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The senior telecom executive was at his combative best early last year when he was involved in an aggressive campaign against the recommendations of the Telecom Regulatory Authority of India, or Trai, to sell 5MHz of 1800 spectrum at a staggering Rs 18,200 crore. Along with the Cellular Operators Association of India (COAI), the lobby group of GSM service operators, he was at the forefront of the campaign that said tariffs would double and the industry would die if the Trai recommendation was accepted. All the ire of the telcos was directed at Trai which was then headed by JS Sarma.
The same executive is now all praise for Trai and its chairman, Rahul Khullar, a former member of the elite Indian Administrative Service who came on board last May. "Khullar is the best regulator we have had after SS Sodhi (the first chairman of Trai)." Khullar, he says, has been using sound techno-economic analyses to come to conclusions on all issues. "And unlike earlier, he does not favour any particular telco or lobby group; so, even if he does not meet anyone below a CEO, you don't mind because his decisions are always fair," he adds.
Seventeen months into the job, Khullar, even his worst detractors admit, has tried to clean up the mess in telecom left behind by the 2G scam, especially the one related to spectrum pricing. Trai, under him, asked for a steep cut in the base price of spectrum in 900 MHz (up to 60 per cent) in Delhi, Mumbai and Kolkata as well as in 1800 MHz (37 per cent for pan-India). The department of telecom, or DoT, felt the cuts were too steep and did not reflect the value of the spectrum. So, DoT asked Trai to reconsider the cuts. But Khullar stood his ground.
Holding the line
This, incidentally, wasn't the first time that Khullar had refused to budge. In September last year, Communications & Information Technology Minister Kapil Sibal had announced with great fanfare that roaming would become free for users of mobile phones next year as it was the cornerstone of the new telecom policy. But Khullar threw a spanner in the works in June this year when he said that such a move was not practical. Instead, he slashed the cap on roaming charges by 29 to 59 per cent, which has brought down overall rates. He added that he will review it again in 2014. He says that free roaming, apart from technical difficulties, means that 88 per cent of the non-roamers would have to subsidise 12 per cent well-off roamers, which is not fair.
The Trai chairman has also stood his ground against the broadcasting world. Information & Broadcasting Minister Manish Tiwari recently asked the regulator to postpone the deadline for implementation of the 12-minutes-per-hour advertising cap on broadcasters to December because of the financial pressures being faced by news channels. There is no doubt news channels will be severely hit by the reduction in ad time as their prime time ad flow is half to one-third of a general entertainment channel. "Only channels with deep pockets and a pan-India reach and appeal can hope to survive in that event. Others will either face a shut down or will have to look at consolidating with bigger networks in order to stay operational," says a media planner who did not want to be named. While many broadcasters, including general entertainment channels, have agreed to the proposal, some have sought legal recourse to get out of the bind. But Khullar has stuck to the October-end deadline.
Perhaps it is owing to Khullar's reputation of fairness that more issues are being referred to Trai by the ministry than ever before. So it has given recommendations on foreign direct investment in the media and the restrictions on cross-holdings and is now working on the renewal of DTH licences, amongst others. So much so, the joke in Trai is that it has become more of a regulator for broadcasters than for telecom.
Those who have interacted with him say Khullar is the right man for the difficult job. He, they say, has a disdain for telcos who have fought with each other to extract benefits for themselves by tinkering with policy. They argue that he believes that DoT has been working in silos with different departments; as a result, nobody has a clear overview of the issues. He makes no bones of his position and says: "Manmade mistakes have bought us to this pass; we should learn from history and move on. Now it is the government's call."
Of course, Khullar also has his detractors. Many say that he could have objected to the high price recommended by Trai last year itself after the GSM telcos had created a furore. "He could have at that time said that the price cannot be paid by operators and suggested that it be brought down. He wasted more than a year for the industry. He recommended price cuts only this September after two auctions had failed," says a senior executive of a GSM company. Detractors say all he did during that time was to say that the average impact of Sarma's recommendations on mobile tariff would be 5 paisa per minute instead of 1 paisa which was the earlier estimate.
Trai insiders, however, say it is an unfair attack. Khullar's mandate from the government was restrictive; it was only about studying the impact of high spectrum price. They say if the government had asked the regulator to look into whether the telcos can pay Rs 18,000 crore, then Trai would have suggested a pricing alternative.
CDMA and dual-technology players (those who offer GSM as well as CDMA services) are also peeved with him. They say that Khullar has killed their growth with his plans to give 800 MHz spectrum which was reserved for them to GSM operators. Says Ashok Sud, secretary general, Association of Unified Telecom Service Providers of India: "If Trai's recommendations on 800 MHz band are accepted, it would mean CDMA operators will have no growth path left." Some CDMA operators have also openly questioned his decision to not push through full roaming as it would benefit only the big three players- Bharti Airtel, Vodafone and Idea-who account for the bulk of the roaming revenues.
Khullar, however, has defended his decisions forcefully. He says that 800 MHz is valuable spectrum which can be used for LTE (4G) services or for extending the 900 MHz band. And he estimates that it will fetch three to four times more than what CDMA operators will pay, so why should the government sell spectrum at a fraction of the full revenue potential? Many believe that if the government does so, it could throw up another big controversy in the telecom story, especially as most operators have sufficient spectrum and therefore did not participate in the last two auctions. Khullar says that the operators are not interested in additional spectrum but want to ensure that the one-time fee they have to pay for additional spectrum beyond 2.5 MHz, which is pegged to auction price, comes down.
Everyone agrees that Khullar has taken a bold decision bringing spectrum prices down by not pegging it to 3G auction prices which was being done under Sarma's tenure. Instead, he has looked at pragmatic alternatives to come to a final conclusion.
While Sarma recommended re-farming and gave various alternatives which include allowing incumbents to retain 5 MHz in the 900 MHz band, Khullar has made it clear that there will be no reservation of spectrum for fair play -a move which has not gone down well with the GSM operators. But dual-technology telcos, despite their unhappiness, say this is the right move because it will give them the opportunity to bid for this spectrum. A telecom analyst says: "After the spectrum scam and the Comptroller & Auditor General report, no one was ready to cut spectrum price lest they may be called to explain their actions many years later."
His transparency is also reflected in his decision on spectrum usage charge, or SUC, which he says should be uniform for all players. So while he might have recommended a uniform 3 per cent, he is open for the government to reduce it to the lowest slab, which is 1 per cent. That is what Reliance Jio currently pays for being a broadband wireless access provider. But what Khullar is hinting at is that if the government wants to keep SUC at that level, as Reliance Jio has protested that it should not be pushed up to 3 per cent, it must give the same benefit to all operators. Surely, Khullar is not the one to make an exception.
