Telecom trade-off

Policy problems ensure employment for politicians. Particularly when it comes to business issues. The Group of Ministers GoM on telecommun...

Policy problems ensure employment for politicians. Particularly when it comes to business issues. The Group of Ministers GoM on telecommunications, confronted though it was by a tangle that confounded the telecom regulator and the disputes tribunal for over two years, moved quickly in announcing its recommendations on Thursday. A remarkable performance, indeed, from a bunch of people with little expertise in the technical or business complexities of operating communications networks. Led by the finance Minister, it included the external affairs minister, the telecom minister, the law minister, the I038;B minister and the defence minister. Beating its November deadline, the GoM pushed for unified licensing which will largely benefit Reliance Infocomm and Tata Teleservices. For cellular operators, the loss of rights to mobile telephony will merely be formalised. Reliance has already been offering seamless mobility, or roaming facilities, to its subscribers. After unified licensing is introduced, it won8217;t need to disguise the roaming facility.

It8217;s as if in exchange for 8216;unlimited8217; mobility given to limited mobility basic operators, the cell operators have been offered what they have been asking for in the past few months. A higher cap on foreign investments that will allow direct and institutional stakes of up to 74 per cent and the green signal for intra-circle mergers and acquisitions. Strapped for cash, cell operators had their backs to the wall. And, in a market where size matters, they also needed money to buy out smaller players who wanted out. The clause prohibiting intra-circle M038;As or buyouts of competitors within a circle prevented them from considering raising their debt risks.

This move will definitely spell consolidation in the cellular space by triggering off a shopping spree by the bigger players. Significantly, though, while it addressed other issues like additional spectrum for operators, the GoM kept its counsel on the issue of Reliance roaming free under its current licence conditions. The larger question that remains unanswered is whether these quick fixes can take the place of transparent policies.