Date:17/11/2002 URL: http://www.thehindu.com/2002/11/17/stories/2002111702961100.htm

National

Industry not content with lower cellular licence fee

By Our Special Correspondent

NEW DELHI NOV. 16. Though the Communications Minister, Pramod Mahajan, has made it known that the Government was about to lower the licence fees for cellular companies, the industry, particularly MNCs as well as a few respected names in the Indian corporate sector, remains unmollified.

The industry believes that all the issues raised by them in identical missives to the Prime Minister, Atal Behari Vajpayee, remain unaddressed. A cut in licence fee will benefit companies across-the-board and will still not address the problem of the National Telecom Policy' 99 tenets being altered on a purely ad hoc basis.

These companies feel that capriciousness in telecom policy has desisted them from planning for a further round of investments. Most of these companies have substantial exposure in the sector. They are worried over several issues, including favouritism towards the State-owned MTNL and the BSNL, spectrum management and the Government's move to allow unlimited competition.

"The cellular sector is carrying huge losses and there still remains some grave concerns that are threatening the very existence and economic well-being of the cellular industry,'' wrote the Chief Operating Officer of the Hong Kong-based First Pacific Company Limited to Mr. Vajpayee.

The Escorts CEO, Rajan Nanda, points out that even after eight years of private entry into telecom, India still lacks a world class interconnect regime. The regulator refuses to ensure interconnection or intervene in spite of massive misuse of market power by the incumbent. "Unfortunately while interconnection is solely a regulatory power, there are hints of Government intervention, which are worrying as it is against the TRAI Act and represents commercial conflict of interests.''According to Mr. Nanda, over 80 lakh cellular subscribers are subject to a discriminatory access fee regime. This is not only against the international best practices but also prohibits cellular companies from providing free incoming calls for their subscribers.

Hutchison Telecom stresses the need for a more stable environment "given the lengthy gestation period for investments.'' "While there is a need for policy to keep pace with continued developments, the changes to such policy must be the result of a fair and transparent process. NTP '99 was the result of lengthy investigation and consultation process and the result was commendable. To see such a policy overturned by ad hoc statements without opportunity for the industry to be heard is of great concern,'' observes the Hutchison Telecom Managing Director, Dennis Lui. The company has invested over $ 1 billion and is prepared to make further investments provided there is greater clarity in the policy.

Hutchison complains about the lack of spectrum management policy. "Lack of spectrum means all operators are constrained to be inefficient producers and this cost is passed on to the consumer. The talk of offering further licences when current operators (and accordingly blocking spectrum) are at such low levels shows a lack of regard for the genuine needs of the existing operators and ignores the significant amounts they have contributed to the Indian Government by way of entry fees, licence fees, sales and service tax and employment opportunities,'' Mr. Lui says.

In an apparent response to charges of predatory pricing by the BSNL, the TRAI has issued a clarification. Companies have claimed that predatory pricing announcements have been cleared by the TRAI without any regard to its impact on competition. Mr. Nanda has alleged that predatory pricing is not only ignored but also encouraged in the Indian context by the regulator.

The TRAI has noted that there appeared to be a lack of clarity on the tariff approvals for BSNL's cellular services. The pre-paid tariffs were approved as an `introductory offer' for 90 days and before the end of this period, regular and duly approved tariffs should be introduced by the BSNL, the TRAI said.