to take the decision making into his hands, I think, all arms of democracy will support him fully.

No one should contend that simply because Supreme court quashed a flawed a Government order, Democracy has collapsed. It is FLAWED LOGIC.

There was almost nothing to defend in Shri A.Raja’s decisions. So, it goes.

Now what?

Let the cancelled Licences remain as such. Let the incumbent operators get additional spectrum as per needs at a market related rate. Let India not crowd the telecom space with huge number of additional operators and kill all of them through unfair competition. There is unfair competition in Telecom space. Every New operator uses the network of all incumbent operators – without paying them the fair price for it. The licence fees he pays  to Government is not compensation for use of Networks of all operators. Second – every New operator tries to fix lower and lower prices – which suits him – but not the incumbent operators who are already incurring losses / low profits at rock bottom prices even while expanding their Pan India Net works.

The Regulator, TRAI, is not active, in fixing some bottom level ceilings on Tariffs – to prevent unfair unfair competition (in tariffs) to protect even Government’s own operators like BSNL.

It is one thing to be proud of running our telecom services at world’s lowest tariffs. It is an entirely different thing to drive down tariffs much below that -  and kill our Industry in the process. It is necessary that TRAI comes out with some lower ceiling at this time – so that only the most serious of the NEW OPERATORS will again bid for licence and there will be fair competition. There is also the need to protect to some extent, the BSNL and MTNL – even while making serious efforts to make them more efficient. A Government operator in Telecom is needed – and it does make sense for a Nation of this diversity.

A pure Auction – achieves none of these National OBJECTIVES – it only achieves higher one time money to Government. In the process, it can bring in UNFAIR and NON SERIOUS COMPETITION. Therefore, Government must bear in mind the following :

Ø  Auction must be for PAN INDIA LICENCES covering all states – and not for a few, lucrative cities/states.

Ø  Auction must be with strong roll-out responsibilities.

Ø  Auction must be for ROBUST  technologies, supported by the technology manufacturers.

Ø  Offers must be supported by strong financials.

Ø  Auctions must not just aim at huge one time money for Government coffers – but achieve long term (Country’s) objectives.

Ø  Auction must protect Government’s own operators – even while making them more efficient.

Ø  The whole process – must be TOTALLY TRANSPARENT – FROM DAY ONE.

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