COAI chief's SOS to govt: Stop charging licence fees & SUC

Everything that we talk of rides on this ONE network. In other countries like the US and Korea, you have multiple choices of networks like satellite, cable or mobile networks to access broadband. In India, we have THIS one network. All the government’s plans to deliver e-governance, healthcare and financial inclusion need to ride on this network. I am not sure any one company can marshal the resources to do achieve all these objectives. It has to be three or four big companies with deep pockets, who are committed and have the ability to make it work. 

The question to ask is: Is it appropriate to destroy national wealth? The government licenses based on what technology to use. It is only in 2014 that spectrum was liberalised. Companies have invested billions of dollars. The transition to a new technology has to be orderly. If 20 lakh people lose their jobs, is it good? That's where the regulator and licensor need to come and put in place a mechanism, which protects consumer interests and allow free market dynamics but at the same time protect some of these investments. It is important to see how economic and technology landscapes have changed. Why are we not talking convergence?

What are the four reforms that you think are needed at this time to help improve the health of the industry?

First, stop charging a licence fee and spectrum usage charge as the government has got its money upfront through spectrum auctions. No country in the world does it both ways. If SUC goes to 1 percent and licence fee goes to 2-3 percent then the industry stands to save 8-9 percent of industry’s adjusted gross revenues (AGR). The industry’s AGR is USD 36 billion.

Second, find a way to level the playing field for OTT players and telecom companies. Let us figure who will be licensed and who will not be licensed. Today, it is very ad hoc. Anybody who plays in this field has to play by the minimum set of rules. Take a comprehensive look and decide what you ought to license. A lot of the contention arises because the 1885 Act says only the government has the monopoly to provide voice services.

Third, can the government incentivise private operators to do the things the government wants to do like reaching the rural marketplace? Some bold moves are needed to bring order back to the industry. The government can allow the industry to issue tax-free bonds. This allows liquidity to enter back into the industry. If you go into certain regions, then the government will consider waiving off AGR or make it tax-free in a particular region.

The AGR is also getting in the way of pushing penetration in rural markets. For instance, if a company sells a phone along with a service, a percentage of it will have to be paid to the government as a portion of revenues.

What is the challenge faced by operators in India compared to other world markets?

The challenge for operators is revenue, as there is an enormous amount of pressure to invest in networks. Consumers want high speeds and top service. It is not only connectivity that the consumer wants. To sustain investments is difficult if investors are unable to make good returns. The demand curve is going up while returns are going down. Governments and institutions are trying to close the gap.

Do you think operators should be allowed to monetise investments through different means in case they don’t want to charge consumers? Facebook is a classic example of this.

It must happen, but you have to define economic principles under which you play. Even in highly competitive markets, there is an underlying set of laws. How is the regulator asking the industry today what constitutes a promotional offer or what is predatory pricing?