If there’s one thing that’s going well for the telecom sector it is the Chairmanship of Rahul Khullar at the Telecom Regulatory Authority of India (TRAI). Under Khullar, the TRAI has made some landmark proposals including allowing spectrum trading and a fool proof mechanism to curb tele-marketing calls. His most recent recommendations on the next round of spectrum auction have been hailed by the industry as one of the most thought out proposals yet. But the biggest challenge has been to convince the Government to implement most of these well meaning proposals. In an interview with Business Line , Khullar responds to some of the criticisms leveled at recent recommendations made by the TRAI in the telecom and broadcasting sectors.

The industry has been saying that there is not enough spectrum for a while. Why is it that the TRAI and the Government did not take measures to make available spectrum earlier?

If you recall, TRAI in its earlier consultation paper and recommendations had asked the Government to announce a roadmap for spectrum availability. We had raised this issue earlier, but yes we hadn’t realised the magnitude of the problem. What has happened over the last six months is that data usage has grown hugely. As users start downloading more videos and with increased penetration of smartphones, the telecom networks are not being able to carry the load with the given amount of spectrum. What has become absolutely clear is that if the Government conducts the immediate supply constrained auction, it will have serious fallout for consumers, the industry, the banking sector and even the Government. It’s not as if some sort of wisdom has dawned now but we have realised that we are so acutely short of spectrum that if we do an auction now it will lead to grave difficulties. So, DoT should think of augmenting supply.

One of the things you have proposed is to get 1.2 MHz from BSNL. But won’t that be like robbing Peter to pay Paul?

No it won’t be. In most places BSNL has 6.2 Mhz, so even if we take 1.2 MHz away they still have 5 MHz which is enough given the number of subscribers they have. Private operators are managing ten times more subscribers with the same amount (or lesser) of spectrum; so what’s wrong in asking BSNL to become more efficient. In any case, BSNL has not paid anything for this spectrum; then surely the Government has the right to take it back. By taking back 1.2 MHz from BSNL, it will be possible to make available one more block of spectrum. The price of 5 MHz block is going to generate upwards of Rs. 15,000-20,000 crore.

Your proposal to create an extended GSM band has been opposed by one section of the industry. Is that a viable proposition?

The Authority if not hellbent on E-GSM. It is only one of the options. It is simply not possible for the Authority not to tell a new Government that there is this option. We have proposed other ways too. For example, we have said that within 900 MHz the Government must re-assign frequencies and if they do this then you will get additional blocks of spectrum. On 1800 MHz too we had said that the biggest thing one can do is reorganise allocation. This will release spectrum in many areas. Any additional spectrum in 1800 Mhz will alleviate the pressure on 900 MHz. Similarly we had said that 2100 Mhz should be made available. If you have 2100 Mhz then it will relieve the pressure on acquiring 900 Mhz.

As demand for broadband grows, how will you deal with the demand for more spectrum?

We had sent our suo motu recommendations on 700 Mhz; these are still awaiting the DoT decision. We had said that 700 Mhz should be auctioned in 2015, giving enough time for an ecosystem to develop. Then, in the 2500- 2690 MHz there is 190 MHz which is available. You have to decide how you are going to use it. This can accomodate 5 operators with 15 MHz each. If DoT gives a roadmap for 700 MHz and 2500 MHz this will give a signal of what is coming and then the pressure will ease up.

Does this question the wisdom of refarming and gives credence the operators’ to earlier demands for licences in perpetuity?

When refarming was put on the table, the operators raised the argument that the spectrum bundled with the license was theirs in perpetuity. This was largely because at that time the price for spectrum was set way too high. But, in the February 2014 auction, after we lowered prices, the operators bid. 900 MHz was being offered at a reasonable price and then there was 1800 MHz as a fall back. All we are saying today is that put enough spectrum at a reasonable price on the block; if then the operators lose out in the auction then it’s their bad luck.

Will you give your pricing for 2100 Mhz and 2300 Mhz ?

Ans- We have asked DoT to give us some details on 2100 Mhz availability. We need to know the supply situation and how much they plan to auction. If there is no supply, what use is it setting a reserve price? On 2300 Mhz, so far roll out had not happened; so even if you have this spectrum, is the DoT sure there are any takers? Either you wait till roll out happens and the ecosystem develops; otherwise whatever reserve price is set, you may end up having to sell it far too cheap.

Many operators are struggling but have no way to exit. Should there be a rethink on exit policy?

In the telecom business the most important asset is spectrum. If any operator wanted to exit the only thing they would get some value for their spectrum. The Government has taken the position that if anyone returns spectrum then they will not get any compensation. In effect the most important asset has not resale value. This is why we said trading should be allowed. Trading allows you to be able to sell your spectrum to another party if that party is not interested in taking over assets like network and employees. M&A is another way, but the industry has told the Government that existing M& A guidelines don’t work. Untill you get reasonable trading and M&A guidelines out, exit is simply not possible.

There have been demands for regulatory intervention on issues related to Over the Top players and telecom companies. Have you taken a view on this?

We are putting together a consultation paper on this. There is clearly a problem. Both sides have their version on what needs to be done. In countries like Germany and France, if you are providing communications services and are using the Internet, then you have to be subjected to some regulation to bring parity. France, for example, has told Skype to pay charges. Germany is also looking at separating applications which are communications services from those which are non-communication. So, if you use Flipkart or Amazon, it is not a rival to communications providers. In many countries, they are moving to a toll booth model, where the OTT service provider pays higher for super express lanes and there is also a free lane where there is revenue share arrangement. Toll boothing is common in many parts of the world. But having said that, let me clearly say the Authority will not take a decision or a position untill the consultation process is over.

In your recommendations dealing with cross media ownership, you have expressed concerns over corporate ownership of media but you have not given any specific proposals. Why?

There were some who said Trai should impose equity caps on corporates ownership in media. But it is a fundamental right for anyone to do business. So for the Authority to arbitrarily suggest an equity cap would not have been right. Suppose we say no corporate ownership then are we saying that we will allow media corporates to function but non-media corporates cannot? That’s not fair. The Authority pointed out the serious problems associated with corporate ownership and the Government should take this into account and balance it with the objective of being fair to business.

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