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Paranjoy Guha Thakurta

Given the long history of botching up telecom policies, it is hardly surprising that the Government should be accused of favouring one company by introducing a unified licensing regime. As in the past, this time as well, the Government has not been transparent and fair, says Paranjoy Guha Thakurta, recounting the story of the great Indian telecom tangle.

THE GOVERNMENT'S decision of October 31 to have a system of unified licensing for telecommunications operators has stirred the proverbial hornet's nest, with mobile phone companies claiming that the powers-that-be have gone out of their way to favour a particular company, in this case, Reliance Infocomm. The Union Cabinet approved the recommendations of the Telecom Regulatory Authority of India after they were vetted by a Group of Ministers led by the Finance Minister, Mr Jaswant Singh, with exemplary promptness. Yet, ironically, the fact that the Government acted as expeditiously as it did has made many wonder if the entire exercise did not have a single not-so-hidden objective, that is, to make Reliance's `limited' mobile service unlimited, post facto.

A look at the past to examine how telecom wires in the country got badly tangled could perhaps throw more light on the situation prevailing at present. In 1994 the Congress(I) Government headed by Mr P. V. Narasimha Rao, decided to allow private players enter an industry that had hitherto been the exclusive preserve of the public sector. The Communications Minister at that time was the rather colourful politician from Himachal Pradesh, Mr Sukh Ram. Acting against the advice offered by many experts at that time, the minister went ahead with a complex system of auctioning licences for particular telecom circles to the highest bidder after a placing a cap on the number of circles one company could bid for.

Though it was never explicitly stated, most knowledgable observers agreed even at that time that such a system could never be viable in the long run. Particular companies, including Himachal Futuristic Communications Limited, bid exorbitant amounts for licences. It was evident that after paying such high licence fees, operators would have to necessarily make their services very expensive or go under. This, in turn, would restrict the number of potential consumers of mobile telecom services. The Bharatiya Janata Party had vehemently opposed the manner in which the telecom licences were auctioned and even kept Parliament engaged on this issue for two weeks in May 1994. The party, together with the entire Opposition, was extremely critical of the then government for its alleged lack of transparency.

After the United Front Government came to power in May 1996, raids were conducted by the Central Bureau of Investigation on Sukh Ram's residences, which yielded a record sum of Rs 3.5 crore in cash. The fact that the party Sukh Ram formed later (after he was thrown out of the Congress) tied up with the BJP to form the government in Himachal Pradesh, may only be tangentially linked to the great telecom tangle. But what subsequently transpired is that the telecom licensing system eventually had to be scrapped and replaced by a revenue-sharing arrangement by the Atal Bihari Vajpayee Government.

It is also a historically significant truth that the Cabinet decision in this regard, coming as it did on July 6, 1999, five days before the Election Commission formally announced the dates of the 13th general elections that were conducted in September-October that year, raised the hackles of those opposed to the BJP and was even questioned by the then President, Mr K. R. Narayanan. The BJP argued that it was necessary to go ahead immediately with the introduction of a revenue-sharing system for private telecom operators to prevent firms from going bankrupt. Its political opponents, on the other hand, alleged that the decision was aimed at benefiting a few operators at public expense.

It was around this time that bundles of what were supposed to be `confidential' documents were leaked to the media. One such document purported to list a host of objections to the revenue-sharing arrangement raised by the Department of Revenue in the Ministry of Finance. The then Finance Minister, Mr Yashwant Sinha, acknowledged that he was party to a decision that had been taken by the Cabinet as a whole. Thus, evidently, objections raised by individual ministries were over-ruled. It should also be remembered that the Attorney-General of India, Mr Soli Sorabjee, gave two sets of diametrically opposite recommendations relating to the transition from a licensing system to a revenue-sharing arrangement.

Further, the Vajpayee Government had not exactly covered itself with glory when it moved the former Communications Minister, Mr Jagmohan, to the Urban Affairs Ministry. The Prime Minister, Mr Vajpayee, himself took over the Communications portfolio. Mr Jagmohan had taken a tough stance against private telecom firms insisting that the operators fulfil their contractual obligations. He had reportedly even approved a decision to cancel the licences of a few firms and encash bank guarantees as a penalty.

The other historical aspect of the telecom tangle that should be recalled is the open confrontation that had taken place between the Department of Telecommunications and the regulator, TRAI. The two had publicly fought turf battles on questions of jurisdiction. On March 11, 1999, Mr Jagmohan told Parliament that the government had decided to "keep in abeyance" the revision of telephone charges recommended by TRAI, supposedly an independent statutory body. Mr S. S. Sodhi, the retired judge who was then TRAI Chairman, had accused the government of undermining the authority of the regulatory body by delaying the revision of local and long-distance telephone call charges and rentals. Mr Jagmohan's decision was apparently on account of opposition from one of the BJP's coalition partners, the Trinamool Congress headed by Ms Mamata Banerjee, who claimed that the new phone rates were against the interests of the poor and those not residing in urban areas. TRAI argued that the opposite was true — that local call charges had gone up only marginally whereas long-distance charges (for phone calls within the country as well as outside it) had come down substantially. The authority also claimed the new rates had been proposed after extensive consultations.

Given this long history of botching up telecom policies, it is hardly surprising that the Government is today being accused of favouring one company by introducing a unified licensing regime. In the name of "limited mobility", the company provided all-India mobile telephone services using call-forwarding and multiple registration bypass the letter of the law that the operator's services should not go beyond the short distance charging area. While Reliance claimed it has not violated the law, the Telecom Dispute Settlement Appellate Tribunal, TRAI and the Government have all formally differed.

On August 8, in his minority judgement, the TDSAT Chairman, Mr Justice D. P. Wadhwa, cited judicial restraint for not using harsher language against government officials who had favoured Reliance. Could the company have got the number of subscribers it did (around five million) if its service had earlier been declared illegal? Could Reliance have offered its service at the price it did if the playing-field had indeed been level and if the firm had paid three times the amount it did for an all-Indian cellular licence in August 2001? The answers to these questions should be evident.

The Government's move to allow Reliance to regularise its service by forking out close to Rs 1,400 crore is bound to be challenged in court. The Communications Minister, Mr Arun Shourie's claim that the new regime may usher in a new litigation-free era for the telecom sector is wishful. Those who do not learn from the past are condemned to repeat the same mistakes in the future. As in the past, this time as well, the Government has not been transparent and fair. The story of the great Indian telecom tangle continues.

(The author is Director, School of Convergence, International Management Institute, New Delhi and a journalist with over 25 years of experience in various media - print, Internet, radio and television. He can be contacted at paranjoy@yahoo.com.)

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