A spectrum of questions

D. P. S. Seth | Updated on October 06, 2011 Published on September 29, 2011

Auctions for the spectrum for BWA (Broadband Wireless Access) services were successfully completed more than a year ago. Several major players have successfully participated in these bids, even though only one player has a possible pan-nation footprint. Prospective customers have been waiting for the launch of these services. Reports of extensive field trials of equipment have been filtering in through the press. It was expected that the news of the date of the actual launch of BWA services by several operators would be announced any day.

However, even before such a thing could happen, it has been reported that the license of a major international participant, who is stated to have brought in $1 billion Foreign Direct Investment (FDI), may soon be denied a license. The reason being mentioned is that this company has not applied for the mandatory Internet Service Provider (ISP) license within the time limit prescribed.


This raises several important questions for the telecom sector. It is well accepted that the bidding process was a transparent process and, therefore, this company, along with the other winners, has won the spectrum bid in a fair and square manner.

Having successfully completed a spectrum auction, for which the government received well-deserved kudos, one should have thought that the government approach would be to regard all bid winners as partners in the attempt to spread the broadband revolution in the country. It is well-known that advanced countries, such as the US and Japan, often sit down with industries and work out plans and smoothen wrinkles to ensure suitable and efficient investments in sectors which are considered critical for the advancement of their economies.

The reports seem to indicate that, in this particular case, the license is proposed to be denied because the company applied for ISP licenses in four circles through four different nominees, whereas they should have done so through one nominee, properly introduced by the bid-winning company. The company in question seems to interpret the Notice-Inviting Bids documents condition differently, and therefore claims it had met the condition.


If the government felt that one of the bid winners was not entirely meeting the stipulated conditions, it could have urged it to do so in the interest of getting the service started rather than wait and disqualify it on what appears to be a technical issue of different interpretation. (Since the action would have been after the successful completion of the bidding process, it couldn't have been treated as tempering with the tender).

The question that one asks is if the government should be playing the role of an enabler or a strict monitor in such a situation. As already mentioned, several advanced countries have benefited immensely through the enabler role, and for a nascent broadband sector in India, the Government of India will be well justified in taking a similar role upon itself. It is only hoped that this isn't the backlash of all the recent happenings in this sector.

The second question that arises is the impact of such a decision on foreign investments in our country, since the company involved is a major international giant. The message that goes out has negative vibes for future investments, which are already under threat in the telecom sector, as a result of regulatory and policy uncertainties due to recent events.

The third issue relates to the fact that, in four important circles, competitive service offering will be missing till a fresh bidding process is completed, and service is actually launched. The Indian customer is by now well-aware of the advantages of competition, and therefore would certainly not like having to live in a non-competitive market.

(The author is a Member, TRAI.)

Published on September 29, 2011
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