Opinion - Editorials

Clearing the telecom muddle

The kind of growth the mobile telephone service business has shown in recent years does India proud. With the number of wireless phone connections approaching 210 million, the country leads the world in the monthly accretion of new mobile subscribers through attractive low prices. Correspondingly, telecom industry revenue grew by more than 20 per cent to Rs.106,000 crore in 2006-2007. Super profits have accrued to the service providers and operators, with private service p rovider earnings before interest, tax, depreciation, and amortisation growing by 71 per cent. So far the mobile phone has been largely used for voice communications, with less than one-fifth of users having access to the Internet. The introduction of third generation (3G) and broadband wireless networks, the policy for which was announced last week, provides a whole new and exciting dimension to the industry; it brings to centre stage features such as video and high speed data access.

As cellular signals reach deeper into rural India and new users get connected — over seven million did in September 2007 — the industry is drawing a horde of aspiring service providers. Today there are close to 50 companies, including some non-serious players, who wish to be in the mobile telephone services business, clearly many more than the available wireless spectrum can support. The challenge before the government is to allot the scarce spectrum in a fair and transparent manner. Telecom Minister A. Raja did so when he ruled that the licences for 3G and Wimax services would be auctioned not just among existing phone companies but also among newcomers. That course of action will offer consumers wider choice; aspiring companies a rightful sense of inclusion; and the government a healthy tranche of licence fees. The question is why such an even-handed approach is not being readily used to distribute the extra spectrum, some of which was made over by the Defence Services, for the current second generation phone service. The argument advanced against an open auction is this: since the Department of Telecommunications accepted over the past year extra licence fees from a few existing players, it is now obliged to allot them spectrum on a preferential basis. With most players and independent experts refusing to buy that line, an unseemly wrangle has broken out among the Department of Telecommunications (DoT), the Telecom Regulatory Authority of India (TRAI), and the Telecom Ministry on the one hand, and between the existing players and potential new entrants on the other. The problems clearly relate to technology, commerce, and non-transparent decision-making. All things considered, it will only be fitting that the spectrum for 2G services is also distributed after a transparent, open auction.

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