Wednesday, May 23, 2012

NEWS & VIEWS TODAY= TELECOM SPECTRUM TANGLE = Way to Resolve = If Vision is clear, Path is clear = 24th,MAY,2012


1. Limit No. Of operators to 5-8
2. Adopt Revenue Sharing
3.  ENSURE BSNL, MTNL survive

1.       NEWS :-Commerce Minister Anand Sharma has opposed TRAI’s proposals on Spectrum pricing and has written to the Finance Minister very clearly about it. Leading GSM Operators have already severely criticized the TRAI proposals as “flawed, retrograde and regressive”. The proposals of TRAI will result in 100% increase in call Rates. Shri Anand Sharma has said, the proposals would result in  mobile companies losing over Rs.1 lakh Crores. 

VIEWS :- One of the Best regulators anywhere in the world – prior to this recommendation – was TRAI. Most of TRAI’s earlier recommendations enhanced the effectiveness of the Telecom Industry in expanding to the nooks and corners of India, keeping the TARIFFS at the world’s LOWEST levels.

But, thanks to the mindless expansion of competition introduced by Shri A.Raja in particular, and of course, there too, TRAI’s proposals were not that good, the telecom Industry players lost their profitability levels to the bottom-most levels, hovering very close to losses or actually incurring losses. Even as of today, none of the Telecom Players in India are anywhere near sound profitability levels, which can enable them to expand their networks and upgrade their Technologies. If they are still surviving and growing, it is because, these players have deep pockets to sustain at current levels of LOW PROFITABILITY/ LOSSES.

In my view, it is suicidal to expand competition from existing levels. Government must find ways to limit the competition to existing players. I do not think anywhere in the world, there are more players.

Simply because, there are 1000 people willing to enter the Indian telecom sector, will you allow all of them entry into it – at some level of spectrum / licence fees? The number 1000 must be looking ridiculous, isn’t it? It is ridiculous. Likewise, a hundred players in India is equally ridiculous. Even 25 players in each state of India  is equally ridiculous. About 6-8 is the utmost, the optimum that the telecom sector needs to have and can bear comfortably. Right now, I am looking at about 6 towers from my house, very near to each other – just looking ridiculous by their proximity. There were so many small birds in the vicinity before. But, now they are no more there. What is happening seems to be nobody’s concern. Are the human beings in any risk by such close proximity of so many of these towers? Every Operator claims that their tower by itself is within safe limits (which itself is in doubt). But, putting them all together, their combined emissions – are they in safe zone still for us? Who will  ensure that? TRAI must look into this aspect quickly. It has relevance to all future Telecom Planning.

Now, Mr.A.Raja wanted many more such towers all around us, with many more operators coming in, fighting among themselves – and perishing ultimately. That would be their fate ; 100 people cannot eat the same Bread – and expect to survive. Leave aside the fate of the operators; With so many more towers to come up all around us, what is our fate? Who will tell that? Who will assure that?

Enhancing Government revenue and bridging the budget deficit– seems to be the only concern today.
The immediate fall out will be that - many existing private telecom operators will run out of their money immediately – BSNL and MTNL have no money to pay for these spectrum fees proposed by TRAI any way – and the payment of the spectrum fees by private operators – will not guarantee efficient usage of spectrum thereafter.

The second impact will be – from a very efficient, VERY LOW COST telecom service as of today – India will immediately become very inefficient, very High Cost telecom service in the world.

From world’s LOWEST PRICED SERVICE  to  the world’s HIGHEST PRICED SERVICE ! A phenomenal change overnight.

Why is this sudden change in TRAI? I suspect  TRAI is also afraid of what CAG or courts may say later. I don’t think, such a feeling is warranted. TRAI  is neither an EARNER nor a SPENDER – but just a RECOMMENDER. It gives EXPERT ADVICE. CAG has absolutely no jurisdiction to criticize ADVICES given by EXPERTS in Regulatory Authorities. CAG is not the EXPERT  chosen to ADVICE. CAG’s jurisdiction is limited to the EARNERS/SPENDERS (Plus their internal IFAs) and not to external advisers/recommenders. So, regulatory authorities must not feel constrained by CAG, who has his duty neatly cut out.

Courts can find fault with an advice which is obviously flawed, which is accepted by Government with all those flaws and implemented to the detriment of the Industry or the consumers. Even in such a case, Courts find fault with Government – not with the regulator, whose OPINION, is just an opinion, and not binding.

So, what should the Government be doing? It must have its vision very clear, to start with. 

(i)                  India must have efficient but low cost telecom services, affordable for the maximum number of people. That is what India has achieved so far – thanks to TRAI, DOT and Government. But, for God’s sake, please do not upset this beautiful apple cart, merely because a coalition partner minister has created so many problems because of which, CAG and the courts are now breathing down on these decisions. Telecom will go the way of Airlines overnight, if Government accepts TRAI’s latest recommendations. The Minister, Sri Anand Sharma is absolutely right in what he said.

(ii)                Secondly, Please decide on how many operators in each circle – are enough. Please do take into account the number of towers that would be emitting these waves all around the people. Already, there are too many of them. There is really no need for more – merely because, Government wants to Auction the spectrum to whoever is willing to pay. You must have an optimum number in mind – keeping public health in mind. We want to survive and be sane – before we can talk on these mobiles. No studies are being done at all on the combined effect of these towers in so close proximity.

(iii)               Forget the Budget deficit – which is a temporary phenomenon any way. Why not a revenue sharing method, which brings in long term revenues, without hurting the telecom operators. Even BSNL and MTNL can still survive and implement these new technologies, if it is REVENUE SHARING – Not if it is to be the type of Auction being proposed by Government and TRAI. I do not think, CAG or Courts can object if it is REVENUE SHARING. If needed, Government can take the opinion of CAG and the courts as well on this further.

(iv)              Government has an investment of around Rs.1 lakh crores in its PSUs, BSNL and MTNL, after many years of LOW INVESTMENT, and high depreciation. BSNL and MTNL still have a huge public purpose. There are many remote places, where still BSNL is the main / sole operator, which Government can command to put up telecom services. Government must aim to keep its PSUs afloat and efficient. The latest recommendations of TRAI will certainly keep BSNL and MTNL out of the Auction – they just don’t have the cash resources to pay such huge spectrum fees any more. They are still employing 3 lakh people. Government has not been creating many Jobs; it should at least not do away with existing employment of this order, so suddenly by denying BSNL and MTNL the opportunity to EXIST. It is now RIGHT TO LIFE -  for these PSUs.

(v)                So, I suggest three parameters – (i) Limit number of operators to 6-8 maximum. Beyond this, it does not look good for Public Health. (ii)  Make the criterion Revenue sharing.(iii) Ensure that Government’s (Public) own investment of over Rs.1 lakh Crores in BSNL and MTNL  starts yielding some good return as in the years before and they do serve public purpose.

(vi)              If the VISION  is clear, the PATH is clear.

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