Opinion Dropping their call

Second,this technology is simultaneously implemented across India; even the green revolution,while successful,was introduced only in a few selective parts. Around 60 per cent of the operators’ new subscriber additions are from rural India. The mobile revolution after creating history in urban India is now all set to drive our laggard,rural economy. India commands the world’s lowest telecom tariffs and yet earns impressive profit margins,something our business needs to be duly credited for. However,it is not hard to understand that for the price of a commodity to continue to be low,the cost of production needs to be proportionately low as well.

With this backdrop of why we need a coherent telecom policy,let us see what our policymakers have for us.

After the controversial allotment of telecom licences in 2008,which cost the government exchequer close to Rs 60,000 crore — and distorted telecom policy,too — the industry was eagerly awaiting recommendations from the Telecom Regulatory Authority of India to clear the mess and streamline a policy which would set the tone and tenor of the sector’s growth in the next five years. But Trai’s recommendations last week were not just devastating enough for the telecom shares to take a beating in the markets,but also compelled the country’s top telcos to censure the regulator in a manner never ever seen before,calling its recommendations “perverse”.

No one has any idea as to what the regulator wanted to achieve through these policy directions. Maximise revenue for the government? Promote consolidation? Create a level playing field? Ensure transparency in the sector? None of these has been met. One would like to believe that it was something more profound and of national importance than these,but then what was it?

To enlist a few things it has done,it has given the communications and IT minister,A. Raja,a clean chit for the controversial allotment of telecom licence to new operators. However,it has failed to explain its reasons for doing so,saying that 2G spectrum cannot be auctioned because there “wouldn’t be many takers for it” — obviously hard to believe in a sector so hot and thriving. And even if that were the case,it should have been left to market forces to decide,not the sectoral regulator.

Second,its merger and acquisition recommendations have ensured that the country’s largest telecom operator,

best-suited and best-placed to take over unprofitable business and turn it around,cannot do so. It has further deprived large telcos from efficiently utilising the unused spectrum with start-up ventures,by barring them from spectrum sharing.

The recommendations were so shocking that it forced the

telecom operators to bid more aggressively for the ongoing 3G spectrum,because for the past two years and the next two operators will not get any more spectrum,the single most important means of production in the telecom business — thanks to the regulator’s vision.

Until Saturday,the auctions have yielded close to Rs 64,000 crore to the government.

This is beyond design and default. It is a sign of the operators’

anxiety,and the sector’s signal that it no longer trusts the regulatory environment and hence is up for grabs for whatever little is on sale.

This doesn’t augur well for the sector,or the economy as a whole — and sends extremely wrong signals to global investors who are viewing the sector with immense suspicion.

Currently,the sector has an air of chaos and mistrust. No

one knows what next is in store. The government must step in and win back the trust of all the industry’s stakeholders. Perhaps the EGoM headed by Pranab Mukherjee is a step in the right direction — to display its resolve to promote,and not penalise,

the sector.

The writer is special correspondent,‘The Financial Express’

anandita.mankotia@expressindia.com