After the boom,the slide

After the boom,the slide

The telecom department continues to be buffeted by small storms. It has failed to lay out a clear-sighted and long-term policy

Another year,another sordid addition to the telecom saga. Political developments could mean this phase is less interesting than the A. Raja episode,but that is only incidental. The theatrics around the telecom sector,however,obscure the fact that it has helped more Indians navigate out of poverty than government doles in the last 20 years. Consumers were able to benefit from two things: the plummeting price of voice telephony and the deluge of cheaply priced mobiles. But that boom has come to an end. The transition to the next stage — the masses accessing the internet on their mobiles — has not happened as policymakers and the corporate sector are bogged down by short-term issues instead,with the spectre of corruption allegations looming over them.

Today,the department of telecommunications finds it impossible to allow companies with 3G licences to share spectrum. The result is that valuable usable spectrum is lying fallow. The companies,having invested heavily in winning the spectrum allocations,are unable to get returns and the banking sector that lent these companies money is sitting on bad debt. However,if the department allows these companies to utilise each other’s spectrum,it is almost certain to lead to charges of favourtism,as it will be seen as a departure from policy.

The only way this vicious cycle can end is if the telecom department makes it clear that it is wedded to the policy of assigning spectrum on the principle of “good governance”. Otherwise,investigative agencies like the CBI will continue to make it difficult for the executive to prove that deviations from policy are sometimes in the public interest. At every stage,the policy should clarify that it will target keeping the airwaves cheap,which,in turn,would require efficient use of spectrum.

Incidentally,telecom is not the only sector in such a predicament. A larger weakness in decision-making is common to policymaking across natural resources in the country. The zeal to uncover a corporate-political nexus is leading to repeated cul de sacs. We are mired in discussions about chargesheets and the merits of decision-making,but this lacks any reference to the overarching principle of optimising spectrum usage. Companies should be encouraged to use spectrum efficiently,pricing should be optimal and technological developments should be maximised to make the best use of this resource. It is not a policy turf war that is making life difficult for the telecom department. Instead,it is the failure to lay out a policy in the national interest,which the department has failed to do so far,that is costing it dear.


Once policy goals are made clear,it becomes difficult for investigating agencies to trip up any line of action. For instance,in the case of the allocation of spectrum beyond the 4.4 MHz band in 2003,at which the CBI is looking askance,if the department can show it was striving for efficiency of usage,the issue of the price paid for the spectrum becomes less relevant.

By the same yardstick,it is easy to see why the allocation of spectrum in 2008 by former telecom minister Raja was so incorrect. Instead of the questionable methods used by the auditor to calculate a loss to the exchequer,a more powerful argument is that more than 20 MHz of spectrum was assigned to new companies in the guise of increased competition at throwaway prices,but most of it was never used. The public is the loser,cheated of the chance to get better quality of service.

The same logic also shows that the telecom department and regulator Trai were the culprits in the early 2000s,though not quite in the way the CBI imagines. They created a race that incentivised companies to add subscribers without laying out a path for the future. There were no parameters outlined to increase efficiency in using airwaves,which is akin to encouraging miners to extract the ore without any reference to safety or the long-term preservation of the mines. That the companies would ask the department to allocate more spectrum to accommodate the haphazard growth in traffic,much like the demand to expand road space to accommodate more vehicles instead of enforcing lane discipline,was quite expected. Lost in the race to pick the low-hanging fruit was a vision of the future.

Even now,there are chunks of telecom bands lying unused in the 2100 Mhz spectrum and others. The government and the regulators are,however,keen to sort out the immediate muddle rather than consider these unused efficiencies,just as they have done through most of the last decade. Instead,a simple declaration of the overriding goal for the sector would have set us on the path to fast growth.