The Telegraph
Since 1st March, 1999
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If only regulators understood technology and convergence and if only the convergent communications bill had been passed. Interestingly, the information and broadcasting ministry still wants a separate regulator for broadcasting. Segmentation of communications with separate licences is inefficient and increases costs. Why should there be separate licences for basic telecom, GSM-based limited mobile services, national long distance, international long distance, internet and V-SAT services' Technology is seamless. But because legislation is not in place, the country is stuck with a unified telecom licence rather than a unified communication licence. This is a second-best solution that is undoubtedly better than the mess resulting from failing to anticipate development of wireless technology. Given inadequate appreciation of developments in 1994 and 1995, the dispute between basic and cellular telecom providers was inevitable. And thatís the only problem the Telecom Regulatory Authority of India has tried to solve through a unified licence that now integrates basic and cellular licences within a circle. To pretend that this is a genuine unified licence for nation-wide telecom (forget communications) amounts to being factually incorrect. That the cabinet and the group of ministers on telecom have accepted TRAIís recommendations can be interpreted as a victory for Mr Arun Shourie and Mr Pradip Baijal. However, the decision to hike the foreign direct investment limit in telecom to 74 per cent (from 49 per cent) has been referred to the finance ministry.

If an earlier decision on licensing is reversed and terms of entry changed, there are bound to be relative losers and winners in this basic versus cellular tussle. In purely relative terms, the cellular operators have clearly lost. Whether they will accept the cabinet decision or whether there will be continuing litigation is clearly a function of what compensation they can extract from the finance ministry, and there is precedence for restructuring-cum-relief packages in steel and textiles. TRAI thinks no compensation, as opposed to a restructuring package, is necessary. This may involve longer maturity periods for loans or reduced interest rates on rupee debt and may even extend to altering the revenue-sharing arrangement. Basic operators should not complain, especially because the gravy train is in the mobile rather than in the fixed business. The unified licence fee is attractive enough.

There remains the matter of an entry fee dispute pending before Supreme Court, but that may well be withdrawn. Meanwhile, there will continue to be speculation about whether one particular companyís clout influenced the decision and over GSM versus CDMA. But clearly, a shakeout in telecom is still awaited and will be hastened if TRAIís proposal of abolishing licensing in telecom is accepted.

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