Wrong call

By questioning the Centre’s decision allowing Reliance Jio to offer voice telephony using spectrum it had originally got for broadband services, the Comptroller and Auditor General of India (CAG) has probably overstepped its brief. The CAG’s primary role is to raise a red flag if irregularity in procedures followed by government departments or public sector undertakings result in any revenue loss to the exchequer. It shouldn’t grapple with policy decisions of the Government implemented in a transparent manner without discrimination between market players. In this case, the issue is a policy in 2013 that permitted internet service providers (ISP) having broadband spectrum to launch voice telephony services by paying an additional ₹1,658 crore.

True, Reliance Jio had in 2010 acquired pan-Indian airwaves in the 2300 MHz frequency band at a fraction of what operators paid for 2100 MHz or 3G spectrum. But unlike the 2100 MHz airwaves used globally for 3G services, the feasibility of the 2300 MHz band wasn’t established. For a spectrum band to be commercially viable, it needs both suitable propagation characteristics as well as an ecosystem of compatible and cheap mobile devices that can run on these radio waves. The 2300 MHz band suffered on both counts; it was at best seen only as an alternative to fixed line broadband services. The CAG’s argument that the Centre may have received higher bids if it had made clear that voice telephony would be allowed on 2300 MHz prior to the 2010 auctions, therefore, falls flat. The fact is Reliance Jio hasn’t been able to roll out any services on this band till date, which has to do with its poor propagation characteristics. That’s also what forced the company to pay over ₹11,000 crore for bagging additional 1800 MHz spectrum in the most recent auctions – four years after shelling out ₹13,000 crore for airwaves in the 2300 MHz band.

As regards the permission granted for ISP licencees to offer voice telephony by paying a one-time fee of ₹1,658 crore, this was part of a migration policy to a unified access services licence regime. Under it, operators were allowed to use spectrum purchased through auctions for offering any type of service — including voice, data or mobile entertainment. Now, just as all auctions held between 2010 and 2014 were open to all players, the migration policy was applicable to all without discrimination. Having bought spectrum through open auctions both in 2010 and 2014, Reliance Jio cannot really be accused of receiving any favour. But more than anything else, interventions by constitutional bodies such as the CAG on policy matters undermine the Government’s ability to take decisions in a dynamic economic environment and in industries where technology is fast-moving. In the Reliance Jio case, the CAG has made a wrong call even with the luxury of hindsight.

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