TELECOM SECTOR – CRIPPLED BY GOVERNMENT

The telecom sector growth has been crippled after the 2G scam controversy arose. The Hon'ble Supreme Court rejected all the licenses given in an irregular manner. The government is playing hot & cold and is unable to take appropriate decisions in a businesslike manner to suit the interest of all stakeholders and more specifically the telecom users besides the service providers. The auction of the spectrum has failed miserably twice due to very heavy reserve price. A heavy reserve price actually indicates the CAG stand about the loss of profit due to first cum first serve policy, bringing forth allegations of FT, corruption. The Attorney General of India has bought a new assault, opining against the refunding of entry fee of 2G players whose licenses have been cancelled by Supreme Court.

Hon'ble former Prime Minister Shri Atal Bihari Vajpayee took a very pragmatic step in 1999 while allowing telecom operators to migrate from fixed license fee to revenue share regime & also extending the license tenure to 15 years including an opportunity to even rectify the deficiency in applications. UPA government needs to take the most crucial step of bringing back common business sense while dealing with businesses. The government is unnecessarily frightened from possible judicial intervention. The government should not concentrate on collecting very heavy license fee as it will kill competition; create oligopoly, resulting in heavier telecom charges, negatively impacting inclusive growth besides adversely affecting growth of telecom sector itself. The government may consider:-

• To make application fee cum license fee refundable in respect of cancelled licenses, as it is most equitable and will bring back faith in the government.
• Rather than charging license through auction, revenue sharing formula needs to be bought back, with auctioning the maximization of revenue sharing.
• The telecom licenses & spectrum should be made freely transferable.
• The entry barriers in telecom sector need to be completely withdrawn by permitting maximum possible telecom operators to bid for spectrum on revenue sharing basis, while allocating a reasonable economic size to each operator.