Thu Mar 10 2011, 18:01 hrs
New Delhi:
‘Taan Shourie Saab, hun ki karn da irada hai?’ Giani Zail Singh asked. So, what do you plan to do now?
There had been another turn in my life. I had gone to call on Gianiji.
‘Sir, ki karana? Kitaabaan hi likhniyan. Kitaabaan likhanga’ — Sir, what is there to do? I will write books, I said.
‘Naeen, naeen,’ No, no, Gianiji said, ‘Tuseen samjhe hi naeen’ — You haven’t understood. ‘Siyaasat badi kutti cheez hai’ — Politics is a real bitch. ‘Jadon audaa hoye, taan yaar naeen chchadan dinde’ — When one has a post, one’s friends don’t let one leave it. ‘Jadon audaa hathon nikal jaave, taan dushman naeen chchadan dinde’ — And when one loses the post, one’s enemies don’t let you leave it!
I have been reminded of Gianiji’s prescience in the last
few months. For the last year, I have been living far away from Delhi,
immersed in religious scriptures for a book that I have completed.
Telecom has been as far from my concerns as any other gutter in Delhi.
It is the spate of lies which has been let loose that has compelled me
to return to it.
The falsehoods have been spread to
divert attention from what are the two central issues. Who made the
money? What were the heads and controllers of the Government doing when
this loot was going on? Hence, ‘NDA’, ‘first come first served’, 2003,
1998... And, given the fact that media, etc. do not read documents,
given that few would today remember what the condition of the sector was
at that time, the Government has all but succeeded: ‘there has been no
loss’; ‘in any case, it was only Raja who was doing something wrong, and
we have already removed him’; ‘in any case, he was just following NDA
policies’ ...
As fabrications have been put out, I will set out the
facts that relate to the time that I was in charge of the Communications
Ministry — from early 2003 to April 2004.
The sector at that time
When I was put in-charge of the Ministry, the sector was marred by the following features:
[A] The sector had all but collapsed after the excessive
bids; the decision to shift to a Revenue Sharing Model had rescued it
from collapse; but the sector was yet in a very precarious condition.
[B] Today, there is a rush for licenses; at that time few
were coming forward to enter the sector or to extend the coverage of the
services that they were providing. This is evident from the following
table:
Hence, one of the principal objectives of Government was to steer the sector on to a growth path.
[C] Such services as were being provided were concentrated
in the relatively well-to-do parts of the country. This had led to a
lot of acrimony in the ill-served areas and to criticism in and out of
Parliament — namely, that telephony was being converted into a service
for the elite and the rich living in just some favoured parts of the
country. It had also reinforced deep resentment in areas such as the
Northeast and J&K — in these areas the lack of service was taken as
further proof that the Centre did not care for them and was actively
discriminating against them. In fact, apart from BSNL, no Operator had
come forth to provide services in the J&K circle. In some circles
(like Assam, Bihar, North East, Orissa, MP), there was only one licensee
or the second Operator had taken the license but was providing next to
no service. There was not much growth even in Kolkata. Circles like
Bihar, Haryana, Rajasthan, Punjab, UP (East), were also suffering from
slow growth.
One of the principal concerns of Government, therefore, was to extend communications services to these under-served areas.
It is in this context that the figure that is being touted
about — that 28 licenses were given by the NDA in 2003-04 — should be
seen: not one of these 28 licenses was for lucrative circles or metros.
The distribution of the licenses was as follows:
[D] The sector was paralysed by litigation: the CDMA
Operators and the GSM Operators were at each others’ throats. Almost
nothing could be done and it would be challenged by one side or the
other in TDSAT, the High Courts and the Supreme Court. The Operators
would file cases not just against each other but also against the
Government. Indeed, even the expectation that Government was considering
a course of action would trigger one side or its rival to rush to the
courts and obtain a stay. Two examples will suffice. A Group headed by
the then Minister of External Affairs and Electronics, Mr. Jaswant
Singh, had been constituted in the late 1990s to make recommendations
for a New Telecom Policy. It had to get a special study done on
‘Possible Litigation Scenarios’. The exhaustive paper was considered by
the entire Group in its sixth meeting held on 22 March 1999. Similarly,
no sooner had the Cabinet decided to integrate the Limited Mobility and
Full Mobility services, the GSM Operators had moved the Supreme Court to
stay any order that the Government may issue in this regard.
A major concern of the Government, therefore, was to lift
the sector out of this quagmire of litigation. Telecom service providers
should compete for the goodwill of the customers rather than trying to
block each other in courts, or by suborning ministers and civil servants
in Delhi — that was the objective.
[E] One of the reasons for this litigious and paralyzing
situation was the complexity of the licensing system at the time. The
plethora of licenses had grown as a coral reef over the decades. They
differed by the date on which they had been obtained; the type of
service the Operator provided; the location at which the service was
provided; the distance over which the service was provided; the
technology that was being used to provide the service; the type of
customer to whom the service was being provided . . . This had two
consequences: (1) It triggered litigation; (2) Every decision was seen
by one side or the other as discriminating against it. [In a lecture
that I delivered at the time, and which the Indian Express published, I
described the situation in regard to the licensing system as I found it.
The text can be easily accessed today as it is reprinted in my book, Governance, The sclerosis that has set in, ASA, Rupa, 2004, pp. 69-92.]
On the other hand, it was becoming clear by the day that
the licensing system was being rendered obsolete by the advance of
technology. This was specifically noted in the 1999 Telecom Policy. In
its Paragraph 1.3, the Policy had stated, inter alia,
‘In addition to some of the objectives of NTP 1994 not
being fulfilled, there have also been far reaching developments in the
recent past in the telecom, IT, consumer electronics and media
industries world-wide. Convergence of both markets and technologies is a
reality that is forcing realignment of the industry. AT one level,
telephone and broadcasting industries are entering each other’s markets,
while at another level, technology is blurring the difference between
different conduit systems such as wireline and wireless. As in the case
of most countries, separate licenses have been issued in our country for
basic, cellular, ISP, satellite and cable TV operators each with
separate industry structure, terms of entry and varying requirement to
create infrastructure. However, this convergence now allows operators to
use their facilities to deliver some services reserved for other
operators, necessitating a relook into the existing policy framework.
The new telecom policy framework is also required the facilitate India’s
vision of becoming an IT superpower and develop a world class telecom
infrastructure in the country.’
This is why the Government set up the Group on Telecom and
I.T. Convergence in 2001. The way that technological advance was
cutting the rationale of the licensing system, and also the way that the
licensing system, in turn, was holding back the adoption of newer
technologies and thereby harming the interests of consumers and the
country were the major themes of the TRAI report of October 2003. These
were also among the principal reasons on account of which TRAI
recommended that Government should replace the plethora of licenses with
a Unified License.
Three further facts should be borne in mind.
[F] First, in those days, spectrum was given as a part of
the license: the licensee got the license, and the Government in turn
undertook to allow him use of a start-up quantum of spectrum to provide
the services for which he had got the license. Subsequent tranches of
spectrum were to be released when the subscriber base crossed certain
specified limits.
[G] Second, while we had been able to establish the
bidding route firmly in Disinvestment, and for which reason I was keen
to introduce it in the Telecom sector also, the experience with bidding
in the latter had not been altogether a happy one:
* When the sector had been first opened up and private
Operators had been invited to bid, they had filed grossly excessive bids
as a result of which the sector had all but collapsed, and had to be
rescued by abandoning altogether the obligations that ensued as a result
of the bids.
* The fourth Cellular Licenses were given as a result of
multi-stage bidding process in 2001. By 2003, the teledensity had not
changed much since the bids in 2001.
* As several areas of the country had not been taken up by
any Operator when the bids were invited for the 4th Cellular Operator,
in March 2003 bids were again invited for these areas. But it became
evident that not a single bid was going to be received. At considerable
discomfiture, the Government had to call off the entire exercise.
[H] Terrorism had become a major problem. Grave
apprehensions had developed among intelligence agencies that the spread
of mobile telephony will enable terrorists to carry out their plots even
more readily.
Government’s strategy
In view of these circumstances, the Government’s strategy became:
* Accelerate growth;
* In particular, in the under-served areas;
* But at the same time, meet the concerns of the intelligence agencies;
* Once telephony grows, spectrum will become a scarce resource; for this purpose
* Take measures that will make more spectrum available for civilian use;
– Devise a fair and transparent modus for distributing spectrum for the time it would have become scarce;
– The modus adopted should also ensure optimal usage of the spectrum;
* Pull the sector out of the mire of litigation and
allegations. Operators should compete in the market not in courts and
government offices.
* The licensing system should be simplified. In
particular, it must be service and technology neutral, and it should
spur the adoption of the best and latest technologies that would benefit
the consumer.
Means for implementing the strategy
We decided to use a series of instruments to achieve these objectives:
* Unleash and enable BSNL/MTNL to provide intense
competition to private Operators: in particular, (i) to spur them to
extend coverage to under-served areas; (ii) to offer new services; (iii)
to lower the exorbitant tariffs they were charging;
* Lower the Revenue Share being taken by Government;
* Unify licenses, eventually instituting a single unified license:
– To ensure competition, this should be given quasi-automatically: TRAI came to use the expression ‘automatic authorization’;
– Keep the entry fee at a minimum;
* Anticipate the situation when spectrum will become scarce. Hence,
– Commence work that is required for eventually delinking licenses from spectrum, and auctioning the latter;
– Allocate Rs. 1400 crore to Defence Forces — this was
their estimate of what they needed — so that they may modernize their
signaling equipment, and thus free excess spectrum for civilian use;
– Devise incentives for optimal use of the spectrum and
penalties for its inefficient use: existing inefficient use of what
would become a scarce resource if the growth that it was projecting
would materialize, was ‘of utmost concern’ TRAI observed, and hence it
emphatically recommended that these incentives and penalties be devised.
[See, for instance, Para 7.30 and Annexure IV of its Report of October
2003. These reports are all available on the website of TRAI.]
* Ensure that every thing is done so openly and with such manifest fairness that litigation ceases.
It is a matter of great pride that these steps indeed more than fulfilled the objectives that Government had sought to pursue:
a) From a situation of near collapse, the sector set on to
a course of massive growth: this has made a major contribution to
growth — could the IT sector have become what it is today without the
growth that we have recorded in the telecom sector?; it has generated
large employment; it has helped integrate the country further;
e) From being a rich man’s toy, the mobile has become an
adjunct of everyman’s daily life. It has enabled the poorer craftsmen to
improve their businesses. It has enabled migrant labour to keep in
touch with their families. In a word, it has been a boon to the poor as
much as to anyone else.
f) At that time, Operators used to charge Rs. 28 to 32 per
call — both the caller and the person called had to pay. Today, our
rates are the lowest in the world.
g) At that time, our teledensity was far below the world
average. Today, the Indian telecom network is the second largest network
in the world, and the fastest growing network in the entire world. In
2002, the mobile density was 1 per cent. Today it is 70 per cent. In
2002, the country was adding 2 lakh subscribers a month. Today, it adds
close to 20 million subscribers every month. This is one sector in which
targets set by Government have been exceeded manifold: the Plan target
for 2010 was exceeded by 300 to 400 per cent; rural connectivity targets
were exceeded by 400 to 500 per cent. This happened because of bold
decisions of Government, the growth-oriented approach of the Regulator,
the alacrity with which Indians adopt to new ways and things; most of
all, it happened because of the entrepreneurship of several Operators,
an entrepreneurship which the policy decisions of those days unleashed.
Contrast the way the country has always fallen woefully short of targets
in the power sector, a sector in which corresponding decisions have not
been taken and implemented.
h) At that time, the sector was mired in a host of legal
cases — with private Operators fighting each other, with all of them
challenging every decision of the Government; litigation was brought to
an end.
i) The Government used to spend an amount close to Rs.
20,000 crore every year for growth of telephone services in the country.
Now, the telecom sector is contributing to the Exchequer more than Rs.
50,000 crore every year by way of licence fees, spectrum charges,
service tax and other corporate taxes.
That this entire transformation is the result of policies
adopted during the NDA period is evident from the repeated affirmation
of the current Minister of Communications, and none other than the Prime
Minister that the UPA has just followed policies of the NDA Government!
How people are sought to be misled
‘It is Arun Shourie who introduced the
first-come-first-served principle. Raja merely followed it,’ Government
spokesmen have been declaiming again and again.
Typical of the devices that these people specialize in
deploying, it is a red-herring that has been thrown in the way to lead
everyone away from the central fact: Raja followed no principle, no
procedure, no policy. He certainly did not follow the
first-come-first-served procedure:
* There were 167 pending applications. Under
first-come-first-served norm, these are the ones that would have been
dealt with first. He just discarded this norm, and called for new
applications.
* On 24 September, 2007, he announced that the deadline
for receiving the applications would be 1 October, 2007. There was a
spurt of applications: 408 were received.
* Under Raja, the DoT announced that these would be considered on a first-come-first-served basis.
* Months later, he arbitrarily changed this to 25
September and thus eliminated a slew of competitors. This edict cut out
the applications from 575 [the 167 that were pending and the 408 new
ones that were received] to 232.
* Next, he changed the basis of adjudging the order in
which applications would be considered: the basis was to be the date and
time of receipt of application; he now ruled that it shall be the date
and time of fulfilling the conditions that were being specified in the
Letter of Intent. Among these conditions, as the CAG has pointed out,
was the condition that the applicants bring a banker’s draft of Rs. 1650
crore within 41 minutes. The favoured companies had prior knowledge
that this would be one of the conditions, and hence had come with the
drafts. Others were physically assaulted and prevented by musclemen from
accessing the office.
* As even these manipulations did not secure for Swan and
other favourites the quantum of spectrum which had been agreed upon,
Raja changed the priority list in circles like Punjab and Maharashtra.
Is this the way the first-come-first-served principle is
adhered to? Indeed, does this sequence betray that he and the UPA
Government were adhering to any principle at all?
The first-come-first-served principle has been in vogue
for long, certainly before the time when the Ministry was put in my
charge — in fact, I would be surprised if the Prime Minister with his
intimate acquaintance with the license-permit raj does not remember that
there was a time when such norms were used to allocate licenses for a
host of things: from railway rakes to imports. Here are just three
examples of documents in the telecom sector that refer to it:
* Guidelines for Issue of Licence for Basic Service
[No. 10-2/2000-BS-II, Ministry of Communications, Department of
Telecommunications , Licensing Cell (Basic Service Group), Sanchar
Bhavan, New Delhi, dated 25th January, 2001.] Clause 26 of this document
reads in part: ‘. For Wireless Access Systems in local area, not more
than 5+5 MHz in 824-844 MHz paired with 869-889 MHz band shall be
allocated to any Basic Service Operator including the existing ones on
first come first served basis. The same principle shall be followed for
allocation of frequency in 1880-1900 MHz band for Micro cellular
architect based system.’
The title of the next document itself is Procedure for
Allocation of Spectrum on First Come First Served Basis, [No:
10-2/2000-BS-II, Ministry of Communications, Department of
Telecommunications, Licensing Cell (Basic Service Group), Sanchar
Bhavan, New Delhi, dated 23rd March, 2001]. Apart from the title itself,
Para 1 of this document states, ‘As per Guidelines issued for Basic
Telephone Service providers, the spectrum for WLL service in the
frequency of 824-844 MHz paired with 869-889 MHz is to be allocated on first come first served basis.’
And, remember that, at that time licenses and spectrum
were joint-twins: so it is not that this principle was confined to
spectrum and had nothing to do with licenses.
Later that year, The Group on Telecom and IT Convergence submitted its 'Report on Limited Mobility'.
The Group was headed by the then Finance Minister, Mr. Yashwant Sinha,
It elucidated the meaning of the principle ‘first come first served’ in
regard to allocation of spectrum. Para 25 of this Report stated as
follows:
‘25. The Group noted that the description of
“first-come-first-served” used in the Guidelines of January 2001 was not
an accurate description of the content of policy as announced and as
implemented with reference to existing Fixed Service Operators. It does
give the impression that immediately on application the applicant would
become eligible for a spectrum license, whereas in fact the Guidelines —
especially when read with the spectrum allocation procedure of 23rd
March 2001, which stipulates the conditions under which the spectrum
would be allocated — clearly require that the Operator seeking spectrum
must have established a Point of Presence (POP) in an SDCA in order to
be eligible for the first tranche of spectrum; further installments of
spectrum being given subject to fulfillment of roll out obligations
which would include the obligation now mentioned in this advice, and to
ensure that the spectrum already given has been optimally utilized. The
23rd of March, 2001 Procedure also stipulates that in the event of roll
out obligations not being fulfilled the spectrum allocated would revert
back to the Government. Hence, “first-come-first-served” on a true
interpretation only means that allocation of spectrum is and must be
considered inextricably linked to performance. The Group noted that the
quantum of spectrum to be allocated to the fixed service providers for
WLL with limited mobility is in accordance with the recommendations of
TRAI.’
Each of these documents is from 2001 — two years before
I was given charge of the Ministry. In a word, ‘first come first
served’ was a well-established and recognized method of processing
applications.
Here is another example — this one from TRAI whose
recommendations everyone are always holding up as if we violated them.
In the Report, Recommendations on Unified Licensing, that TRAI submitted in October 2003, in Para 7.29, it stated, inter alia,
‘... The allotted spectrum varies from 4.4+4.4 MHz to 10+10 MHZ
depending upon the number of subscribers in each service area. Existing
BSOs [Basic Service Operators] shall be allocated 5+5 MHz in 824-844 MHz
paired with 869-889 MHz bands on a first come first served basis. The same principle shall be followed for allocation of frequency in the 1800-1900 MHz band.’
[E] In contrast to what happened during Raja’s time — when
the Finance Ministry repeatedly objected to what he was proposing to do
— during the time that the Ministry was under my charge, no objection
was ever raised by the Finance Ministry. In particular, the record on
file establishes that the Member (Finance) — who represents the Finance
Ministry on Telecom affairs — specifically approved the decision that
the first-come-first-served principle shall be observed. By contrast,
during the UPA tenure, the then Member (Finance) was so outraged by what
Raja was doing that she sought premature retirement and left Government
service all together.
And it was a perfectly reasonable principle. Two points
are noteworthy. As will be obvious, for instance from the extract given
above from the Group headed by Yashwant Sinha, it was never the sole
criterion: the applicant was to have fulfilled a number of other
requirements. Only after the competitors had fulfilled these criteria,
would the first-come-first-served criterion come into play. And these
requirements were known to all at the time they submitted the
applications. They were not injected ex post facto as in Raja’s
tenure. Second, it was a necessary and entirely open and fair criterion:
consider a situation in which two operators have fulfilled the
requirements — for instance, regarding establishing Points of Presence,
and getting the specified number of subscribers; but Government has at
that moment spectrum that is sufficient to meet the operational
requirements of just one of them. How would it choose between the two?
On the basis of which of them came to it with evidence of having
fulfilled the other criteria first. What could be fairer? What could be
more open?
Cabinet decision and what DoT did
One of the fabrications that has been put out is that
during the time the Ministry was in my charge, it exceeded what Cabinet
had authorized us to do. Forget my personal temperament, the fools who
put out such a lie should remember that that was not the Cabinet of
Manmohan Singh. It was the Cabinet of Atal Behari Vajpayee — the
slightest excess would land one out of the Government. And he had as his
Principal Secretary, Mr. Brajesh Mishra, one of the most powerful and
most effective Principal Secretaries that any Prime Minister of India
has had. He kept a hawk’s eye over whatever was happening in departments
of Government. It is beyond imagining that a decision of Cabinet would
be violated — and that too in such a contentious sector — and the
contenders — the private Operators who were always rushing to court —
would not raise Cain; that Mr. Mishra would not know; and that Mr
Vajpayee would condone the transgression.
The Cabinet decision is clear as can be. In its meeting on 31 October 2003, the Cabinet had decided as follows:
‘The recommendations of TRAI with regard to implementation
of the Unified Access Licensing Regime for basic and cellular services
be accepted.
‘DOT be authorized to finalise the details of
implementation with the approval of the Minister of Communications &
IT in this regard including the calculation of the entry fee depending
upon the date of payment based on the principles given by TRAI in its
recommendations.
‘The recommendations of TRAI in regard to the course of
action to be adopted subsequently in regard to the implementation of the
fully Unified Licensing-Authorization Regime be approved.
‘DoT be authorized to finalize the details of
implementation with the approval of the Minister of Communications and
IT on receipt of recommendations of TRAI in this behalf.’
The Cabinet decision clearly recognized that, as
recommended by TRAI and by the Group of Ministers, the process of
implementation would be in two phases. In the first phase, the Unified
Access Licensing Regime would be introduced: that is, the licenses that
had been differentiated by technology — CDMA vs. GSM — and range of
service — limited or full mobility — would be unified. In the second
phase, after recommendations of TRAI in regard to a fully Unified
Licensing Regime had been received and approved by Cabinet, that Regime
would be introduced. In both phases, the details of implementation of
the UASL regime and of the fully Unified Licensing Regime were to be
worked out by the Department of Telecommunications with the approval of
the Minister of Communications and IT.
2. The implementation action was taken in the background
of the following aspects of the TRAI recommendations which had also been
accepted by the Cabinet [Para numbers in the following refer to the
TRAI Report of October 2003, which can be readily accessed on its
website]:
(i) Within six months ‘Unified Licensing’ regime should be
initiated for all services covering all geographical areas using any
technology. (Para 7.1)
(ii) Unification of access services at circle level [a
‘circle’ roughly coincided with a state] should be taken up forthwith:
for this consultations with various stakeholders had already been
completed. This should be without delay followed up with steps to set
out the guidelines and rules for Fully Unified Licensing/Authorization
Regime by gathering details of international practices and through the
consultation process. (Para 7.6)
(iii) To determine the benchmark of the entry fee for the
UASL regime — that is, the interim period before the fully unified
licensing regime is ushered in — TRAI had considered the option of
inviting bids from existing as well as new prospective players. It had
concluded explicitly and emphatically that this option should not be
adopted. TRAI had advised that this option would be time consuming and
that it would delay the implementation of Unified Licensing. TRAI
recommended that instead the existing entry fee of the Fourth Cellular
Operator be accepted as the basis for fixing the entry fee for migration
to Unified Access Licensing regime for Basic and Cellular services at
the Circle level. (Paras 7.16 to 7.20) This was an eminently logical
proposition: the mobile density in 2003 was just about the same — a
miserable 1 per cent — as it was in 2001 when that price had discovered
through multistage auctioning.
(iv) TRAI had stated that it would give its
recommendations on efficient utilization of Spectrum, its pricing and
Spectrum allocation procedure in the near future. DoT was to issue
spectrum related guidelines based on the recommendations of TRAI after
receiving those recommendations. (Paras 7.28 & 7.29)
(v) TRAI had stated that it was not in favour of high
spectrum pricing since such a regime would make the services more
expensive and the desired growth would not take place in
telecommunications. (Para 7.33)
(vi) It had advised that the formulation of an appropriate
environment for growth, regulation and strategy had to be based on the
single priority of the moment, viz. increasing the availability of phone
connections at affordable costs and tariffs and ensuring a rapid roll
out of services. Growth of teledensity, it said, revolved around
developing access networks and making access to them available at low
cost. (Para 6.2)
(vii) To achieve 100 million wireless subscribers, TRAI
estimated that an investment of the order of Rs. 50.000 crores would be
required. It said that for investment of this order to come forth, the
prerequisite was that the sector be freed from litigation. (Para 6.5)
(viii) TRAI recommended that induction of new cellular
mobile operators should preferably be done under the ‘Unified Licensing
Regime’ which it expected to come into being soon after it finalized its
recommendations on the matter. (Para 7.37)
(ix) Yet two paragraphs later, TRAI recommended that, if
adequate spectrum was available, then in the existing Licensing Regime,
Government may introduce additional players through a multi-stage
bidding process as was followed for the Fourth Cellular Operator. (Para
7.39)
The words ‘existing regime’ referred to the
pre-UASL regime — for that was the regime that was existing at the time
that the Report was submitted in October 2003.
3. Thus, as will be evident from both — the
recommendations of TRAI and the decision of the Cabinet — the UASL
regime was a transitional phase. It was to be the first step towards
putting in place a fully Unified License Regime.
4. During this transitional phase, the DoT was to proceed
with its usual duties using the price paid by the Fourth Cellular
Operator as the benchmark.
5. The Cabinet never intended that the Department should
halt all expansion of services and, to take one instance, leave the
under-served and unserved areas of the country in a state of neglect.
Nor did the Cabinet, to take another instance, put any bar on giving
Basic Service licenses. What happened as a consequence of its decision
was that an addendum was added — nothing was subtracted from the NTP of
1999 — and two additional categories were introduced: henceforth, the
DoT could issue licenses not just for Basic Services, NLD, ILD, etc. It
could in addition issue UASL and Unified Licenses.
6. Subsequent events showed the wisdom of this decision —
for, in the event, TRAI took not six months but one and a half years to
finalize its recommendations regarding a fully Unified Licensing Regime:
by that time the NDA Government had long gone. And in the Report that
TRAI eventually gave in 2005, there was no recommendation for
multi-stage bidding at all. Had the Cabinet directed the DoT to stop all
further steps for extending services, the sector would have been per
force frozen for over a year and a half — and that on the basis of an
imagined recommendation that TRAI itself did not reiterate in its
subsequent Report on the matter.
7. No sooner had the Cabinet decided to introduce
unification of licenses, the Cellular Operators filed an application in
the Supreme Court seeking a stay on the implementation of UASL regime.
This application became part of the Appeal that had been filed earlier
by the Cellular Operators against the TDSAT order of August 2003 in the
Limited Mobility Case. Implementation of the Cabinet decision therefore
required careful handling of the litigation before the Supreme Court.
DoT accordingly proceeded with the following objectives in mind: (a)
ensure that the decision of the Cabinet regarding the UASL Regime is not
stayed as a result of the petition of the Cellular Operators; and (b)
implement the UASL Regime in so transparent and fair a manner that the
sector indeed becomes litigation-free. Through the Law Ministry, the
services of the then Solicitor General were availed of by the DoT for
handling this matter.
8. Implementation of the Cabinet decision then proceeded as follows:
(i) Since there were pending applications for Basic
Service Licenses, these were dealt with in accordance with the usual
procedure. Tata Teleservices had applied for providing Basic Service in
four service areas in early September 2003. Letters of Intent were
issued against these applications in the normal course for Basic
Services on 7 November 2003.
(ii) On legal advice, including that of the Solicitor
General, in the Guidelines for issue of UASL’s resulting from migration,
it was provided that all new applications for Access Services would be
in the UASL Category. The rationale for this was manifest: issuing of
Service based licenses, as was the practice till then, would have
perpetuated the very aberrations which were sought to be corrected by
the UASL Regime that the Cabinet had directed the DoT to implement.
These Guidelines were issued on 11/11/2003. This meant that henceforth
neither applications for Basic Services nor from new cellular mobile
Operators would be entertained. The new operators for access services
could only be of the UASL category. Going in for bidding for the new
UASL’s would have required determination of slots for auction in each
service area in the CDMA technology and separately for those involving
GSM technology. The bidding process would have been time consuming.
Government also had before it the fate of the bidding process that it
had initiated as recently as March 2003 when bids had been invited for
the vacant slots for the Fourth Cellular Operator, based on GSM
technology, no bids had been received and the process had to be
cancelled at the last moment. The main reason for this lack of response
was evident to Government: the Telecom Sector had got entangled in
litigation and, except for the existing lot of Service Providers, new
entrants were not forthcoming.
(iii) There was another very important aspect which could
not be ignored. Had all further permissions been stopped, and Reliance
had proceeded to migrate on the basis of the Cabinet decision of
31/10/2003, Government would have been opened to the charge that it had
favoured Reliance by blocking its competitors. Apart from being
manifestly unfair, such an outcome would have definitely resulted in the
Courts staying the UASL Regime.
(iv) Para 7.39 of the TRAI Report regarding multi-stage
bidding process related to the introduction of additional cellular
operators under the pre-UASL regime. If it had been intended for new
UASL operators, it would have been worded differently and the words
‘existing regime’ would not have been used. Thus there was no violation
of the Cabinet decision in this regard.
It is in this background that clarification was sought
from TRAI by the then Secretary DoT about how pending applications,
applications from existing Operators who may opt to migrate, and new
applications for UASL’s were to be dealt with. Chairman TRAI and the
Regulatory Authority as a whole put the position beyond doubt.
The entry fee recommendation which was benchmarked to that
paid by the Fourth Cellular Operator and which had been adopted for the
purpose of migration in November itself, had to be used for others also
— otherwise the latter would at once get a ground for charging the
Government with tilting the playing field in favour of one or some
Operators. This was a very important consideration. Even the majority of
TDSAT in its judgment delivered as recently as August 2003 had held
that, while the introduction of limited mobility had been legal, it had
upset the level playing field. Tata-Teleservices were the major
competitor of Reliance, and the Cellular Operators, namely Bharti and
Hutch, who had applied for new UASL’s. Neither set would, and with
eminent justification, have reconciled to anything which would have put
them at a disadvantage vis-a-vis Reliance. On this basis, in
accordance with the recommendations of TRAI, a procedure was adopted for
dealing with applications for new UASL’s, and the new applications,
which were few in any case and which were from Operators with great
experience in the sector. TRAI had made it clear that this procedure was
to be followed for an interim phase, till Guidelines for spectrum were
finalized in the future.
That TRAI recommendations covered applications from both
existing limited mobility Operators who were migrating as well as new
applications is evident from the repeated references in the
communications of TRAI to both categories. Similalrly, consider the last
exchange on this subject — about the application for West Bengal and
Andaman and Nicobar Islands: this was to be a new license. TRAI
reiterated its recommendation.
And the communications were from the Authority as a whole.
By no stretch of imagination can they be dubbed as private letters from
the Chairman in his individual capacity. This is evident from the
Agenda item dated the 17th November 2003 for the meeting of TRAI. It is
evident from the communication of the Secretary and Principal Advisor of
TRAI dated 19 November 2003. And it is evident from the communication
of TRAI dated 5 December 2003 in regard to West Bengal and Andaman and
Nicobar Islands. I have just not been able to fathom how responsible
persons — who have had access to these communications — have suppressed
them from public knowledge and made out that the Chairman of TRAI and
the Secretary of Telecom Department entered into some surreptitious,
private conspiracy to grant licenses to TATAs or Bharti or someone else.
The procedure adopted and the decisions taken were so
manifestly fair and transparent that there was no controversy or
allegation by anyone of any discrimination. No one challenged the
approach or decisions in any Court. There was no criticism in the media.
All this in a sector that had been marred by acrimonious allegations and litigation.
And who got the licenses and for which areas? Some Swan? Some real estate racketeer?
The licenses
The procedure adopted for grant of new UASL’s was simple
and straightforward. The entry fee payable was based on the same
principles as were followed for migrating from Basic Services to a UASL.
In November itself, Reliance migrated in 18 Service Areas;
Tata-Teleservices in 6 areas; Bharti, HFCL and Shyam in one area each.
Tata-Teleservcies surrendered the Letters of Intent for
Basic Service Licenses that had been issued to them on 7/11/2003. They
applied for UASL’s for providing services in Haryana, Kerala, Punjab,
and UP (West).
Tata-Teleservices applied for UASLs in 8 service areas on
12/11/2003. These were Bihar, Orissa, Rajasthan, Madhya Pradesh,
Himachal Pradesh, Kolkatta and UP (East). These were all underserved and
unpopular areas with very low tele-density.
Bharti applied for UASLs 6 service area — namely Bihar,
Orissa, Rajasthan, UP(East), West Bengal including Andaman and Nicobar
Islands, and J&K. Once again, all these were underserved and
unpopular areas with very low tele-density. Out of these service areas:
* In the Jammu & Kashmir circle, apart from BSNL no other Operator had ventured forth to provide services.
* While, Bihar, Orissa & West Bengal circles were offered during 2001 auction, no bidder had expressed any interest.
* In March 2003, DoT had again tried to auction these
service areas. As it became evident that there would be close to nil
response from possible Operators, the auction process was abandoned at
the last moment.
* A glance at the teledensity in the circles for which
licenses were given will show how the situation that prevailed then
compares to 2010:
As noted above, it is a matter of pride that the decisions
of Government were implemented with such fairness and transparency, and
the migration and other licences were given with such fairness and
transparency that not a single objection was raised by any party — and
this in a sector in which every step of Government had hitherto been
challenged and denounced by one side or the other. When they saw the
fairness and openness with which Cabinet decisions were being
implemented and licences being granted, the petitioners who had filed a
petition in the Supreme Court to stay the implementation of the UASL
licensing regime withdrew the petition.
There are several other fabrications that the spokesmen of
this Government have put out to deflect people from the issues at hand:
who got the money? What were the seniors doing when this loot was going
on? But they are at par with the fabrications that I have listed above.
In addition to attending to the routine tasks that had to
be implemented during the interim period, as directed by the Cabinet, we
began exchanging views about elements of the Unified Licensing regime.
Should the bids be single-shot bids — as was the case in disinvestment?
Or should the bidding be multi-stage — as had been the case, for
instance, in selecting the Fourth Cellular Operator? Should the bidding
process be conducted by the DoT — a Department that had itself been
dragged into much litigation, and was the object of strident allegations
— or should they be conducted by an independent agency? How should
incentives be built into the bidding process to induce optimal use of
the spectrum, and penalties for hoarding or inefficient use? What should
be the stance of Government if, once again, the competitors overbid and
then cannot sustain their operations at the high prices they have paid?
Should they be rescued as had to be done when the sector was first
opened up? Or had the sector become mature enough by now so that firms
that overbid should be allowed to go under?
These were the sorts of questions on which we had begun work in the wake of the six-month framework suggested by TRAI.
The Government changed.
No one could have imagined that the advance towards the
Unified Licensing regime would be halted. And that what had been the
procedures to be followed for the interim period of six months would be
made permanent. And that without any authorization from the Cabinet.
That is one reason on account of which the current
problems have arisen. Another one is that in UPA-I lines were slipped
into the Guidelines without recommendations of the Regulator, without
any reference to Cabinet. In UPA-II, the terms of reference of the Group
of Ministers were altered without reason or authority. On matters on
which the Government is bound by law to seek TRAI’s recommendations,
TRAI was specifically told that it had no business to seek to advise
Government . . . But the main reason, as stated above, is that in Raja’s
case, he followed no procedure, he followed no policy, he adhered to no
norm at all. And, even though his misdeeds were known publicly, he was
allowed to continue to make a business of his office. In what way does
this represent a continuation of anything done during the Government led
by Mr. Vajpayee?
