The Hindu Business Line : Telecom rush

An index of a thriving industry is the number of new investors willing to take a bet on it. With about 8 million subscribers enrolled in just one month, August, the telecom industry is seeing a momentum quite unparalleled and it is no surprise that nearly a dozen companies are willing to throw their hat into the ring for licences to operate mobile telephone services. Some of them are new avatars of existing service providers; others are new to the field, albeit with deep p ockets; and a few are of unknown background. In many other spheres, the simple response to such applications would be to invite them all right away into the business arena. It is not so easy in telecom, especially in wireless, which is constrained by the frequency spectrum that can be made available to service providers. At the moment there is not enough to go round the existing cellular service providers in cities of intensive use such as New Delhi and Mumbai. At least that is what the operators claim, even if the regulator contends they have enough and more for the number of current subscribers.

Yet everyone concedes that before one or more of the new players can be allowed into the ring, new chunks of spectrum need to be obtained, indeed prised out of the clutches of the Ministry of Defence, whose communication networks happen to ride, extravagantly some say, on vast swathes of frequencies. The constitution of an inter-disciplinary technical committee to identify the spectrum lying unused by the Defence Ministry is classic bureaucratic overkill, but if that body can resolve an issue in “a few weeks” what could not be done for over a year now, it will get but commendations.

In the meantime, the Telecom Ministry must formulate its strategy on how it will distribute or allocate the new spectrum to the applicants and to existing players who are asking for more. Do the current players need to get priority? Should the applicants, who have been lining up for several months now, be treated on a first-come-first-served basis? It is obvious that when demand is greater than availability, all these questions will crop up, but the Ministry would do well to steer clear of them, and pitch instead for a transparent auction of the spectrum, which should be open to all those interested and serious about providing high quality mobile services. An auction not only spells fairness; it also will fetch the highest fees possible for the spectrum handed over, which is important, though not crucial, for the Telecom Ministry that may have to compensate the Defence Ministry for vacating the spectrum. From the kind of interest displayed for leasing the spectrum, there ought to be no problem in collecting the Rs 5,000 crore the Defence Ministry needs for investments in alternative communications links.

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