Sunil Jain: Parliament be damned!

RATIONAL EXPECTATIONS

The government's answers to Parliament on the issue of Reliance Infocomm passing off international calls as local ones to avoid paying around Rs 1,000 crore of access deficit charge (ADC) payments to Bharat Sanchar Nigam Limited (BSNL) are rapidly deteriorating into a major farce with the telecom ministry either deliberately obfuscating facts or is simply so ignorant it still doesn't know what's happening.

Either way, the government's replies clearly indicate the ADC-avoidance business is much larger than originally envisaged, and probably involves players other than just Reliance Infocomm. The only problem is the government isn't willing to admit to this openly, at least not as yet.

As this column argued two weeks ago, the government damaged its case by citing violations of non-existent sections of its international long-distance licence by Reliance and even telling Parliament (in a reply to Navjot Singh Sidhu) on December 1 that such violations amounted to Rs 350 crore since 1998-99, at a time when BSNL and MTNL had issued notices asking Reliance to pay them over Rs 600 crore for such illegal call routing for a period at most extending over six to eight months! The latest reply (December 16 to Nilotpal Basu) is even more obfuscating.

Basu asked a straightforward question""how many international calls have come into the country since the ADC regime began in May last year and how much is the ADC that BSNL has received? Taken together, the two figures would reveal the extent of the scam.

The telecom regulator, Trai, had imposed an ADC of Rs 5 per minute of international calls either coming in or going out of the country and an ADC ranging from Rs 1.25 to Rs 4 per minute of national long-distance calls.

On February 1 this year, the international ADC was reduced to Rs 4.25 and the national one to 30""80 paise. Since the ratio of national long-distance calls to international ones is roughly 10:1, even using the lowest national long-distance rates implies the total ADC that should have accrued to BSNL and MTNL should have been Rs 7,859 crore between May last year and September this year.

Since half the national long-distance calls take place on BSNL/MTNL phones, and they get to keep the ADC that accrues on this, the total ADC BSNL/MTNL should have got from the private players should be around Rs 5,400 crore.

Yet, what the government says is that "BSNL has reported that ADC received w.e.f. 1.5.2003 to 30.9.2004 from different International Long-Distance and National Long-Distance operators for incoming international calls is of the orders of about Rs 2,005 crore."

Since national long-distance operators pay ADC on only national long-distance calls, it's not clear why the telecom ministry should suddenly bring in the national long-distance players into an answer to a question only on international ADC, unless the idea was to obfuscate matters.

But leave that aside. If BSNL and MTNL were to get at least Rs 5,400 crore as ADC between them, how do you explain the fact that BSNL got only Rs 2,005 crore considering it owns over 90 per cent of the fixed lines held by the two public sector firms?

It points to just one thing""the window-dressing of calls as local ones to avoid paying ADC is several times what was earlier thought, and probably extends to national long-distance calls as well, instead of just to international calls, as believed by most.

What casts further doubt on the accuracy of the government's replies is a letter written to the telecom minister by B K Syngal, a former CMD of VSNL in the days it used to be a government company.

Syngal says that while the government has put the total number of incoming international minutes at 6.2 billion for a period of 17 months, the actual figure is more likely to be around 9 billion""in which case, the scam is much higher.

It is, of course, curious that the telecom ministry should collect these figures of international minutes from the same international long-distance operators (like Reliance) whom it accuses of doing the concealment in the first place, and not from Trai, which is statutorily bound to keep such data""that's right, in the reply to Basu, the government says the figure of 6.2 billion minutes has been collected from the operators themselves!

What's even more curious in this entire episode is a letter written last week by the Cellular Operators' Association of India (COAI) to Trai on the ADC issue.

When Trai first imposed an ADC of Rs 5 on international calls and Rs 1.25""4 on national long-distance ones in May last year, the COAI demonstrated how BSNL didn't really incur losses on rural phones and so didn't need any ADC.

It later argued that if the government was hell-bent on giving BSNL a subsidy, it was better to do this with a revenue-share type of ADC""since this would be a proportion of all revenues, there would be no money to be made by misdeclaring calls, as is being done today to take advantage of different specific ADC rates on different types of calls.

What the COAI's now done is to say the current ADC regime should not be changed as a reduction in the ADC "will not discourage grey market activities; it will only slightly reduce the size of the incentive for operators indulging in grey market activities"!

While this is too short a space to discuss the (few) merits and (many) demerits of the COAI's latest argument, the huge somersault in its position raises a lot of questions that need to be answered.

Right now, of course, it appears very few people are even asking any tough questions. And those few certainly aren't part of the government.

suniljain@business-standard.com