India’s telecommunications sector watchers know that currently all action is around wireless. For over a year, most major deliberations of the government’s department of telecommunications (DoT) and the Telecom Regulatory Authority of India (Trai) are linked to wireless communications.
This includes recent licensing of new players, guidelines for 3G and broadband wireless access (BWA) services, norms for merger of mobile licences, Trai recommendation on mobile television services, use of dual technology by mobile players, stricter subscriber norms for spectrum, attempts to persuade defence forces to vacate mobile spectrum, proposal to allow Mobile Virtual Network Operators (MVNOs), sharing of active and passive mobile infrastructure, subsidies for mobile phones from the Universal Service Obligation Fund and the DoT-ministry of finance (MoF) disconnect on spectrum fees.
For India, wireless is the cheapest and fastest way to deliver primary connectivity and powerful data services to nearly a billion people — who may never experience the alternative fixed line services that were widely available in developed countries before mobiles became popular. It is essential therefore that DoT and Trai get wireless right. However, DoT and the Trai seem to be missing the larger picture as almost all their recent documents focus on piecemeal licensing. Recently when DoT awarded over 100 new licences, its price for a national licence — same since 2001 — was at least a billion dollar lower than the reported market value of the spectrum.
DoT claims that cheap mobile licences will increase competition in the market. But its new merger and acquisition norms have removed the obligation of new licensees to roll out networks. New players are forbidden to merge with existing players for three years but they can sell to entirely new ones.
This is in contrast to most international regulators, in the US, EU and Australia, who believe that if spectrum, a critical resource for any kind of wireless service, is allocated and priced transparently to reflect its scarcity and demand, this is sufficient to ensure operators deploy competitively priced services using the best technology.
And when demand for spectrum exceeds supply — such as for mobile services — designated frequencies are auctioned to discover its price. Spectrum in India is bundled with mobile licences. Companies receive additional spectrum as they reach specific subscriber numbers. GSM receives more spectrum than its competitor CDMA.
Interested players have attempted to leverage India’s unorthodox rules for spectrum leading to a spate of controversies and litigation. The daily to and fro between the DoT, MoF and the Vigilance Commission about the right price for 2G spectrum produces reflects the complete failure of Trai and DoT to provide a consistent framework for spectrum allocation and pricing and increasingly absurd defence of patently illogical spectrum rules.
The Trai too wants more competition and lower prices. But, it sees little contradiction in insisting that forthcoming 3G auctions be open to existing 2G players — include the many who got lucky recently — but not to any new player. This when its justification for recommending auctions for 3G spectrum was that the services were distinct from 2G.
It says new bidders can threaten investments of current players when the spectrum available for 3G today can barely accommodate three or four players out of the existing 12 or so in each circle. To consider formidable incumbents with nation-wide networks with uniquely valuable market information as vulnerable is a strange approach to competition.
*ET-“Mahesh Uppal, The author is a consultant specialising in regulatory issues.”
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