This Union Cabinet decision is another tragic misstep heaped upon the hapless telecom sector.
The Supreme Court (SC)’s February 2012 verdict indicted the government, quashed spectrum allocations, and spelt out a cradle-to-grave process, from recommendations, to auction, to issue of new licences. SC did not permit the government to profiteer from its own illegality, by placing half the quashed spectrum for auction, and pocketing the rest. What the Cabinet has unwittingly endorsed is downright confiscation. A sky-high reserve price is confiscation by other means. I don’t believe these decisions will survive a legal challenge.
Equally questionable is a proposal to “liberalise” spectrum. Licences have been technology-neutral since NTP 99, and a licensee can deploy any technology upon its spectrum. It would be more accurate to describe the Telecom Commission proposal as an attempt to de-liberalise spectrum already liberalised, by a retroactive amendment.
More worrying than the legal infirmities is the mindset! Is it sensible to disregard contracts and to misuse sovereign powers to extort? Is it not known that the sector contains several economic zombies who are incapable of repaying existing debt? You place a gun on their heads so they borrow more, you cosmetically cover today’s fiscal deficit, but hit the banking sector along with the telecom sector. The voodoo econometrics of Trai may make some believe you can mop lakhs of crores with negligible impact on consumer price, on the assumption money grows on trees. And in a perverse way, they might be proved right. Maybe consumer prices will not rise. Only, most companies would go into liquidation!
Telecom regulation is an evolved subject, dealt with world over by impartial, top-notch specialists. Our trillion-dollar economy is vastly complex. Minister CEOs and Union Cabinets with coalition dharmas are not there to micro-manage specialist subjects. Their role is to create an enabling environment for quality institutions, which they have been loath to do.
(The writer is a former corporate CEO)
