Illegal? Change the law

BS OPINION

It has become fairly obvious that a unified telecom licence is the only way out of the tangle of wires that is India's telecom regulatory scene, especially since disputes continue to fester on who should be allowed to do what, and on what terms.

Nevertheless, the telecom regulator's proposal to come up with a unified licence for basic and cellular services does seem like jumping the gun, considering that the telecom dispute settlement tribunal (TDSAT) is about to rule on whether the WiLL-mobile services offered by basic telephone players are legal or not.

If it turns out that the WiLL-mobile services are to be declared illegal, the unified licence will allow them to continue! While the timing of the two events, the TDSAT judgement and the Telecom Regulatory Authority of India's (Trai) consultation paper on the unified licence, may be coincidental, it is curious that the unified licence suggested by Trai confines itself to basic and cellular operations "" it does not, for instance, talk of national long distance or international long distance telephony.

In the event, since the cellular operators have not been asking for permission to offer fixed line services on the strength of their existing licences, the players to benefit the most and immediately from Trai's unified licence are the basic or fixed line service operators who are also providing WiLL-mobile services.

If a unified licence of the limited sort proposed by the Trai is to be issued, what needs to be kept in mind is that this cannot be done by fiat and should not lead to a fresh rash of lawsuits in a litigious industry.

If the government goes ahead and issues a unified licence and converts all existing basic/cellular licences to this, it will have to deal with issues of equality and compensation. The first issue is equal terms for entry into the same business (the cellular industry has been screaming from the housetops that it has paid far more as entry price than the WiLL-mobile players).

The second is the potential loss of profit that the cellular industry will want to be compensated for, in return for letting new entrants into their turf "" on the argument that the extent of competition in the business does not warrant new licences.

Of the two issues, the government is likely to be sympathetic on the first, though the calculation of what is an equalising entry price will vary "" Reliance (whose case is at the heart of the entire issue) will point to the very low entry price for the fourth mobile licences and argue that it should not pay more than that.

Meanwhile, the government is almost certain to be less sympathetic (if not positively hostile) on the second issue of compensation to the existing mobile players "" whereas the cellular industry argues that such compensation is the global practice. If a dispute erupts it will be over this, and it is interesting that (as in the past) Reliance's competitors find that they end up fighting the government.

An unrelated but important point to be kept in mind while recommending a unified licence, is the need to ensure that competition does not suffer.

For instance, if a firm is offering one type of service, say long distance telephony, the profits from this should not be used to subsidise another service, say, the cellular business of the same firm.

This, by the way, is the very allegation being levelled against the state-owned Bharat Sanchar Nigam Limited (BSNL), but Trai has still not been able to get BSNL to separate its accounts. Once unified licences are issued, as is fairly certain, such a situation will be the rule, not the exception.

That presumably is when the Competition Commission will step in. Expect more legal battles.